Features of opening an LP in Canada in 2023
Limited Partnership is one of Canada's most popular forms of incorporation for representatives of medium and small businesses. The company is managed by partners who contribute their money, labor, property, and other assets. Before opening an LP in Canada in 2023, they enter into an agreement that specifies how income is distributed, responsibilities, and other nuances.
Advantages of Limited Partnership in Canada
- Prestigious jurisdiction.
- Limited Partnership owners can be foreigners.
- Partners can carry any contribution, and there are no requirements for share capital.
- There is no tax on profits made by Limited Partnership outside the country.
- No corporate tax return may be filed.
- No audit is needed.
- No income tax.
- Residency in Canada is not required of business owners.
- Protection of personal assets. Personal assets are protected from a lawsuit if a client sues your business.
Features of corporate tax
LPs are not taxable entities, so the company does not have to file returns or pay taxes on income. All the earnings that LPs receive go to the partners in the net form. If they are not Canadian citizens, they may not pay taxes there. Residents must include their portion of the profits from the LP on a personal return and pay personal income tax.
Requirements for LPs
- The organization must have at least one general partner (a foreigner is allowed). The role can be a natural person, or a legal entity. For example, the partner can be a corporation, which must be registered nationally before that.
- LP is also required to have a partner with limited liability, an individual, or a corporation. It can also be the general partner of the LP, so one person is enough to register a Limited Partnership.
- The general partners must manage the company unless the agreement between them allows for the appointment of a manager.
- The presence of an office in the country is mandatory. Documents of the company must be kept there.
- LP must have a unique name, which can be checked in the corporate names and trademarks database. If the name is available, it must be registered in the business register.
Peculiarities of opening an LP
LP registration in Canada is possible at the federal or provincial level. Nationwide registration allows you to operate across the country without additional permits. A business can be registered through the Canadian government website.
It is easier, faster, and cheaper to open LP in Canada at a provincial level, but you can work only at the place of registration. If you want to open offices in other regions, you must get additional documents. You can apply to open a business through the local registration portal (each region has its own).
How to open a Limited Partnership in Canada
Contact IT-OFFSHORE consultants to open a business in Canada in 2023.