LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name. The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP. Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct. Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity. Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.

Company Registration in Canada |

Overview of Canadian Company Registration

The tenth-largest economy in the world, Canada, allows anyone to start and run businesses. Any investor or entrepreneur can easily launch a business in Canada thanks to the country’s abundance of resources. Incorporating and establishing a business in Canada is open to anyone on the planet. The government provides a variety of advantages for business owners to operate in Canada. In addition, a lot of investors move to Canada because the opportunity there makes it simpler to register a firm. It is a noteworthy nation that is regarded as one of the important G7 countries. On addition to this, it ranks highly in the global index of business accessibility. Depending on your line of business, you can select from a variety of business structures.

Advantages of Canadian Company Registration

The advantages of registering a company in Canada are as follows:

Low corporate tax rates- For businesses all over the world, the corporate tax rate is the most important consideration when deciding where to relocate or where to launch a new venture. Businesses can save money when corporate tax rates are low and reinvest the surplus back into the company. Canada has kept its corporation tax rates far lower than those of other developed nations, dropping them from 18% to 15%, making it the most sought-after location for business establishment.

Trade free agreements- It provides Canadian businesses unrestricted access to their markets because Canada is a signatory to a number of them. Canada has signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the North American Free Trade Agreement (NAFTA), and the Comprehensive Economic and Trade Agreement (CETA) with the EU, all of which grant it favorable access to these sizeable markets.

Robust intellectual property laws- Innovation is safeguarded by a strong intellectual property laws regime in Canada. In order to better protect Canadian firms, the system in Canada is always being improved upon and evolving. In addition, Canada has ratified a number of international agreements and treaties relating to the protection of intellectual property, including the Hague Agreement, the Madrid Protocol, the Singapore Treaty, the NICE Agreement, and the WIPO Patent Law Treaty, among others.

Benefits of a Developed Economy- Pre-Covid unemployment rates in Canada are below 5%, indicating a Developed Economy. Additionally, the pay rate has been maintained competitive compared to the other industrialized countries of the world, making Canada financially secure with a mature and stable economy.

Plenty of natural resources- The country of Canada has been blessed with a wealth of natural resources, including natural gas, crude oil, wood, minerals, coal, etc., which have long powered the country's economy. Canada is viewed as the best location for enterprises all over the world to enter the Canadian market due to its strong economic foundations and wealth of natural resources.

Favorable business environment- Canada also provides a favorable business ecosystem that allows companies to grow. Because of this, Canada has consistently ranked among the top nations for ease of doing business. By providing low net effective tax rates, one fosters the growth of enterprises, especially start-ups. Businesses can also get financing at extremely low rates and have access to a variety of investment options.

Competent and Educated Staff- With one of the most competitive and educated labour markets in the world, Canada provides many opportunities for businesses to gain from a talented workforce. The absence of strong labour law limitations, which are very common in most developed nations, is another appealing aspect of the Canadian economy.

Regulatory Body for Canadian Company Registration

For federal-level business registration, Corporations Canada is the appropriate authority, while for provincial-level company registration, there are corresponding province-specific authorities.

Eligible Organizational Structures for Canadian Company Registration

In Canada, there are essentially 3 different business structure kinds. The business formats listed below are available to Canadian entrepreneurs-
Sole Proprietorship
The most typical business structure for small firms is the sole proprietorship, which is informal. The business and the operator are one and the same in the eyes of the law and the tax authorities. The sole proprietor's earnings are his or her own earnings and are as a result subject to taxation on the personal income tax form. In cases where people choose the sole proprietorship structure for their side enterprises, it is also employed as a tool for tax management. They benefit from better tax management since they can utilize business losses to offset other sources of revenue. In this case, the proprietor is personally responsible for the business' finances and obligations. The owner is personally responsible for all of the proprietorship's obligations and liabilities; therefore, this also becomes a drawback.
Partnership
When there are multiple proprietors, a partnership is a similar arrangement. The terms and conditions outlined in the partnership agreement, which regulates the sharing of profits, expenses, and tasks, among other things, control a partnership even though it lacks a formal legal structure. The Canadian legal system recognizes three different types of partnerships:
General partnerships

Limited partnerships, and

Limited liability partnerships.

Corporation
A corporation in Canada is similar to the concept of a company in other jurisdictions in that the investor can raise capital from investors quite easily and the tax payment can be optimized in a variety of ways. However, in Canada, the investor's liability towards the debts and obligations of the corporation is limited. However, a company requires extensive documentation and significant financial outlays for their governance, incorporation, etc. The 5 categories of corporations recognized in Canada are as follows:
A corporation is referred to as a Canadian Controlled Private Corporation (CCPC) if, at the end of the tax year, it meets all of the following requirements:
It is a corporation that, between June 18, 1971, and the conclusion of the tax year, was either incorporated in Canada or was a resident of Canada.

It is a privately held company.

It is not directly or indirectly controlled by one or more publicly traded companies (other than prescribed venture capital corporation as defined under Regulation 6700 of the Income Tax Regulations)

It is not governed by a non-resident or non-residents.

It is not managed by a corporation with Canadian residents whose shares are listed on an authorized exchange outside of Canada.

It is neither directly or indirectly controlled by any of the people named in the preceding three circumstances.

If a non-resident individual owns all the shares of a public corporation (except from a prescribed venture capital corporation) or a corporation whose shares are listed on a specific stock exchange, and this individual does not own enough shares to control the corporation.

There aren't any classes of the corporation's shares that are traded on a specific stock exchange.
If a company at the end of the tax year satisfies all of the following requirements, it is classified as an Other Private Corporation:
It is not a publicly traded company./li>
It is a Canadian inhabitant.

It is not controlled by any of the listed federal crown corporations (as defined in Regulation 7100)

It is not governed by a public corporation or groups of corporations (other than prescribed venture capital corporation as defined under Regulation 6700 of the Income Tax Regulations)

It is not governed by any corporate entity or entities listed in the first two clauses.
At the end of the tax year, a corporation is considered to be a public corporation if it meets one of the following criteria:
If it has a class of shares that are listed on a specific Canadian Stock Exchange;

If it has been chosen to be a public corporation; or if the Minister of National Revenue has so designated. The corporation has satisfied with the requirements set forth in Regulation 4800(1) of the Income Tax Regulations with regard to the number of shareholders, the open market trading of its shares, the distribution of ownership of its shares, and the size of the corporation.
Corporation Controlled by Public Corporation
If a Canadian subsidiary of a public corporation, a company is considered to be a corporation controlled by a public corporation. When filling out your T2 Corporation Income Tax Return, you cannot choose this corporation as a public corporation as the type of corporation.
Other Corporation
Corporations are referred to as Other Corporations if they do not meet the requirements of the aforementioned corporations. General insurers and crown corporations are two prominent examples of other corporations.

How to Register a Company in Canada?

A potential applicant must adhere to the following steps in order to register a business in Canada:
Choosing a JURISDICTION that is suited for the corporation

The choice of the corporation's NAME

Determining whether the name of the corporation is available

Producing the Incorporation Documents

Document submission and registration for incorporation

Creation of the corporation's board of directors

Upkeep of Records and Corporate Seal

Issuance of shares, completion of organizational minutes, and adoption of bylaws

Additional Permits and Licenses to be Arranged

Making a Corporate Bank Account Available

Register the Business
Choosing a suitable Jurisdiction for the corporation
The business owner must first choose the jurisdiction in which he or she wishes to register the company before registering it. The jurisdiction determines the boundaries of the company's permitted business activity. The entrepreneur has the option of incorporating the business in one of 13 provincial or federal jurisdictions. Entrepreneurs typically select their home province or the registration at the federal level as the jurisdiction for their business.
Choosing the Name of the Corporation
The entrepreneur must now decide on the name of the corporation. This is a little challenging because the rules and specifications for approving corporate names vary between jurisdictions. The following are some of the rules that apply to name selection in all jurisdictions:

The name shouldn't go against the established law of the country.

The name shouldn't be the same as or similar to a trademark or business name that already exists. The name shouldn't be used in a way that misleads the public.

The name may be written in either English, French, both English and French, or a combination of English and French.

The name should have a unique and descriptive component.

The name should always be followed by a suffix that describes the company's legal structure.

Verifying whether the name of the corporation is available
The availability of the selected name must be confirmed prior to submitting the corporate name for the corporation. The Newly Upgraded Automated Name Search (NUANS) system or the system of the Centre Informatique du Registre des Entreprises du Quebec (CIDREQ) can be used to check the name availability.
Making the Incorporation Documents
When a business owner considers establishing a small or private company, a basic pre-packaged incorporation plan can be made, which comprises the following-
Model Articles of Incorporation have already been written (which can be amended later on)

Maximum of two or three share classes

Maximum of ten directors, and

A designated and numbered company name.
However, if the business owner is considering forming a larger organization, a tailored incorporation plan is available and includes the following:
Name of the company

Its share structure, restrictions on the transfer of shares, and

The number of directors it has.

Restrictions the entrepreneur wishes to place on the business.
Document submission and registration for incorporation
Before a corporation is incorporated in Canada, the entrepreneur must submit the necessary paperwork to the relevant government agency, including the Articles of Incorporation and supporting documents like the name search report and filing fee.
Establishment of the corporation's board of directors
The entrepreneur is also responsible for establishing the corporation's board of directors (BOD). The eligibility requirements for serving as a director of the corporation must be met while the BOD is being formed. Each director's first and surname names, as well as their respective addresses, must be stated when incorporating. When they incorporate, the residency status must also be stated.
Documents should also be maintained apart from purchasing the corporate seal
Every corporation is required by law to keep a record of its articles of incorporation. This also includes purchasing the corporate seal. The following is just a partial list of the documents:

Corporate Bylaws

Copies of the Articles of Incorporation

The shareholder meetings' minutes

Resolutions of the shareholders

Director decisions

A copy of the documents submitted to the government bodies

Shareholders agreement

Register for share transfers

Register for securities

In order to emboss the corporation's legal name on formal business documents, a corporate seal must be purchased. All Canadian provinces, with the exception of a handful, have made it a requirement that every corporation have a corporate seal next to its name.
Issuance of shares, completion of organizational minutes, and adoption of bylaws
Once the corporation has been incorporated, it is crucial to organize its organizational structure. A meeting of shareholders and directors may be called, or written resolutions may be adopted and signed by the directors or shareholders. The initial structure of the business is made up of the following:

Getting the corporate by-laws approved

Distributing shares to stockholders

Choice of the directors

Appointing the corporation's officers

Shareholders agreement

Additional organizational decisions

Obtaining Additional Permits and Licenses
A corporation must adhere to additional legal requirements after being incorporated. These requirements entail acquiring additional licenses and permits, such as the ones listed below:

Getting a federal business number registered

Getting registered for worker's compensation and the provincial employer health tax

Opening an account for the provincial sales tax

Creating a non-corporate business name registration

additional municipal and provincial licenses

Opening a Business Bank Account
A corporate bank account must be opened by every corporation. A copy of the proposed corporation's articles of incorporation must be given to the bank by the applicant. All of the company's authorized officers must provide their signatures. A copy of the corporation's by-laws or resolution may also be required by the bank in some circumstances before they are permitted access to the bank account.
Starting the company's operations
After the applicant has completed all of the aforementioned processes successfully, management can start the company's activities.

French Corporate Tax

Corporate tax must be paid by all legally existing Canadian corporations. There would be the ensuing taxes:

•15% of net corporate tax is due in Canada.

The net tax rate drops to 9% for private corporations under Canadian ownership that are using the small business deduction.

Documents Required for French Company Registration

For the purpose of forming a corporation in France, the following papers are necessary:

Articles of incorporation

Lease agreement or title deed of the Registered office

Name Search report to demonstrate to the authority that sufficient procedures have been made in relation to searching the name and reserving the same

Information regarding the Board of Directors

Federal Business Number for conducting corporate transactions from the competent Canadian revenue body

If the Shareholders are foreign nationals, Canadian address documentation is required.

A copy of the passport or visa showing the foreign stockholders' Canadian addresses

Information about the company's paid-up capital

Information on the Company's Founders, such as their addresses, passport numbers, and other pertinent data

Translation and notarization are required for the shareholder identification documentation for the company.

Information on the company's managers, including copies of their identification documents and letters of appointment

Registration and Fee Application Form

A declaration that the management has never been convicted of a crime

Board Decision ( If required)

FAQs

Concept of LLP

LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.
The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.
Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.

Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.

Structure of LLP

LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession.

Advantages of LLP

LLP form is a form of business model which:

(i) is organized and operates on the basis of an agreement.

(ii) provides flexibility without imposing detailed legal and procedural requirements

(iii) enables professional/technical expertise and initiative to combine with financial risk-taking capacity in an innovative and efficient manner

Other Countries where this form is available

The LLP structure is available in countries like United Kingdom, United States of America, various Gulf countries, Australia and Singapore. On the advice of experts who have studied LLP legislations in various countries, the LLP Act is broadly based on UK LLP Act 2000 and Singapore LLP Act 2005. Both these Acts allow creation of LLPs in a body corporate form i.e. as a separate legal entity, separate from its partners/members.

Difference between LLP & ‘Traditional Partnership’

Under “traditional partnership firm”, every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner.
Under LLP structure, liability of the partner is limited to his agreed contribution. Further, no partner is liable on account of the independent or un-authorized acts of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful acts or misconduct

Difference between LLP & Company

A basic difference between an LLP and a joint stock company lies in that the internal governance structure of a company is regulated by statute (i.e. Companies Act, 1956) whereas for an LLP it would be by a contractual agreement between partners.
The management-ownership divide inherent in a company is not there in a limited liability partnership.
LLP will have more flexibility as compared to a company.
LLP will have lesser compliance requirements as compared to a company.

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