Proprietorships & Partnerships
Proprietorships and partnerships are registered business names used for legal and tax purposes. Businesses operating in British Columbia are required to register.
The simplest form of a business is a sole proprietorship. For these, one person performs all the functions required for the successful operation of the business and assumes all the liabilities. The sole proprietor is said to be self-employed.
When two or more people or corporations arrange to carry on business together they register as a partnership.
The Partnership Act describes three main types of partnerships:
A) General Partnership - When two or more people or corporations arrange to carry on business together they can decide to form a partnership. In a general partnership the partners are responsible for all aspects of the business, including the debts of the partnership.
B) Limited Partnership - In a limited partnership there are two types of partners - general and limited. Each type of partner has different rights and responsibilities. Generally speaking, there is a limit on the liability of a limited partner, while the general partner's liabilities are not limited. In a limited partnership there can be a general partner and a limited liability partner.
C) Limited Liability Partnership - A limited liability partnership (LLP) is similar to a limited partnership however there are no general partners and all partners have limited liability.