Characteristics of a Partnership

Characteristics of a Partnership

 A General Partnership is defined as a business arrangement between two or more persons who share the profits, liabilities and management of the business.

•               Each partner reports and pays income tax on his or her personal income tax return
•               Partners share in the decision making and risks of conflict exist
•               You should agree early on about the details of your business relationship. Not doing so can potentially cause significant legal problems down the road.
•               A written Partnership Agreement is a MUST--Your Lawyer can assist you with this to make sure the following items are addressed:              
•               How is the equity divided by Partners?
•               What are the roles and responsibilities of the Partners?
•               What assets or cash does each founder contribute or invest into the business?
•               How are key decisions and day-to-day decisions of the business to be made? (by majority vote, unanimous vote or are certain decisions solely in the hands of the CEO?)
•               How much time commitment to the business is expected of each founder?
•               Is the percentage of ownership subject to vesting based on continued participation in the business?             
•               Are salaries (or dividends) going to be paid to the partners?  How can this be modified/changed?
•               If a Partner leaves, does the company or the other partner(s) have the right to buy back the exiting partner’s shares? At what price?
•               What happens if one partner isn’t living up to expectations under the Partnership agreement? How will it be resolved?
•               Under what circumstances can a partner be removed as an employee of the business?
•                How will a sale of the business be decided?

--A Limited Partnership s comprised of one or more general partners and one or more limited partners whose liability is ascertained according to their financial contribution to the partnership.

AFTER REGISTRATION:

4. Register for any other licences required to run your business - see here for a list of contacts
5. Set up a separate bank account for the Partnership
6. Register for CRA programs including Harmonized Sales Tax (HST), payroll deductions, corporate income tax and import/export accounts. To do that, you will neect to contact CRA directly.. Visit the CRA website or call 1 800-959-5525
7. Record your registration date and make sure you renew your business name every 5 years!
8. dopt an Accounting software program
9. Hire a bookkeeper if you haven't already done so
10. Think about your Marketing requirements-Get in touch with a graphic designer
11. Have you thought about your Website yet?  Do you need a Storefront that accepts Payment?
12. What kind of phone/cell phone system will you need?
13. What do you need for your office?  Office Furniture? Office Equipment?Supplies?
14. Will you use your office/home address as the Business Address, or will you rent a mailbox from UPS or Canada Post?
15. How will you ship your products?
16. How will you advertise?