Partnership Registration in Ontario, Prepared and Reviewed by a CPA Firm

What a partnership is, and how people start one without meaning to

Carrying on business in common with a view to profit

That is the legal test. Two friends who start selling together and split the money are partners, signed or not.

The Partnerships Act applies whether or not you signed anything

Without an agreement, the Act’s default rules decide profit shares, management and what happens when a partner leaves.

Registering a name does not create the partnership

Under section 2(3) of the Business Names Act, partners must register a firm name before trading under it. A name made up only of the partners’ own names does not need registering, under section 2(4).

General, limited and limited liability partnerships

The general partnership, $60

Every partner manages the business and carries unlimited personal liability. The firm name registration costs $60 for five years. If you will trade alone instead, see sole proprietorship registration.

The limited partnership, $210

At least one general partner with unlimited liability and at least one limited partner whose risk is limited to what they put in. The declaration costs $210 for five years.

The limited liability partnership, $60

Only professions whose governing law allows it, such as lawyers and accountants, can use one. It protects a partner from the other partners’ negligence, not from their own or from ordinary trade debts.

Which fits which situation

Two working owners: a general partnership or, more often, a corporation. Passive investors in real estate or film: a limited partnership. Regulated professionals: a limited liability partnership if their college allows it.

Registering a general partnership in Ontario

What the registry asks for

The firm name, the business activity, the business address, and each partner’s legal name and address.

The five-year term

The registration lasts five years from acceptance and must be renewed, at the same $60, before it expires.

What registration does not give you

No ownership of the name, no trademark protection, no licence to carry on a particular business, and no limit on liability.

Registering a limited partnership in Ontario

The declaration

Filed under the Limited Partnerships Act, naming the general partner, which is often a corporation.

The record of limited partners

The partnership keeps a record of its limited partners and what each contributed.

The five-year term and the $210 renewal

The declaration runs five years and is renewed at the same fee.

Joint and several liability, in plain terms

Any partner can bind the firm

Each partner is an agent of the firm, so a contract one partner signs in the ordinary course binds you both. Our comparison of a corporation and a partnership sets this out side by side.

One partner’s debt is every partner’s debt

A creditor can pursue any partner for the whole of a firm debt, not just their share. There is no separate legal person in between.

How a limited partner loses protection

A limited partner who takes part in controlling the business can be treated as a general partner.

What insurance covers

Insurance covers named risks. It does not cover a supplier account, a lease or a loan your partner signed.

The partnership agreement

What the Act gives you if you write nothing

Equal shares of profit and loss, equal management rights, and a partnership that can end when a partner leaves or dies.

The clauses a CPA asks about

Profit split, draws, capital accounts, admitting a new partner, and what happens on exit or death.

Who drafts it

A lawyer licensed in Ontario. We review the tax and accounting terms.

How partnership income reaches your personal tax return

Section 96

The partnership computes its income as if it were a separate person, then allocates it to the partners, who report it on their own returns. Business income stays business income.

Taxed on profit you left in the business

Tax follows the allocation, not the cash. A partner who draws nothing still reports their full share.

Capital accounts and adjusted cost base

Draws reduce the adjusted cost base of your interest. For a limited partner or a partner not actively engaged in the business, a negative adjusted cost base at year end is taxed as a capital gain. For an active general partner it is usually taxed when the interest is sold or ends.

HST, payroll and the partnership’s own business number

The partnership registers for GST/HST once taxable sales pass $30,000, and opens a payroll account if it pays employees who are not partners.

The T5013 partnership information return

The size tests

A T5013 is required where revenues plus expenses, both as absolute values, exceed $2 million, or assets exceed $5 million at cost.

Triggers regardless of size

A partnership with a corporation or a trust as a partner, a tiered partnership, one that invested in flow-through shares, or one the Minister asks to file.

Due dates

31 March after the calendar year where all partners are individuals, five months after the fiscal year end where all are corporations, and the earlier of the two for a mix.

The penalty

The greater of $100 and $25 a day, up to 100 days, so a maximum of $2,500.

When a partnership should incorporate instead

Liability

Usually the only reason that matters. A corporation stands between the business and your house. See unincorporated against incorporated, compared.

The small business deduction

A partnership’s partners pay personal rates. A Canadian-controlled private corporation pays 11.2% in Ontario from 1 July 2026 on the first $500,000 of active business income.

Section 85

An existing partnership business can be moved into a corporation without triggering accrued gains. See our section 85 rollover guide.

What the switch costs

Our $35.00 with HST included plus the $300 Ontario fee, or $200 federally. See Ontario incorporation and federal incorporation.