Register a Business in Alberta - All About Partnerships

Do you want to register a business in Alberta? If so, the first thing you need to determine before you register your business in Alberta is your business type. In Alberta, this can either be a sole proprietorship, a partnership, limited partnership, joint venture or a corporation. To know which business type to go with when you register your business in Alberta, you need to examine the overall structure of your business. Ask yourself the following:

When you register a business in Alberta, are you the sole owner of the business or will you be owning it with others?
When you register a business in Alberta, what is the exact nature of your business?
When you register a business in Alberta, what are your tax considerations?

The answers to the above will help you determine which business type to go with. If you want to register a business in Alberta that is small and you plan to run it all by yourself, the best business type would be register the business in Alberta as a sole proprietorship. On the other hand, if the business is big and is meant to be owned by several people (i.e., its shareholders) then a corporation is the better business type.

But say your business is something in between... in this instance, a partnership may be the better choice.

Register a Business in Alberta - Partnership Pros and Cons

If you plan to register a business in Alberta that you intend to own 'in conjunction' with others, then you need to register the business in Alberta as a partnership. In this business type, all you probably need is a Partnership Agreement (which will be governed by the Partnership Act). Partnerships are easy to set up but the key is really to come up with a great Partnership Agreement. This is because to register a business in Alberta as a partnership can be tricky for the owners.

Perhaps the main disadvantage of registering a business as a partnership is liability. In general, if you register a business in Alberta as a partnership, each partner is held responsible for the acts of the other partners. For instance, say that your partner has entered a contract without your consent or full knowledge, the company (whether you agree or not) must fulfill that contract.

Another item you should be aware of if you register a business in Alberta as a partnership is that there seems to be a very thin line between the partners (i.e., the business owners) and the partnership (i.e., the business entity). The drawback here is when it comes to finances. For instance, say that the business incurred debt, the partners' personal finances or assets may be used to pay the debt.

This is not to say that to register a business in Alberta as a partnership is a mistake. The first rule is to know your partner(s) and the extent to which you want them to be involved in the business. As mentioned, a well-drafted Partnership Agreement is the key. Before you register a business in Alberta, ensure that this document clearly outlines the authority each partner has in the business. Do not forget to also indicate the level of ownership of each partner. If you do not specify this when you register a business in Alberta, it is assumed that all partners have equal business ownership and as such are entitled to an equal share of business earnings.

Most people do not enter a partnership unless they feel that their partners are trustworthy. Still, business is business and it will save you a lot of headaches and money if you really make well-drafted Partnership Agreement. If you need help, check out www.albertaregistry.net for more information and to help you register your business in Alberta.