If you are interested in forming a business partnership, please review our five legal tips on how to form a business partnership below:

1. Begin by assessing whether a partnership is the best way to structure your business.

One of the principal benefits of a partnership is that it allows you to pool resources together.

However, you should keep in mind that each partner is responsible for all debts and obligations of the business (with the exception of a limited partnership – see below).

Further, a partner may be found liable for the wrongs committed by other partners or the employees of the partnership if those wrongs were committed in the course of the business.

Other options available to your business are a proprietorship and incorporation. Read more about the different options for structuring your business here.

2. Consider entering a limited partnership.

In a limited partnership a single general partner operates the business and holds unlimited liability with respect to the business’ debts.

The general partner is supported by other “limited partners”, whose liability is limited to the amount of capital they contribute to the business.

3. Consider a limited liability partnership as an alternative to a limited partnership or general partnership.

It is similar to a limited partnership except that there is no single general partner with unlimited liability.

All partners have limited liability that matches their contributions to the business. In some provinces, only certain professionals can enter into a limited partnership.

There are no such restrictions under the British Columbia Business Corporations Act.

4. Be clear about how you are financing the partnership.

In some cases partners will provide equal contributions to the partnership.

However, in situations where there are unequal contributions, you may choose for this to be reflected in the share of earnings each partner is entitled once the business turns a profit.

5. Partnership agreements can be beneficial.

While there is no legal requirement that you execute a partnership agreement, you may find it beneficial to have one in place, as it provides greater certainty to each party about their rights and responsibilities with respect to the partnership.

Read more about partnership agreements here.

With years of experience M.J. O’Nions, Lawyer & Mediator can help you set up your partnership, register it, execute a partnership agreement and provide you with advice all along the way. Please contact us at 604-449-7779 for assistance with your partnership.