When we compare limited partnership vs limited liability partnership, we notice that each type offers a different balance of control, risk and flexibility.
These differences matter for everyday Canadians trying to understand how partnership models work, and for new business owners registering through the Business Registration Center BC (BRC BC). Our goal is to make this decision easier by breaking down the rules, risks and practical considerations in plain language.
This is why understanding Limited Partnership vs Limited Liability Partnership matters for new businesses.
Understanding Limited Partnerships (LPs)
This section highlights the LP side of Limited Partnership vs Limited Liability Partnership comparisons.
A Limited Partnership (LP) is a structure made up of at least one general partner and one limited partner. In BC, LPs are governed by the Partnership Act (British Columbia). LPs are often chosen by investors, film producers, and developers and joint venture projects where some partners want limited liability while staying out of day-to-day control.
General Partners manage the business and take on full liability. Liability partners contribute capital but do not manage operations. If a limited partner begins performing management duties, their protection can be reduced.
Does a partnership have limited liability? (LP Edition)
LPs offer limited liability only to limited partners, and only when they remain passive investors. General partners remain fully exposed. This is one of the most common misunderstandings we see when clients compare LP and LLP models. This distinction becomes important when comparing Limited Partnership vs Limited Liability Partnership models.
Understanding Limited Liability Partnerships (LLPs)
Here we break down the LLP side of Limited Partnership vs Limited Liability Partnership. A Limited Liability Partnership (LLP) is a partnership structure available only to certain regulated professions in BC typically lawyers, accountants and similar fields. LLPs allow partner to work together while sheilding each aprtner from liability for another partner’s professional negligence.
What is limited liability partnership?
An LLP is essentially a general partnership that provides each partner with their own protective “bubble” for professional errors made by others. However, each partner is still liable for their own negligence, misconduct or malpractice. Understanding this helps when analyzing Limited Partnership vs Limited Liability Partnership structure.
Limited Liability Partnership Comparison: Core Protections
Unlike LPs, all partners in an LLP can actively manage the business without losing their liability protection. This makes LLPs popular in professional practice groups.
LP vs LLP Overview: Key Differences That Matter
Below is a breakdown of Limited Partnership vs Limited Liability Partnership in simple terms. When we compare the two structures, LP vs LLP difference several distinctions quickly stand out.
Control
LP: Limited partners cannot manage.
LLP: All partners can manage.
Liability
LP: General partner = unlimited liability.
LLP: No partner is liable for another partner’s professional actions.
Eligibility
LP: Available to any type of business.
LLP: Restricted to regulated professions.
Partnership types comparison by risk level
Risk varies significantly in Limited Partnership vs Limited Liability Partnership structures.
- High risk: LP General Partners
- Medium Risk: LLP Partners (Responsible for own actions only)
- Low Risk: LP Limited Partners
Limited Partnership Vs Limited Liability Partnerships (Using BC as an Example)
Below is the comparison of the key differences and features of both Limited Partnership Vs Limited Liability Partnerships (BC)
| Feature | Limited Partnership (LP) | Limited Liability Partnership (LLP) |
|---|---|---|
| Liability | General partner: unlimited; Limited partner: limited | Each partner liable only for own actions |
| Management | Limited partners cannot manage | All partners may manage |
| Who Can Register | Any business type | Only certain professions |
| Registration Body | BC Registries | BC Registries |
| Common Uses | Investments, real estate, film projects | Law firms, accounting groups |
| Risk Level | Higher exposure for general partners | Shared control with professional protection |
| Tax Treatment | Flow-through | Flow-through |
| Ongoing Requirements | Maintain LP agreement | Maintain LLP agreement and annual filings |
How to Register a Limited Partnership vs Limited Liability Partnership Online in British Columbia
This section outlines registration steps for Limited Partnership vs Limited Liability Partnership in BC.. Both structures in BC, for example, are registered through the BC Registries, and many Canadians often complete the process using the Business Registration Center BC website.
- LP Registrations
- LLP Registrations
Want ot register an LP or LLP in another province? Not a problem! Visit our sister company, Incorporationagency.ca
How to register a limited liability partnership?
To register an LLP in BC:
- Choose an approved professional caregory.
- Submit a name reservation.
- File the LLP registration statement through BC Registries.
- Keep annual filings up to date.
Example: Registering an LP in BC?
For example, a BC Property investment group forms an LP with one general partner managing teh rental property and five limited partners providing capital. They file the LP statement through BRC BC, receive their registration number, and operate with the general partner overseeing daily decisions. This example shows how LPs function in Limited Partnership vs Limited Liability Partnership comparisons.
Example: Registering an LLP in BC?
Three BC accountants run a shared practice. They convert their general partnership into an LLP so each partner is protected from liability for another partner’s professional errors. They register through BRC BC and update their firm name to include “LLP”. This scenario demonstrates the LLP side of Limited Partnership vs Limited Liability Partnership.
Legal Responsibilities and Reportings
Both LPs and LLPs must maintain updated records, file required documents annually, and ensure that their partnership agreement remains accurate and enforceable. LLPs also need to notify their professional regulator.
Common Mistakes When Choosing Between LP vs LLP
These errors often occur when comparing Limited Partnership vs Limited Liability Partnership.
- Believing LLPs are available to all business types
- Assuming limited partners can help manage operations.
- Thinking LLPs eliminate all personal liability.
- Choosing a structure without evaluating long-term control preferences.
Research-Supported Fact on Partnerships in Canada
According to Statistics Canada, more than 15% of Canadian businesses operate as partnerships, demonstrating the importance of understanding partnership structure before registering. (Source: Statistics Canada, Business Register)
Myths vs Facts About LP and LLP Structures
Here are myths often found during Limited Partnership vs Limited Liability Partnership research.
Myth: LLPs protect partners from all lawsuits.
Fact: Partners are only protected from other partners ‘ negligence, not their own.
Myth: LPs let limited partners manage the business.
Fact: Management by limited partners can remove their liability protection.
Myth: Both structures are available to any business.
Fact: LLPs are restricted to qualifying professions,
Myth: LPs and LLPs work the same way for tax purposes.
Fact: While both are flow-through, tax treatment varies based on the type of income and partner roles.
Conclusion
Choosing between a limited partnership vs a limited liability partnership in British Columbia depends on your goals, your risk tolerance, and whether your business qualifies as a regulated profession. LPs offer a mix of active and passive roles, while LLPs offer shared management with liability protection between partners. Understanding these differences helps us make better, safer long-term business decisions.
FAQs - Limited Partnership Vs Limited Liability Partnership (BC)
What is a limited partnership in British Columbia?
A limited partnership is a business with at least one general partner managing operations and at least one limited partner acting as an investor with limited liability.
What is an LLP in British Columbia?
An LLP is a partnership allowing eligible professionals to work together while protecting each partner from liability for another partner’s professional negligence.
Does a partnership have limited liability?
Only limited partners in an LP and partners in LLPs have a form of limited liability.
Is an LLP better than an LP?
Neither is automatically better—LLPs suit professional practices, while LPs suit investment projects and passive-partner arrangements.
How to register a limited liability partnership in BC?
You must reserve a name, qualify as an approved profession, and file registration documents through BC Registries.
Can limited partners manage a limited partnership?
No. Management typically removes its liability protection.
Are LLPs available for small businesses in BC?
Only if the business falls within an eligible regulated profession.
What is the main difference between LP vs LLP?
LPs separate general and limited partners, while all LLP partners can manage the business with individual liability protection.