Want to understand what is a general partnership in BC means for taxes, liability, and registration requirements? This guide is designed to help individuals and co-founders understand how general partnerships operate in British Columbia, including how income is reported, how responsibilities are shared, and what legal considerations apply before registrations.
Many business owners choose a general partnership structure in BC for its simplicity and flexibility, especially when working witha trusted partner. However, this structure also comes with important implications, particularly around shared liability, decision-making authority, and personal exposure to busienss debts.
Before registering a general partnership, it’s essential to understand how BC law treats partnerships, how tax obligations are handled at both the business and personal level, and how this structure compares to other common options. This guide focuses on the practical and legal considerations registrants should know, so you can move forward with clarity and confidence.
What Is a General Partnership (Definition & Meaning)
So, what is a General Partnership? A General Partnership is a business structure in BC where two or more individuals carry on a business together to make a profit. Unlike corporations or limited partnerships, there’s no legal separation between the business and its partners in a general partnership. This means all partners share both the management and the liabilities of the business.
Each partner is personally responsible for the debt’s legal obligations. So if one partner signs a contract or incurs a business debt, the other partners are equally on he hook, even if they had no direct involvement.
This structure is recognized under the Partnership Act of British Columbia, which governs how partnerships are created, managed, and dissolved in the province.
Some quick facts:
- No legal separation between business and partners
- Share profits, losses and responsibilities
- Low cost and relatively simple to establish
- Requires mutual trust among partners.
In BC, general partnerships are often used for small service-based businesses, freelancing teaming up, or family-run operations where formality isn’t the top priority, yet proper registration and tax handling are still required.
Key Features of a General Partnership in BC
Let’s take a deeper look at what makes a general partnership in BC tick to the locals:
1. Joint Liability
All partners are equally liable for the debts and actions of the business. If your partner enters into a bad contract, you may still be legally responsible for the consequences.
2. No Legal Entity
A general partnership doesn’t exist as a separate legal entity like a BC Corporation does. This affects how taxes are filed and how the business is treated under the law.
3. Equal Management (unless agreed otherwise)
By default, all partners have equal rights in the management of the business. however, you can override this through a written partnership agreement.
4. Flexibility
General partnerships are relatively easy to form and then dissolve. There is no requirement for annual meetings, minutes or resolutions, unlike with corporations.
5. Shared Profits
Unless stated differently in an agreement, profits (and losses) are shared equally among partners, even if one does more work than another.
This setup works well for people who know and trust each other very well. but it’s crucial to have a formal agreement to avoid issues down the road.
Who Should Consider Forming a General Partnership?
For many small business owners, understanding what a general partnership is helps determine whether this structure fits their operational goals and risk tolerance.
A general partnership can be a good fit for:
- Friends or family members starting a small business together.
- Freelancers who want to offer combined services
- Startups testing the waters before incorporating.
- Professionals who need shared liability (like designers, consultants, or small-scale contractors)
If your business has low risk and you value simplicity and shared control, this might be a great choice. Just be aware of the personal liability side of things.
However, if you are planning to raise capital, work with many employees, or limit your personal risk, you may want to look at incorporating instead.
How is a General Partnership Formed in BC?
Forming a general partnership in BC involves a few simple steps:
Choose a business name
This name must be unique and approved by BC Registries through a Name Request.
Register the partnership
Once the name is approved, you’ll register the general partnership. This involves submitting a Statement of Registration.
Get your Business Number (BN)
This number allows you to set up tax accounts with CRA (e.g., GST/HST, payroll).
Draft a Partnership Agreement (recommended)
While not legally required, it’s highly recommended to outline responsibilities, decision-making rules, profit sharing, dispute resolution, and what happens if a partner leaves.
To register, every Canadian can head over to our general partnership registration form at BRC BC and have the whole process completed for you hassle-free, alongside getting support from our expert registration specialists.
General Partnership vs Limited and LLPs – Quick Table
Here’s a quick comparison between general partnership (GPs), limited partnerships (LPs), and limited liability partnerships (LLPs):
| Feature | General Partnership (GP) | Limited Partnership (LP) | Limited Liability Partnership (LLP) |
|---|---|---|---|
| Legal Entity | No | No | No |
| Liability | Unlimited (all partners) | General: Unlimited; Limited: Limited to investment | Limited (for professional negligence) |
| Management Control | Shared equally | General partners only | Shared |
| Registration Required | Yes | Yes | Yes |
| Common Use | Small businesses | Investment, passive partners | Professionals (e.g., lawyers, accountants) |
| Taxation | Personal income | Personal income | Personal income |
How Does a General Partnership Pay Taxes in BC?
When people ask what is a general partnership from a tax perspective, the key point is that the partnership itself does not pay income tax, profits and losses pass directly to the partners.
Here’s how it works:
- Each partner reports their share of the partnership’s income or loss on their personal tax return.
- The partnership must still file an information return (Form T5013) with the CRA if it earns more than $2 million or has assets over $5 million.
- You’ll also need to pay GST/HST, payroll deductions (if you have employees), and potentially PST, depending on your business type.
The CRA treats the income as personal income, so how much you pay in taxes depends on your individual tax brackets.
BC residents benefit from relatively low personal tax rates, but it’s important to plan ahead; there’s no corporate shield ot protect your assets.
Example: General Partnership and BC Taxes
Let’s say Alex and Jordan run a web design business as a general partnership in BC.
- They bring in $120,000 in total revenue.
- After expenses, their net profit is $80,000.
- According to their partnership agreement, they split profits 50/50.
That means each partner reports $40,000 in business income on their personal tax return. They also register for a GST number and collect GST from clients, remitting it quarterly.
If they hire a contractor or a employee, they’re responsible for CPP contributions and payroll taxes. And if they sell taxable goods, they may also need to collect and remit PST.
BRC BC’s expert accounting team put together an informative guide on GST and PST in BC.
Tax Filing Responsibilities for General Partnerships
Here’s a quick breakdown of what tax responsibilities look like:
- No separate income tax return (unless meeting T5013 thresholds)
- Each partner files their T1 Personal Return, including form T2125 (Statement of business activities)
- File GST/HST returns if registered.
- Submit T4s and T4As if you have staff or contractors.
- Maintain a clear, separate record of partnership finances.
BC businesses also have ot deal with WorkSafeBC if they hire employees, and might need other licenses depending on their industry.
Are General Partnerships Required to Register?
Yes. In BC, any general partnership that operated under a business name other than the legal names of the individuals must be registered.
This registration:
- Makes the business legally recognized
- Allows you to open a business bank account
- Help with taxation and CRA compliance
- Protects your business name
Failing ot register can lead to penalties and worse, complications with CRA and legal disputes.
How to Register a General Partnership in BC via BRC BC
Registering through BRC BC is simple and streamlined.
Steps:
- Visit the General Partnership Registration Page.
- Complete the Name Request form.
- Fill in the partnership registration details
- Pay the applicable registration fees.
- Receive your confirmation and start operating.
Using a service like us here at BRC BC ensures everything is handled according to BC laws, especially helpful for new business owners unsure of the legal process.
Pros and Cons of General Partnerships
Every business structure has its ups and downs. Here’s a snapshot of what you can expect with a general partnership in BC:
Pros:
- Simple and inexpensive to start: No incorporation paperwork or complex filings.
- Shared workload: More hands on deck can mean more productivity.
- Pass-through taxation: No corporate tax filings; profits flow directly to personal returns.
- Flexible Management: Partners can divide roles however they like.
- Low ongoing compliance: No annual return or formal board meetings required.
Common Myths vs Facts About General Partnerships
Here’s where we bust a few common myths about general partnership in BC. Let’s clear the air.
| Myth | Fact |
|---|---|
| You don’t need to register a partnership in BC | You must register if using a business name |
| Partners are only liable for their own actions | False — all partners are jointly liable |
| You can’t hire employees in a general partnership | You absolutely can hire staff as a GP |
| General partnerships are only for informal businesses | GPs can be serious, legally recognized business entities |
| You pay less tax as a partnership | Not necessarily — your tax depends on personal income brackets |
Knowing the truth helps you avoid expensive mistakes and plan your business with confidence.
This article was prepared by the Business Registration Center BC team, with over 20 years of experience in provincial and federal business registrations. While reviewed for accuracy, the information is general in nature. Feel free to contact us anytime, Tel: 604-449-2000. Business Hours: Mon-Fri, 6 AM - 4 PM (PT). Email: info@brcbc.ca Address: 1248-13351 Commerce Pkwy, Richmond, V6V 2X7.
Final Thoughts
A general partnership is one of the most straightforward ways to start a business with someone else in British Columbia. It’s flexible, cost-effective, and can be a great fit for service-based or small businesses where the owners are hands-on.
But the simplicity comes with responsibilities, especially when it comes to taxes, legal liabilities and partnership dynamics.
As we’ve seen, you’ll need to:
- Register your business with BRC BC.
- Keep clean financial records
- Understand your shared liability
- Pay taxes properly on your personal items.
If you’re looking for an accessible starting point for your business, a general partnership might be the right choice.
Now that you understand what a general partnership is, you can better assess whether this business structure aligns with your goals, level of risk, and long-term plans. Just make sure you’ve thought through the responsibilities that come with it, and get the right help if needed.
FAQs
What is a general partnership?
A general partnership is a business structure where two or more people jointly own and operate a business while sharing profits, losses, and liabilities.
What is a general partnership in BC?
In British Columbia, a general partnership is formed when two or more individuals carry on business together, and it may require registration depending on the business name used.
What is a general partnership vs a sole proprietorship?
A general partnership involves multiple owners sharing responsibility, while a sole proprietorship is owned and operated by one individual.
Do I have to register my general partnership in BC?
Yes, if you’re operating under a name other than your personal name, registration is required under BC law.
How does a general partnership pay taxes in BC?
General partnerships don’t pay corporate tax. Each partner reports their share of the income or loss on their personal tax return.
Can a general partnership hire employees?
Yes, general partnerships can hire staff and must comply with employment laws, including payroll deductions and WorkSafeBC registration.
What are the risks of a general partnership?
The biggest risk is unlimited liability. All partners are personally responsible for debts, legal issues, and obligations incurred by the business.
What’s the difference between a general partnership and a corporation?
A general partnership is not a separate legal entity. A corporation is, which means it limits liability and has more formal tax and filing obligations.
Do general partnerships in BC need a business license?
Depending on your business type and location, yes. You may need a municipal business license even if you’re a registered partnership.
Where can I register a general partnership in BC?
You can register quickly and easily online through the Business Registration Centre BC (BRC BC)
, which provides full support for BC-based businesses.