2. Entity types
Registering your business name (sole proprietorship) or partnership defines your business as a legal entity. The type of entity you create determines who can make business decisions, and who is liable for damages caused by the business:
- Sole Proprietorship
A business owned by a single individual, where there is no legal distinction between the owner and the business, and the owner is personally liable. Note that the registration of business names (sole proprietorships) is set out in the Partnership Act.
A business having more than one owner, in which all owners are liable and jointly manage the business.
- Limited Partnership
A partnership having limited partners who cannot act on behalf of the partnership and usually have limited liability up to the amount invested in the partnership.
- Limited Liability Partnership
A partnership where partners have limited liability similar to that a limited partnership or shareholders of a corporation, but can also directly manage the business.
Unlike many jurisdictions, the creation of limited liability partnerships is not restricted to members of a regulated profession. If you are a member of a profession set out in the regulations to the Partnership and Business Names Act, your profession's governing body must provide authorization to form a limited liability partnership.