Guide to the British Columbia LLP
Canada is rarely, if ever, associated with tax optimization. That is despite many of its entities offering some of the best tax benefits anywhere in the world. In this guide, I provide an overview of one such entity, the British Columbia LLP. I also explain how to register one and how to handle compliance.
Simon @ FS / Vancouver, British Columbia
Overview
Canada is a large country, the world’s second largest. It is divided into ten provinces and three federal territories. A province, in the Canadian context, is for all intent and purposes an independent country. Each runs its own education system, health care system, taxation system, police force, law code and in some cases, immigration system. British Columbia is the subject of our focus today, and more specifically its Limited Liability Partnership (LLP) structure.
The British Columbia LLP is, as its name implies, a partnership. This means that it must have at least two owners (partners). The partners can be natural persons, legal entities or a mix of both. There are no residency requirements for any of the partners.
The British Columbia LLP is a pass-through entity for tax purposes. This means that it is not a taxable entity. Instead, the partners must include their share of the profits (or losses) on their own tax returns, in their countries of residence (personal or corporate).
While a British Columbia LLP can conduct business in Canada, doing so will usually create a filing and tax liability in Canada for the partners. Selling services and products to Canadian customers from abroad, however, will not usually be deemed as conducting business in Canada and as such, will not usually create a Canadian filing and tax liability besides sales tax (if applicable).
Regardless of tax liabilities, an annual report must be filed with the British Columbia registry, every year, along with a 35 CAD payment (the report merely confirms that all company information is still accurate, it is not a financial filing).
Opening a business bank account in Canada for a Canadian-registered entity is fairly easy. A personal visit is required (for non-residents) but that is usually it (no minimum balance, letter of reference etc). Canadian residents can open an account online in minutes provided that they have a valid social insurance number (SIN). A chequing account can be opened in Canadian dollar and / or US dollar. Savings accounts can be opened in most other major currencies. Most Canadian accounts come with a debit card (usually a mix of Visa / Mastercard and Interac) that can be used worldwide (including online). In exchange for a security deposit (for non-residents), a credit card can also be issued (including USD credit cards). A British Columbia LLP can also open accounts with the likes of Wise, Airwallex and Currenxie remotely, and these services are in fact a great standalone solution if no traditional bank account is needed.
As for payment processing, a British Columbia LLP can use services like Stripe and PayPal. Do note that Stripe supports settlements in both CAD and USD.
In the event where a British Columbia LLP is no longer needed, it can be dissolved in a matter of days, free of charge, by filing a notice with the provincial registry.
Registration
While it is possible to register a corporation in British Columbia online, it is not possible to do so with an LLP. You have the option to either show up in person at a BC Services office, file via postal mail or use the services of a third party service provider.
If you decide to go in person or to file via postal mail, you will first have to apply for a name reservation certificate. You can do so via this page. Once you receive the name reservation certificate (this takes 1-2 days via the priority channel, or several days to several weeks via the regular channel), fill in form 1 and take it with you to a BC Services office or mail it to the address listed on the instructions page. If you go in person, you will be able to pay the registration fee (275 CAD) using a credit / debit card while if you file via postal mail you will have to pay via cheque or money order.
Before you can file form 1, however, you will need a British Columbia address, to act as both the registered and correspondence address for your LLP. You can get one via a service such as AnytimeMailbox.
If you require a BN (federal tax ID), for example, to use Stripe, you can apply for one by faxing the CRA (federal tax authorities) a correctly filled RC1 form.
If you decide to use the services of a third party service provider, the entire process can be completed remotely and all fees can be paid for using a credit / debit card. As a side benefit, your name will not be listed on form 1 (as you will not be the person filing the form), protecting your privacy. FS offers a competitive BC LLP registration service, you can learn more about it here.
