If you and your friend have a brilliant business idea, and you want to team up to make it happen? That’s awesome! Starting a business with a partner can be exciting and rewarding. If you’re in Prince Edward Island and thinking about joining forces with someone else, a general partnership might be exactly what you need.
In this guide, we’ll walk you through everything you need to know about registering a general partnership in PEI. Don’t worry – it’s not as complicated as it sounds! We’ll break it down into simple steps that anyone can follow.
What is a General Partnership in PEI?
A general partnership is when two or more people decide to run a business together and share the profits, losses, and responsibilities. Think of it like this: you and your best friend decide to start a lawn-mowing business together. You both own the business equally, make decisions together, and split whatever money you make.
Why Choose a General Partnership?
Here are some reasons why people choose general partnerships:
- Easy to set up: It’s one of the simplest business structures
- Shared responsibilities: You don’t have to do everything alone
- Shared costs: You can split the expenses with your partner(s)
- Combined skills: Your partner might be good at things you’re not, and vice versa
- Less paperwork: Compared to corporations, there’s much less red tape
If you are still choosing between partnership and incorporation, let’s compare these two:
PEI General Partnership vs PEI Corporation
| Feature | General Partnership (PEI) | Corporation (PEI) |
|---|---|---|
| Legal Status | Not a separate legal entity – partners are personally responsible for debts | Separate legal entity – the corporation is responsible for its own debts |
| Liability | Unlimited liability – partners’ personal assets can be used to cover business debts | Limited liability – shareholders are only liable up to the amount they invested |
| Ownership | Two or more partners share ownership and responsibilities | Owned by shareholders, managed by directors and officers |
| Setup Cost | Low – registration fee is around $200 (provincial) | Higher – incorporation fee is about $500 provincially, federal option available |
| Annual Requirements | Annual renewal with PEI Corporate Registry | Annual return filing with PEI Corporate Registry, corporate records maintenance |
| Taxes | Business income is reported on partners’ personal tax returns | Corporation pays corporate tax; shareholders pay tax on dividends |
| Funding Options | Limited – mostly partners’ contributions or small loans | Easier to raise funds by selling shares or attracting investors |
| Management | Flexible – partners decide on operations together | Structured – board of directors and officers manage the business |
| Business Continuity | Ends if a partner leaves or dies unless an agreement states otherwise | Continuous existence – unaffected by changes in shareholders or directors |
| Best For | Small businesses, freelancers, family businesses, service providers | Growing businesses, startups seeking investors, or businesses needing liability protection |
Step-by-Step: How to Register Your General Partnership in PEI
Step 1: Select Your Partnership Name
Your partnership can operate under your names (like “Smith and Johnson”) or a cool business name (like “The Soap Squad”).
Pro tip: If you’re using a business name that’s different from your actual names, you’ll need to register it. Make sure your name isn’t already taken by checking PEI business name registry.
Name Rules to Know:
- Cannot be similar to already registered business
- Not allowed to mislead or offense (no “Definitely Not a Front for Something Sketchy LLC”)
- Can’t use the incorporation legal elements in the name (no “Inc.” or “Ltd.”)
Step 2: Conduct a Name Search
Before you get too attached to “Synergy Solutions Supreme,” verify if it is available. Nuans Canada Online Service allows you a search for business names that exist.
Cost: Approximately $30 for a search for a name. Worth it to avoid having to rebrand before you even start. To register a general partnership in PEI, the PEI NUANS name report will be required. Get it from a trusted service provider like Nuans Canada Online or Canada Incorporation Agency. The report will reserve your name for 90 days. During this time you can proceed with the registration.
Step 3: Create a Partnership Agreement PEI
A partnership agreement PEI is basically your friendship contract. While PEI doesn’t legally require you to have a written agreement, NOT having one is like going on a road trip without a map – you might get there, but it’ll be way more stressful.
Your partnership agreement should cover:
- Who owns what percentage – Are you splitting things 50/50? 60/40?
- Who does what – Maybe Sarah handles marketing while Tom manages finances
- How profits get divided – This might be different from ownership percentages
- What happens if someone wants out – Always plan for the “what ifs”
- How decisions get made – Voting? Consensus? Rock-paper-scissors?
Think of this agreement as your business prenup. It might seem awkward to discuss now, but future you will be SO grateful.
Step 4: Register Your Partnership
Online Filing (the modern way):
- Go to Canada Incorporation Agency website
- Create an account (if you don’t have one)
- Complete the online registration form
- Pay the fee with a credit card
- Boom, you’re done! Our filing agent will contact you to confirm all the provided information and will register your PEI partnership within the chosen queue.
Step 5: Fill Out the Registration Form
The registration form asks for pretty basic info:
- Partnership name (if you’re using one)
- Business address (not a P.O. box—they want a real location)
- Nature of business (what you actually do)
- Partners’ names and addresses
- Date the partnership started
- If it’s a limited duration partnership, when it ends
Nothing too scary. Just be accurate because corrections are annoying.
Step 6: Get Your Business Licenses
According to what you’re doing and where, you may need extra licences:
- Municipal business license – Most cities need this
- Professional licences – If you are in a licensed profession
- Industry-Related permits – Restaurants, buildings, etc.
Step 7: Get a Business Number (BN) from the CRA
Head to the Canada Revenue Agency and register for a Business Number. You’ll need this for:
- GST/HST account (if your revenue is over $30,000)
- Payroll accounts (if you’re hiring employees)
- Import/export accounts (if applicable)
This can be done online through the Canada Incorporation Agency service.
Step 8: Open a Business Bank Account
Keep your business finances separate from your personal stuff. Future You (and your accountant) will thank you.
Most banks will want:
- Your partnership registration
- Your partnership agreement
- ID for all partners
- Your Business Number
Frequently Asked Questions about PEI General Partnership
How long does it take to register a general partnership in PEI?
If you register online, it will generally take a few days. In-person registration could be done the same day, depending on how busy the office is.
Can I form a general partnership by myself?
No, a general partnership requires at least two individuals. You would be a sole proprietorship if you wish to open a business by yourself.
How is a limited liability partnership different from the previous two?
In a general partnership, all the partners are equally in control and liable. In a limited partnership, the limited partnerships have general partners (they control the business and have total liability) and limited partners (they contribute money, but have limited liability and limited control).
Do I need to hire a lawyer to form a general ?
No, you will not require a lawyer for general partnership registration. However, to do everything right, we advise to use a trusted service provider like Canada Incorporation Agency.
Can I change my partnership name later?
Yes, but then you would have to register the new name and pay again the registration fee. It’s best that you choose wisely from the beginning!
What if there is a dispute between me and my partner?
This is why having a partnership agreement is crucial! Your agreement must specify how you will solve conflicts. If you cannot solve it on your own, you may need mediation or a legal intervention.
Can I have more partners later?
Yes, you can bring in partners to your partnership, but you have to renew your registration with the new partner’s details.
Conclusion
Starting a general partnership in PEI entrepreneurs doesn’t have to be scary or complicated. With the right preparation, a solid agreement, and open communication with your partner(s), you’re setting yourself up for success. And if you ever get overwhelmed, contact the Canada Incorporation Agency, visit our website or give us a call at 647-945-8893, and we will help to clarify all the information about general partnership registration in PEI.
