I'm looking to register a business name in Canada, however looking at the Revenue Canada web site I believe my only options are to register as either:
Sole Proprietorship : Downside here being that there is no liability protection for my personal assets
Corporation : Downside being the crazy documentation requirements
All the startup podcasts I listen to talk about this thing called and LLC, or Limited Liability Company which basically provides the personal asset protection of a Corporation without the crazy documentation.
Is there something similar to an LLC available to Canadian startups?
Canada does have a Limited Partnership - which is not restricted to only attorneys and accountants (Mark: I'm not sure where that fits into your scheme listed.). However, that will likely not work for you as the limitation of liability regards the involvement in the business (for example, as a Limited Partner, you can invest money, but not participate in day-to-day operations). That said, things do vary from province to province (welcome to a confederation, not a union).
Going the incorporated route, in my experience, it's not hard to find someone who will handle the filing of papers (incorporation, minute books, etc.) as well as year-end taxes for a very reasonable price. (A reasonable price if you are planning on making money.) If you are in the Alberta area, I'm happy to recommend someone.
<disclaimer>And, of course, all of the above being stated: I am not a lawyer, nor am I offering legal advice.</disclaimer>
Jeffery is right - there is a limited liability partnership in Canada, but you have to look at your options on a province by province basis.
The documentation for an incorporated company really isn't that bad, especially if there are a limited number of shareholder / owners.
One thing to consider is the cost of switching from a a sole prop / partnership to a corporation as your business grows. That is something we did and it cost much more - and added much more paperwork - to change incorporate once the business was underway.
With that being said, there can be tax advantages to starting as a sole proprietorship/partnership at first, because you are the business, so if you have losses (very common) in the first couple of years you can use this to reduce taxable income from other sources.
Also, being incorporated may give you access to certain government tax credit programs that you might otherwise have difficulty accessing as a sole prop / partnership. (For example, the Ontario New Media Digital Tax Credit, which has up to $100,000 in tax credits available for qualifying content development and marketing activities, is only available to Ontario corporations.)
Clearly, there are a number of factors to consider. In the long term it really helps to look at both the tax and legal implications for your situation and decide on that basis. But if you are leaning towards incorporating at this point, don't let the inital costs / paperwork scare you away.
Generally speaking, Canada does not have a business arrangement comparable to a US LLC. There is a Limited Liability Partnership, but this is only for professionals such as attorneys and accountants.
The main forms of business in Canada are sole proprietorships, partnerships, and corporations. Corporations -- "limited companies" -- are the only general-use form of business that carries limited liability benefits.
(There is also the concept of a "cooperative" but this again is not of general utility; these are agricultural, artisan, health-care co-ops and the like).
So if you're doing a Canadian start-up it's sole proprietorship, partnership, or a full corporation.
EDIT: The other folks answering this question have mentioned a "Limited Partnership" which I did not list. Note that this is not, actually, a "Limited Liability Partnership" and really very different concepts. A Limited Liability Parntnership is indeed restricted to professional associations such as legal and accounting firms.
In a "Limited Partnership", it is the partners themselves that are limited. That is, they may not participate in business operations. See http://en.wikipedia.org/wiki/Limited_partnership for a general discussion of what this means.
Although the limited partners' liability is indeed limited to the amount of their investment. This is not the equivalent to an LLC -- the US has Limited Partnerships as well.
My apologies for the omission -- I left it out since it's not applicable to the question of whether there is a Canadian equivalent of an LLC, but I see I may have confused the matter.
I am a Canadian operating a Limited Partnership for the purposes of holding real estate assets. The LP structure used to be limited to accountants and lawyers but the government relaxed their requirement and is now available to anyone who desires to use the LP structure. To hold real estate, you need a HOLDCO as real estate can only be owned by an ENTITY (a person or a corporation). This HOLDCO is considered a flow-through entity (also known as a Bare Estate Trustee Ltd). The structure is designed so that monies flow through the HOLDCO to the individual partners in the LP and this money is then taxed at their personal marginal tax rate. This structure eliminates double-taxation of monies (taxation at the corporate level, then taxation again at the personal level). The partners receive a T5013 at year end from our Chartered Accountant to claim their income on their tax return. I use the LP structure because it limits the liability of the partners to their capital contribution. The General Partner or Managing Partner assumes unlimited liability. In Canada, we do not have non-recourse mortgages like in the U.S. You cannot walk away if you default without incurring severe financial consequences which makes us very conservative and prudent in our fiscal operations. At year end, our bookkeeper forwards the Simply Accounting records to our Chartered Accountant, who then prepare A Notice To Reader Financial Statement which gets attached to our T1 Corporate Tax Return along with the T5013.
Unfortunately, not all Chartered Accountants are equal. Be sure to retain a C.A. who has experience in real estate (if real estate is your plan).
As for LLC's, the Canadian government used to treat this entity as a Corporation because of the word "Corporation" in LLC, up until last year. This made it very yucky for Canadians invested in LLC's in the United States because they were double-taxed. The Canadian government now recognizes that U.S. LLC's operate much like Canadian LP's and now treat it as flow-throughs.
My caveat: I am commenting based on my experience as a real estate investor and business owner. I am not giving legal advice nor accounting advice.