The most common type of company in Canada is Limited Company.
Limited Liability –limitation of liability for company debts applies in full extent to the Ltd. Limited company issues shares to its shareholders.
Taxation – expense and income is subject to tax on the company level. If the remaining aftertax income is paid out to the shareholders, then it might be subject to second level taxation on the level of shareholders at dividend tax rate if such tax applies.
– the income and expenses are split to two groups of partners. The income and expense passed to first group is taxed only on the level of partners. The income and expense passed to second group is taxed on the level of company and if subsequently distributed it might be subject to dividend tax.
Limited Liability – all partners enjoy full insulation from debts of the company.
The Limited Partnership has two types of partners – unlimited partners and limited partners.
Taxation – the taxation of the company and partners has two prongs. Under first prong the income is passed to the partners and they include it into their tax return. Under second prong, there are two levels of taxation, first the company includes the income into its tax return and then if paid out to partners, the partners might be required to include the distributed income into their tax return as dividends.
Limited Liability – there are two prongs of liability applicable to partners. Under first prong, the limited partners who might subject to two tier taxation are not liable for the debts of the company. Under second prong the unlimited partners who receive pass through taxation treatment are liable for all debts of the company with all its assets.
General Partnership or Partnership.
Taxation – the income and expenses are passed through to partners and are taxed only once their level.
Limited Liability – all partners of the GP are fully liable for debts to suppliers and payable tax of the company.