Partnerships & sole proprietorships... at the same time?
By John R Mott | February 19, 2012
I am currently running a sole proprietor business under my name, selling craft supplies, books, handmade jewelry, etc. I would now like to register a business with a partner selling jewelry which we will import. Can I register the new business and still keep the old business, or do I need to close it? Or can I just add my partner to the old business and register a name? I have tried to find the answer on the Service Ontario site, but confused as to the proper procedure.
John R Mott answered:
It is certainly possible for you to own and operate one business as a sole proprietor and also be a partner in a separate business.You would register a new business name at the Ontario business registration website and select "partnership" when asked for the type of organization.
Your partnership should have its own GST/HST number, its own bank account and should maintain a separate set of books.
Most importantly, you and your partner should have a written agreement that addresses critical issues such as how decisions are made, how functional responsibilities are divided, how profits are apportioned and distributed, how to handle the withdrawal of a partner, among others.
In your specific case, I foresee the possibility for overlap and conflict between your businesses. To avoid future problems with your business partner, there should be a clear understanding shared by both of you as to what products and channels are the domain of your proprietorship, on the one hand, and the partnership, on the other. You should organize and promote your businesses so that there is nopossibility for confusion among your suppliers, customers and other stakeholders as to which business they are dealing with. And finally, there should be a clear understanding with your partner as to the time and resources that you are realistically able to devote to the partnership (vis-a-vis your existing business). This is the voice of experience speaking.
Best wishes for your new venture!