Entrepreneurs who want to explore foreign markets often look to Canada – one of the most economically developed countries in the world with favorable conditions for successful business activities. Its proximity to the US allows it to maintain close ties to the powerful American market, which, combined with an abundance of skilled labor and other advantages, attracts many large foreign entrepreneurs and investors.

 

If you are also interested in becoming an active participant in the local business environment, then registering a company in Canada is a logical step. It is better to approach this task with the support of professionals who are familiar with all the legal requirements, nuances and pitfalls of the registration process. In the Lawyers Association Lawrange you will provide professional assistance in preparing for the registration of the company and support at all stages. This will make it much easier to overcome bureaucratic delays, significantly save time and minimize your worries.

 

About Canada

This large federated country of 35 million people ranks among the leaders in per capita income, among the top 10 largest trading nations, and tops in rankings of economic freedom. It is a member of:

 

  • Organization for Economic Cooperation and Development (OECD).
  • G8 (G8).
  • NATO.
  • WTO.
  • Organisation internationale de la Francophonie
  • OAS.
  • APEC.
  • UNITED NATIONS.

 

Such Canadian cities as Ottawa, Vancouver, Quebec, Toronto, etc. are the places where business activity is concentrated. The country is characterized by the prevalence of the common law system (with the exception of the province of Quebec), effective protection of personal freedom of citizens, investments, real estate and intellectual property. At the same time, the manifestations of bureaucracy are minimal.

 

Canada is known for its rich natural resources (oil, gas, timber, minerals), which attracts companies working in the field of ecology, energy and mining. Many people have heard about the high Canadian standard of living – by this indicator the country is also a leader. The latter fact is the reason why highly qualified specialists from different parts of the world move here.

 

Advantages of registering a company in Canada

By starting your own business in this jurisdiction, you can benefit from good tax conditions and Canada’s high reputation (few people will want to question the legitimacy of Canadian business). The geographical location also provides another advantage in the form of close trade links with the USA, where one of the largest markets in the world is located. This gives you not only a well-developed logistics network, but also almost half a billion consumers at your disposal. Even the time zones are well suited to trading on US quotes.

 

Stable economy

Registering a business in Canada will not lead to ruin due to negative economic phenomena – they are not known to the Canadian economy, which is among the top 10 countries in the world in terms of macroeconomic indicators. The size of GDP exceeds $2 billion, and at the same time it represents 1.49% of the world economy. Canada is characterised by the greatest economic stability among the other members of the G7 commonwealth. The stability and sophistication of the Canadian economy plays a major role for companies operating here, as it allows them to take full advantage of the vast consumer base and diverse resources.

 

A comfortable business environment

Starting a firm in Canada is as easy as doing business later on. Especially the Canadian government facilitates the existence of young projects, applying a low corporate tax rate of 15% of income. All kinds of government loans, grants and other favourable ways of financing businesses are available to entrepreneurs. This is complemented by support for startups through the FedDev Ontario and Industrial Research Assistance programmes. The Start-up Visa programme makes it easier for foreign entrepreneurs to start a business in Canada.

 

Possibility of remote registration

Registering a company in Canada remotely makes it much easier to start your own business. This is especially true for investors who want to expand their business and develop new markets, but who want to manage their own business from abroad. Saving time and financial costs in this case becomes obvious.

 

A well-established legal system

Canada’s legal system is based on a common law system similar to that of the UK and the US. Compliance with local law is mandatory for every business or individual, and no one questions the fairness of the law. By establishing a business here, you can rest assured that your rights, as well as your responsibilities, will be upheld to the highest standards.

 

Developed banking system

Canada’s banking system is characterised by reliability, convenience and sophistication. The bank with which you cooperate has virtually no chance of bankruptcy or reorganisation. Entrepreneurs can use a personal cabinet and carry out all necessary operations without phone calls and visits to the bank. The main link in the Canadian banking system is commercial institutions, which play a major role in lending to industrial, commercial and other sectors of the economy.

 

Multilingual skilled labour

The World Economic Forum has deservedly ranked Canada’s labour force as the second best in the world. This confirms the fact that Canada has a huge concentration of highly educated and competitive professionals. According to this indicator, the jurisdiction ranks 10th, ahead of even the United States, which is in 16th place. Canada in every possible way favours the attraction of highly qualified personnel from all over the world. First of all, it is implemented through the Federal Skilled Worker (FSWP) programme.

 

Types of companies

In Canada, you can open one of several types of companies. Each type of company has a different authorised capital. It should be taken into account that:

 

  • For partnerships, the starting amount is determined by the shares of each partner.
  • Opening a company in Canada as a corporation requires a paid-up share capital or a declared share capital account.
  • When registering a foreign entity, the amount is determined by the parent company.

 

Nuances of setting up partnerships

A partnership in Canada is a business whose owners work together to make a profit. This legal form of organisation does not require registration as a legal entity.

 

Partnerships can be:

 

  • General Partnership – each of the participants is fully liable for the debts and obligations of the company, that is, their personal assets are used without any restrictions to meet the debts of the firm. Losses and income are equally distributed among the members of the company (unless otherwise specified in the charter).
  • Limited Partnership – LPs are regulated by the 1990 Act. They have the ability to open a bank account and enter into transactions in relation to the services provided or the sale of goods. There is a requirement to appoint one general partner and one limited partner (or one person may hold these positions). No audit or filing of a return is required.
  • Limited Liability Partnership – the partners are not financially liable for the debts of the business. Registration of a business (firm) in Canada in such a legal form provides for mandatory maintenance of tax and accounting records, timely filing of reports. Most Canadian provinces allow the organisation of LLP only in the field of law, accounting, architecture and medicine. Regulation of such partnerships occurs at the level of provincial legislation, meaning that the obligation and level of protection provided differs from place to place in Canada.

 

Setting up a corporation

There are several types of corporations:

 

  • Canadian-controlled private corporation – controlled from within Canada. This means that 100% non-residents or public companies will not be able to form it.
  • Other Private Corporation – like the previous type, it is formed mainly with the participation of residents. There can be no private companies in its structure.
  • Public corporation – provides for the possibility to freely place shares of a public corporation on stock exchanges.
  • Extra-provincial corporation – registration of a corporation in Canada of this type is popular among non-residents, as there are no requirements to the citizenship of the owners. EPCs do not pay tax on profits earned in other countries.

 

Also in Canada it is possible to register a sole proprietorship, where all risks and responsibilities lie with the individual; a co-operative, which is managed by its members with limited liability, etc. However, it should be noted that the most common are partnerships and corporations.

 

How a company is incorporated in Canada by a non-resident

If we consider this process from a technical point of view, it is worth noting its comparative simplicity and convenience. It takes place in the presence of the necessary package of documents and full compliance of the applicant with the requirements of the Regulator of a particular province. To register a company, you need to pay the state duty, wait for a favourable verdict and receive the documents that will confirm the fact of registration.

 

Determining the name of the future company

Registration of a company in Canada begins with the selection and verification of the name. It is unacceptable that it coincides with any other name. It is necessary to prepare several names in order of preference in case one of them is already occupied. The name of the company can be in English, French or a combination of words from both languages. The name information (as well as all other data) is provided on the Government of Canada’s website. The registration authority will check the name in accordance with the rules.

 

Preparing and filing documents

To register a company in Canada, it is necessary to provide forms and documents that reflect real information about the legal entity, its structure, activities, owners. For this purpose it is necessary to:

 

  • Prepare copies of passports of each owner of the company.
  • Develop, notarise the Charter, business plan.
  • Sign the founding documents and approve the structure of the company.
  • Specify the legal and physical address and contact information.

 

If the business is conducted at different addresses, the provincial and territorial addresses should be indicated in the application form.

 

Waiting for notification of registration

Once the documents have been submitted, you must pay the state fees, which vary depending on the province and type of company. If the application is approved, the entrepreneur receives a notice of incorporation and is assigned a business or corporation number (BN), which will be used to identify the company to federal and provincial authorities. This number is also needed to communicate with the tax authority.

 

Obtaining a licence

Depending on the planned business activity, an entrepreneur may need to obtain a licence from various levels of government organisations. For example, medium and small businesses are often faced with the need for a licence:

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  • A general business licence to operate a business in a city or province (General business licence).
  • A Sales tax permit for sales that are made online (Sales tax permit).
  • Licence to work with food products (Health permits), etc.

 

Basic requirements for opening a company in Canada

To successfully register a business in Canada, entrepreneurs must meet the basic requirements of local legislation.

 

Number of directors and shareholders

In most Canadian provinces, a company must be headed by at least one director. At the same time, the establishment of federal corporations and corporations in some provinces will require the appointment of at least three directors. As for shareholders, their number is not limited. Moreover, one person may combine the position of sole director and shareholder.

 

Residency issue

Depends on the province or city where the company will be incorporated. For example, some federal level corporations must be headed by at least 25% of directors with Canadian residency. If there are less than 4 directors, one of them must be a Canadian citizen. There are no citizenship requirements for shareholders. In some provinces, a company may use specialised agencies to meet residency requirements.

 

Filing financial statements and paying taxes

Companies should pay income taxes and fulfil other tax obligations stipulated by law. It is also necessary to prepare and file tax reports and use accounting services on a regular basis.

 

The annual report is filed within the first six months from the end of the accounting period (starts when the company is incorporated and lasts 12 months). The need for an accounting audit is waived for companies whose authorised capital is less than CAD 5 million. In addition, LP companies are exempt from annual financial statements, which makes doing business much easier.

 

Popular destinations for registering a business (firm) in Canada

In this country, foreign entrepreneurs can take advantage of extensive opportunities for business growth and scaling in various industries, among which the IT, healthcare, finance, international trade, and manufacturing sectors are very popular.

 

Technology Industry

It is advantageous for a non-resident to open a firm in Canada to work in the IT sector. The Canadian technology industry is among the strongest in the world. Your company can work in the sector of:

 

  • Cybersecurity.
  • Cloud services.
  • Artificial intelligence.
  • Robotics.
  • AR/VR technologies.

 

It is these sectors that are currently experiencing the greatest surge in activity.

 

Financial and technical activities

The Canadian government has a strong focus on the development of the fintech industry. This is exemplified by the application of, for example:

 

  • Tax incentive for companies that work in scientific and experimental financial development.
  • Industrial research assistance programmes (grants cover up to 75% of the cost of projects).

 

Toronto is considered one of the best fintech cities in the world (12th place out of 230). Vancouver, Montreal, Calgary, and Ottawa are also in the top 100 of this list. Canada, along with the US, UK and Japan, has been actively exploring the cryptocurrency industry for more than 10 years. In this country there is a concentration of highly educated labour force and innovative technologies. In addition, the development of fintech is favoured by a well-thought-out and, at the same time, transparent regulatory framework. For this reason, more and more large investors are seeking to launch fintech startups in Canada.

 

Working with e-commerce

Canada is the 9th largest e-commerce market. At the moment, it is noted for its high development and close integration of Canadian e-commerce with the US infrastructure. Favourable immigration laws and a large concentration of highly skilled professionals encourage the active opening of e-commerce companies.

 

Why choose Lawrange

Registering a company in Canada on your own is extremely difficult for a number of reasons, including a lack of specialist knowledge, language support and an unwillingness to overcome certain bureaucratic delays. Our Attorney`s Association provides a full range of services to help you open a company in Canada quickly and easily. We can help you:

 

  • Select a suitable jurisdiction in Canada and the legal form.
  • Prepare a package of necessary documents.
  • Fulfil the requirements for company registration.
  • Avoid all kinds of errors at any of the registration stages and the associated delay in the registration of the business.

 

These services, as well as translation of documents, business correspondence and in general comprehensive support of the registration process can be ordered from AA Lawrange.

 

Conclusions

Canada is considered a promising location to launch a startup or expand an existing business. Foreign entrepreneurs and investors can take benefit of the many advantages of this jurisdiction, including a stable economy, access to a large market, a wide range of skilled labour, etc. Despite the fact that registration of a company here is considered a relatively simple and transparent procedure, it is almost impossible to cope with it without the help of professionals. In order to avoid unnecessary mistakes when registering a legal entity in Canada, we recommend using the services of AA Lawrange.

 

FAQ

How long does it take to register a business in Canada?

On average, it may take about 3-4 weeks to register a company (from the time of filing an application with the registration authority).

 

What are the difficulties in registering and doing business in Canada?

  • Bureaucratic procedures.
  • High level of competition.
  • Differences in the legal regulations of the provinces.

 

What requirements do Canadian banks have for opening a corporate account?

A package of documents is required from the applicant, which, among other things, includes the memorandum of association, certificate of incorporation of the company, identification document, identification data of all shareholders holding at least 25% of shares. There are no residency requirements for Canadian banks. Some banking institutions may request the personal presence of the owner of the company.

 
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