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Canada is one of the best places to start or expand your business. It becomes significantly easier to maintain business relations with the US than with other countries due to Canada’s geographic location. While startup Canada is a lucrative option, multiple modes are there for starting a business in Canada for foreigners like sole-proprietorship, partnership, co-operative societies, etc., with corporations being a preferred choice for most business holders. Let’s understand the procedural aspects of starting a business in Canada.
If you are looking for starting a business in Canada, then it can be done in the following two ways:
Below is the procedure for starting a business in Canada:
Before proceeding with incorporation, you need to finalize the name of your corporation. Name search becomes mandatory to ensure that your desired business name is available and not identical to an already registered corporation. NUANS search report is required to be generated which will assist in the further incorporation process.
Canada offers flexibility when determining your name. Your corporation can either have a:
While a numbered name is easily assigned, a different name can also be used to run businesses across the country.
Having a physical office address is mandatory for company formation in Canada. This will be the communication address for all the official documents and the place where all your corporate records will be kept.
A signed article of Association needs to be submitted by the applicant. If the applicant incorporating the company is a company itself, then the articles can be signed by an individual authorized by the company. Articles can be filed through Online Filing Center or Complete Form 1 by providing the company name, territory or province in Canada, restriction on transfer of share, share structure, number of directors, etc. The articles can be either in English or French language or both.
Company Incorporation in Canada requires you to decide whether you want to create a provincial company or a federal company. Two criteria that differentiate these two types of registration are:
While it is paramount that the name must not be identical or similar to an already existing name, federal incorporation provides more protection to ensure that your corporate name is not used by any other company by conducting an extensive search. The provincial incorporation also conducts an extensive search within the province of incorporation while the search in other provinces may be less strict. Thus, a name similar to your corporate name may be allotted to a company in another province.
While it also implies that getting the name of your choice is easier in provincial incorporation than in federal incorporation, due consideration should be given to the level of protection you require for your corporate name as well.
The cost of federal incorporation is higher than provincial incorporation primarily because federal incorporation requires you to do extra-provincial registrations for each province from where you wish to conduct your business. However, it allows you to do business across Canada, unlike provincial incorporation where you can conduct business from that province only. Another requirement of Federal incorporation is to ensure annual compliances and filings with the Director of Corporations as well as additional provincial filings if required. This increases the cost of annual compliances for the company.
In case your turnover exceeds $ 30,000 (CAD) over 4 consecutive calendar quarters, then you are required to undertake GST/HST registration in Canada as well. Even if the limit is not exceeded, you can still opt for voluntary registration if you make taxable supplies in Canada.
Holding a visa is the primary requirement for company incorporation in Canada. These two visas will facilitate you for starting a business in Canada:
1) Business Visa: Business Visa allows you to:
A business visa is valid for 6 months period.
2) Start-up Visa Program: This program was initiated to encourage immigrants for company formation in Canada. However, it lays specific requirements for shareholding and ownership for startups. Eligibility criteria for this visa include:
Permanent Residence eligibility for Canada involves a point-based criterion evaluated upon 6 parameters viz., age, language proficiency, education, work experience, adaptability, and employment arrangement. The applicant must score a minimum of 67 points out of 100 to become eligible for permanent resident.
Legally, to keep the permanent residence status, you must be in Canada for at least 730 days during the last 5 years. Permanent Residence opens the doors for Canadian citizenship in the future, freedom to live, study and work anywhere in Canada, participation in Canadian politics as well as social benefits and protection under the various Canadian laws.
Bottom Line
Canada offers great opportunities for businesses and is not behind some of the major economies in terms of ease of doing business. Having friendly relations with the US and shared geography, being its immediate neighbor, gives a strategic advantage for companies looking to benefit from the US markets as well. It’s the right time for starting up a business in Canada or to expand and flourish your existing business in the Canadian Market.
In case of any assistance feel free to contact ASC Group.
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