REGISTERING BUSINESS IN CANADA BY NON-RESIDENTS
Canada is providing great prospects for Non-Residents to start a business with its skilled workforce, access to generous government grants & tax credits and a reasonable cost of living. Non-Residents can also have access to opportunities like venture capital and seed money for your business. Canadian citizens are already reaping the benefits of running a business in Canada. Plenty of options are available for foreign entrepreneurs to do business here, too.
The wealth of resources in Canada makes it simple for any investor or entrepreneur to start a business. Any person across the globe can incorporate and start a company in Canada. It is a leading country categorized as one of the prominent G7 nations. Apart from this, it is also well placed in the ease of doing business index worldwide. You can choose from different business structures depending on your business activity.
Even if you want to start a brand-new business in Canada but you live abroad, you don’t necessarily need to immigrate. In fact, the Investment Canada Act was created specifically to govern non-Canadians who choose to establish a new Canadian business or who acquire control of an existing Canadian business.
There are primarily 2 types of business structures in Canada which are available for Non-Residents. Following are the business structures that Non-Resident entrepreneurs can adopt in Canada:
- Partnership Firm- A partnership is a structure where there is more than one partner. There is no legal recognition for a partnership; however, they are governed by the rules and regulation laid down under the partnership agreement, which includes mainly the sharing of revenues, expenses and tasks etc. You can form a partnership with a Canadian Resident living in Canada while using their address for starting your business in Canada. Three types of partnerships exist in the Canada- General partnership, Limited Partnership and Limited Liability Partnership.
- Canadian Corporation– A corporation is a business entity with a legal status that is independent of its shareholders. As a result, the corporation’s debts, liabilities, and obligations are not the responsibility of its shareholders and only limited to the amount of their shareholding. Business loans can be obtained from different financial institutions quite easily. However, at initial stage a corporation involves elaborate paperwork and hefty sums of money for their incorporation purposes, governance etc. Corporations owned by foreign investors are created through incorporation under the Canadian Business Corporations Act (CBCA) or a similar provincial law.
Most foreign investors choose to conduct business in Canada through a Canadian corporation.
The primary regulatory authority for company registration is Corporation Canada for federal-level company registration, and there are respective province-specific authorities for the provincial registration of a company. The non-resident investor must appoint a local agent to complete the company incorporation procedure in Canada.
You must have a Canadian address to enjoy the tax benefits of having a Canadian controlled private corporation (CCPC). In Canada, you may incorporate federally or provincially. Businesses that are registered federally can operate all across Canada with increased name protection and a different set of annual filing rules.
Both federal and provincial corporations are created by filing articles of incorporation with the appropriate government authorities and paying a required fee. The articles must include details of the rights, restrictions, privileges, and conditions attached to each class of share. Any number of shares of one or more classes can be created; however, at least one class must have full voting rights. The articles of a federally registered corporation must name the first directors and a minimum of 25% of these must be Canadian residents. Forming a corporation at a federal level means you can do business in any province. However, even if you are registered federally, your business needs to be registered as an extra-provincial corporation with each of the different provinces in which you intend to operate.
Corporate legislation of some Canadian provinces does not have any director residency requirement and are sometimes used by foreign businesses in Canada for that reason. Provincial incorporation is often used when a corporation intends to restrict its activities to one province. However, it must be registered separately in each province or territory.
Since each province has their own set of rules, regulations, and fees, the process of registering your business will vary. However, most jurisdictions require a Canadian citizen or physical permanent resident to have at least partial ownership of the company. Ontario allows for 100 per cent foreign national ownership in a corporation.
Company Incorporation in Ontario Canada – Click Here
It is important to know that the Canadian legislation does not impose a minimum share capital when registering a business.
Common Steps to incorporate a Canadian Corporation by Non-Residents:
- having a local address in Canada is mandatory when opening a company in any province or even at a federal level
- preparing the incorporation documents and appointing a specialized agent to submit them with the Trade Register
- reserving a company name, depending on the preferences of the foreign investor opening the business
- obtaining a Canadian tax registration number and registering for GST here if applicable
- obtaining the relevant licenses and permits for offering services or selling goods from the Canadian authorities
Federal Incorporation in Canada – Click Here
Company Name
- Your company’s name should end with Corporation, Incorporated, Limited, Limitée, Corp., Inc., Ltd. or Ltée.
- Your company’s name must be in English, French or have a version in both.
- You may choose to be issued a number, instead of a name, as the company’s legal name, known as a Numbered Corporation.
Canada Non-Resident Company Directors
Only one director is required for your corporation and there are no Canadian residency requirements for directors in British Columbia, New Brunswick, Nova Scotia, Prince Edward Island and Quebec, Ontario. A President and a Secretary must be appointed with no residency requirements for the officers. One person can hold several positions (i.e., be the President, Secretary and the Treasurer)
NUANS – Company Name Search Report
A NUANS – Newly Updated Automated Name Search report is needed for incorporation in Canada. A company name search will be submitted to the provincial government. The report is used to establish the availability of your proposed company name, detailing any existing companies with conflicting names and valid for 90 days only. A separate fee needs to be paid for that report.
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