Whether you’re expanding your business into North America or wanting to capitalise on the low corporation tax rate and trade agreements, Canada is a great place to set up your business.
Nonetheless, registering for a company in Canada can be challenging for many, especially if you’re a first-timer setting up an overseas company, or simply just not familiar with the incorporation process.
First things first. Ensure you have a business bank account. It allows you to track your business expenses, and keep clear records just in case a revenue agency audits your business.
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This article at a glance
Whether you’re registering a limited company as a non-resident in Canada or a large corporation seeking to expand, there are some things you need to know before you dive into trading in Canada. In this article, we bring you through how to register a business in Canada, how long it takes, and how much it could potentially cost you.
The registration process might differ depending on the province or territory in which you plan to set up your business. It’s advisable to do your research on the laws of your exact province and ensure that you meet the specific requirements. Here’s a general step-by-step guide on how to register your business in Canada.
It’s best to select a business structure that best supports your business goals. Note that there might be a different tax law for each type of structure. Here are the three main types of legal structures for a business:
This is the easiest structure to set up, which is also why most new and smaller businesses prefer it. Put simply, you are personally liable for all debts that the business may go into. Your business’s financial details have to be listed in a separate section of the personal income tax form.
A partnership is somewhat like a proprietorship, but instead of having just one proprietor, there are two or more. This means that you have other partners who own a piece of the business together with you. Being in a partnership means that you need a contractual agreement that lists out each partner’s (in percentage) share in revenue, expenses and tasks. This percentage should be applied when filing their taxes as well.
The most complicated structure out of the three, a corporation involves the incorporation of a business, where a separate legal entity owned by its shareholders is formed. If you’re an owner of the corporation, you’re usually paid a salary like your employees.
Your company name represents your company, and choosing the right name is a daunting yet important process. If you are operating under a sole proprietorship, you do not necessarily have to register a business name. You can operate under your name. However, if you add any words to your name (e.g., Linda Mallory Construction), you will have to register that name.
What does your business need to legally operate in a country? Do you need a permit, a registration, or pay for a licence? A business licence is an official document issued by the Canadian government that allows you to run your business within Canada. There are different licensing requirements at a federal, provincial, territorial and municipal level.
If you don’t apply for the proper licences for your business, you could get into serious legal trouble. Your business may face a fine or even be forced to close. Below are five types of licences, permits and registrations you might come across.
As mentioned earlier, there might be different permits depending on your territory. A foolproof way to ensure you have all the required permits is to check with the government directly.
If you’re incorporating a small business, basic incorporation may be sufficient. Basic incorporation includes:
You can also choose to customise your articles of incorporation. Most merchants who choose to customise will specify the following:
Articles of incorporation can be in English, French, or both or use both English and French equally.
Your business must have a registered office address and a board of directors. It’s important to ensure that you provide an address that is real, as official documents will be sent to that address.
Furthermore, if there is a board of directors in your company, you must disclose every director’s first name, last name, and address, and indicate if they are a resident Canadian.
It’s essential to open a separate corporate bank account to track business expenses and transactions. International merchants benefit greatly from multi-currency accounts that allow you to hold different currencies in one place.
There’s a fee to register your company, and also for certain permits and licences. The fees vary. View them here.
There’s no fixed number. It largely depends on how you plan to run your company, how you’re registering it, and where you plan to incorporate it.
Firstly, registering as a corporation federally is $ 200 (if filed online) and $ 250 in other places. For a rough gauge, here are the registration costs estimated for a selection of different provinces.
If you incorporate your business or not-for-profit business online, it will take one business day, provided you have all the required documents ready beforehand. If you need the service urgently, you can choose to top up $ 100 for express service in four hours.
Firstly, decide whether you want to run the business while being in Canada as a foreign entrepreneur. If so, you will have to go through the business immigration process. This process may take time depending on your country of origin.
International merchants can start any type of business in Canada, and there are generally no strict rules on what kind of company you can run.
The steps are generally the same as registering as a resident Canadian, although you must be aware of the different laws, permits, and taxes that apply to different territories and governments. Here’s a guide on whether you’re liable for sales tax for non-residents.
The simple answer is yes, depending on your province or territory. Small businesses form the backbone of Canada’s economy and many overseas businesses choose to start up in Canada as well. A small business is defined as one that has one to 99 paid employees. A medium-sized business has 100 to 499 paid employees, whereas a large business has 500 or more paid employees.
You must register a corporate or trade name with the Canadian government if you’re starting a partnership or corporation. Generally, your company name must be approved by Corporations Canada — it must abide by language rules, be distinguishable, be not too similar to existing names, and not be named after a place, government body or financial institution.
For more rules on naming your company, refer to this article on how to name a company.
Most businesses must register with the provinces and territories where they plan to run their business. In certain cases, if you open a sole proprietorship and operate under your name, you might not need to register your company.
To be safe, always refer to the rules of your provincial or territorial business registrar. Here’s a list of the common territories in Canada.
Canada is attractive for businessmen globally to start and run their businesses.
There are five types of companies in Canada:
Choosing the right company type has a huge effect on your tax liability — so choose the right one.
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The process of registering a company in Canada is to select your business structure, choose and register your company name, apply for business permits and licences, create articles of incorporation, get a registered business address of your main office, open a business bank account, and pay the registration fees.
You can set up a sole proprietorship, partnership, or corporation in Canada.
The incorporation process is fast and simple, the cost of incorporation is relatively low, and there are tax advantages for small businesses, including a lower tax rate.
The main authority governing company registrations in Canada is Corporations Canada.
It’s not a must to open a corporate bank account, but it’s highly advisable to do so, in order to separate your personal and business expenses — this proves essential during tax season.
Canada’s strong economy, low corporate tax rate, and geographic accessibility make it a good place for foreign investors and businessmen.
A Canadian company can reduce their tax payable by doing activities that earn them tax credits or make use of income tax deductions.
The most important step is to decide on your company structure. Doing so paves the way for other steps in the registration process.
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