Steps to start a business in Canada
Your business should have a clear point of difference: a unique selling or value proposition. You must also have a focused service or product and a distinct target customer.
When establishing a business in Canada, the incorporation process can be simple, but as with any process, businesses must understand and comply with the rules and regulations to comply.
Canada is an attractive market for companies looking to invest abroad due to its abundant resources spread throughout the country and its consistently stable political environment. Learn the steps required to start a business in Canada.
1. Decide on a name
To incorporate a business in Canada, you need to choose a name that is unique and that is not confusing or easily associated with another company or business. You must perform a name search in the Nuans system, in order to obtain a report that will give you the names of other current companies with a name similar to the one you request. These reports will help you choose and get your business name approved.
We help you with graphic design, printing flyers, copies of invoices and business cards with home delivery.
2. Choose a federal or provincial / territorial constitution
During the process of preparing to incorporate a business in Canada, companies can choose to incorporate at the federal or provincial / territorial level. If the company wants to do business in more than one jurisdiction, they can appear extra-provincially in each province or territory.
The benefits of incorporating at the federal level or at the level of the Canadian Corporation Act (CBCA) are:
the corporation is considered a separate legal entity that has the same rights and obligations under Canadian law as a natural person;
limits the liability of shareholders; will not be responsible for the debts of the company
companies are taxed separately from their owners, and the corporate tax rate is generally lower than the individual tax rate
companies have greater access to capital given that they can request money at lower rates than those that pay other types of businesses; generally financial institutions tend to perceive loans granted to companies as a lower risk
A federally incorporated company will be more stable than a company that is incorporated as a partnership or sole proprietorship if the owners die.
The challenges of starting a business at the federal level can have higher startup costs and more documents to file, such as:
- annual yield
- notifications about any change in the Board of Directors and / or the registered office address
- keep a minute book
- file corporate income tax and
- registry of any province or territory where it does business.
The constitution at the provincial / territorial level carries various requirements based on jurisdiction.
Once you decide, you need to complete the bylaws forms, which can be done in English or French, or in both languages.
3. Establish the address of an office
A requirement of any Canadian company is to have a registered physical office and a registry office. The domicile must be a physical location in the province where the business was established. All official documentation and correspondence is sent to that office.
4. Appoint the Board of Directors
Each jurisdiction has its own requirements related to the residency of the directors of a corporation.
British Columbia, Quebec, Prince Edward Island, Nova Scotia and New Brunswick are the only provinces in Canada that do not enforce residency requirements for corporate directors. This is especially important for foreign individuals and companies wishing to register business in Canada, as they will not need to designate a resident Canadian director if they constitute their business in any of these provinces.
5. Obtain a company identification number
After your business is incorporated, the Canada Revenue Agency will issue an identification number (BN) for your company. They will also send you a letter confirming all your information and your identification number. This number is used for Goods and Services Tax (GST) or Harmonized Sales Tax (HST), based on
- your province
- payroll deductions
- corporate income tax
- import and export taxes and fees