Canada welcomes immigrants from all parts of the world. Some people go there to find employment while others choose to set up their own businesses in the country and become employers. Taxes are rather high in Canada but the wonderful business environment found there and the social protection will let you avoid regretting this fact.
Starting your own business in a foreign country can be scary indeed but we would like to assure you that it is not difficult to do so in Canada! Of course, you have to know certain things about the local administrative requirements and the ways of doing business and this is what we are going to discuss below. We would like to help you navigate through the process of starting a business in Canada by dividing it into three stages:
- Business planning;
- Business set up;
- Finance management.
1. How should you plan your business in Canada?
Develop a business idea
The first thing to do when planning a business in Canada is to come up with a viable business idea. Reflect on the overall goals, the strategy, and the details. Find the information that you lack and do your maths. You can follow this pattern below:
- Formulate your business goals;
- Study the market tendencies and the work of your competitors;
- Study the demand for your products or services and assess the prospective clientele;
- Define the major task of problem that you product will solve;
- Determine your market niche;
- Involve a business mentor who has experience in your selected field and who can give you valuable recommendations and find some connections in Canada.
Choice of business location and office rent
Many entrepreneurs in Canada start doing their business operations from home and they find an office later. You can do so too but please mind that registering a company in Canada and acquiring licenses and permits requires having a registered legal address in the country.
Here are some factors that you need to take into consideration when choosing the location for your business in Canada:
- Business needs;
- Required office space;
- Zoning and ecological limitations;
- Target market;
- Applicable taxes;
- Noise pollution;
- Local business environment.
Business plan development
Your business plan is your road map that specifies your business objectives and the paths leading to their completion. You have to analyze the market very well and choose how to position your business there in order to create a viable business plan. If you have a well-designed business plan, it will help you reach the following goals:
- Raise funds for your business venture by finding interested investors;
- Measure your business success;
- Plan your business activities as time goes by;
- Make sensible financial forecasts.
Planning your business structure
Before starting a business in Canada, you have to decide what form of company ownership will suit you best. Several company ownership types are available in Canada:
1. Sole proprietorship. This form of company ownership is highly popular with those entrepreneurs who start small-scale businesses. As far as the taxes are concerned, a sole proprietorship is the least complicated form of company ownership in Canada.
You can start your business in Canada as a sole proprietor and later turn your company into a partnership or a corporation.
2. Partnership. —This is a business venture where two or more people participate. Three types of partnerships can be set up in Canada:
- General Partnership;
- Limited Partnership;
- Joint Venture.
The distribution of profits has to be determined in the Partnership Agreement as there are no official requirements pertaining to this matter. The same goes for the distribution of responsibilities.
A Limited Partnership is a convenient form of company ownership if you are going to make profits outside Canada. If this is the case, you will not be liable to the profit tax in the country. Besides, as a Partnership is not a legal entity officially, the automatic exchange of fiscal information rules are not applicable to them. Moreover, Canada has not signed agreements on automatic exchange of fiscal information with some national states.
3. Corporation. A corporation is a legal entity, unlike a sole proprietorship or a partnership. It belongs to the shareholders and it has to keep financial records and file the tax return to the local fiscal authorities in Canada.
According to the statistics, corporation maintenance costs are considerably higher than the costs of maintaining smaller business structures. It can be a good instrument for fund raising as a corporation can go public even if it has been registered as a private corporation initially. However, registering a corporation in Canada will make sense only when your annual turnover exceeds 50,000 Canadian dollars.
4. Cooperative. A cooperative in Canada is a company that is formed by people who have common needs. There different types of cooperative that can be set up in Canada including consumers’ cooperatives, industrial cooperatives, labor cooperatives, and multifunctional cooperatives.
5. Non-commercial organization. These are also referred to as not-for-profit organizations and they can be set up for various purposes. A charitable society, social club, and a sports club can serve as examples of non-commercial organizations in Canada.
2. How to set up a business in Canada
Think of a name for your company
When choosing the name for your business company in Canada, you have to bear the following things in mind:
- Make sure that the company name reflects the type of products or services that you are going to sell;
- Choose a name that sounds nice and that is easy to pronounce and remember;
- Make sure that the company name is unique and there are no other companies in Canada with the same or similar name.
The last point is of legal importance. The Government of Canada likes to stress that if somebody else is already using a brand name, you are not allowed to use it legally.
There are several websites that can help you ascertain that the company name that you are thinking of is truly unique:
- Enter the prospective company name into the search box of your Internet browser. You have to see that the brand name is not used in Canada. If you are going to do business in other countries too, please make sure that the name is not used on these countries either.
- There are national databases of company names in Canada. Depending on the province where you want to register your company, you can use one of the following two databases:
A. The NUANS database allows automatically searching for the availability of a brand name in all Canadian provinces with the exception of Quebec.
B. If you are planning to register your company in Quebec, you have to use the provincial database to find out if the brand name can be used there.
Company registration in Canada
Unless you are a private entrepreneur doing business under your personal name, the name of your company in Canada has to be registered with the authorities in the country. The registration process details will depend upon the form of ownership that your company has and the province where you are registering the company. For instance, you can use your surname in the name of a corporation registered in Ontario but it is not allowed in some other Canadian provinces. In Alberta, the company name has to reflect the company form of ownership (have Ltd. or Inc. at the end).
Acquiring permits and licenses in Canada
You can use the official database BizPal to determine if you will need a permit or a license. You can search the database by the location, industry, and business activity types.
If you are not going to do any business on the territory of Canada, you do not have to apply for any licenses for carrying our business abroad.
There is no currency control in Canada. The CFC (Controlled Foreign Corporation) regulations are not applied either.
3. How to manage your Canadian business finances
Banks in Canada adhere to conservative policies that are based on taking care of the clients and following the legal requirements. Thanks to these policies, Canadian banks suffered less in the 2008 financial crisis than US and European banks did.
Open a corporate account in one of the Canadian banks. In this way, you will have a reliable partner and a wise financial consultant simultaneously.
If you have a business partner who is a legal resident in Canada or if you have your own residence permit, you can open a bank account without anybody’s assistance.
When choosing the bank, please inquire about the internet and mobile banking opportunities that it offers. It is especially important if you are going to manage your Canadian company from abroad. If this is the case, you will also be well advised to hire professional consultants who will help you choose the company type, the location, and the bank.
InternationalWealth portal experts will gladly assist you in opening a company and a bank account in Canada without leaving the comfort of your home. If you have any questions related to starting a business company in Canada, please contact us and request a personal consultation. You are welcome to send us a message at firstname.lastname@example.org or use telephone or the live chat. We will reply promptly in any case!
Can I open a business company in Canada remotely?
Yes, it is quite possible. However, if you would like to set up a bank account in Canada, you will have to visit the country and meet with a bank officer.
How long does it take to open a company in Canada?
Preparing the corporate documents takes the best portion of the time required for registering a business company in Canada. The application processing takes only a few days. If all the application documents are in good order, company registration will take two to three weeks including document package delivery.
What kind of business should I start in Canada?
It should be an international, innovative, and scalable business that creates new jobs in Canada. If your business meets these criteria, you will not have any problems with finding financing the skilled personnel in the country.