Register a Business in Canada

Canada is the second largest Country in the world, situated in North America, holding more than half of the continent's natural resources. It has the tenth-largest economy in the world. Canada is famous for three things: Beers, Bears, and Punjabis. But what is more interesting to us is that being a thriving developed giant economy of the world, it offers various benefits to its Corporate Structures that ultimately aids in the growth of the Country's economy.

The Language of Business is well understood in Canada. The Law Makers understand very well that the Future holds bright for the one who understands the private sector's contribution to a Nation's economy. Therefore, the Canadian Government, along with Canadian Nationals, also allows foreign investors to set up their businesses in Canada.

Canada is very resourceful to budding entrepreneurs to start their businesses. Canadian Legislation permits any entity across the globe to incorporate and run a company in the North American Nation. The Canadian Government offers various incentives to entrepreneurs to embark on their journey in Canada. It also promotes the immigration of foreign nationals into Canada. In addition, Canada has an excellent score on the Ease of Doing Business Index. They also provide various business models to choose from when registering a business in Canada.

Benefits of registering a Business in Canada

 

Since we have enlisted some of the benefits of registering your Business in Canada, let us look at them one by one in detail.

Canada boasts of a low Corporate Tax Regime

In some countries, Corporate Tax is alarmingly high. It is one of the important factors for industries to thrive in a nation. Many Nations tax such corporations heavily to collect the required revenue for public service. Since Canada is a wealthy nation, the Corporates need not be burdened for the nation's progress. This forces businesses to move to some corporate-friendly tax regime nation.

Many Corporates choose a jurisdiction for starting a new business. Low tax rates allow businesses to save their surplus and invest it back into the Business, thereby contributing to its perpetual growth. To attract investors from around the globe, Canada keeps the corporate tax rates considerably lower, from 15% to 18%. This tax range makes Canada one of the most sought-after destinations to set up a business.

Canada has an ample amount of Free Trade Agreements

Canada is a signatory to numerous Free Trade Agreements. Such agreements offer unhindered access to the Canadian markets for businesses. Canada has entered into the following prominent FTAs over the decades to promote healthy competition in the Market:

• North American Free Trade Agreement (NAFTA)
• Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
• EU's Comprehensive Economic and Trade Agreement (CETA)

 Such FTAs give multiple businesses access to large Canadian markets at favourable terms.

Canada offers Intellectual Property Rights to its registered Businesses

The Canadian Authority imposes a strong regime to enable Intellectual Property Rights. These IPRs protect the business innovations of corporate entities. Also, the Canadian system vouches for improving and evolving itself continuously. Such measures make administrative processes smoother and simpler.

Canada has been an authorized signatory to multiple International Intellectual Property Protection agreements and treaties, such as:

• Hague Agreement
• Madrid Protocol
• Singapore Treaty
• NICE Agreement
• WIPO's Patent Law Treaty, to name a few

Canada is a Developed Economy with Quality Infrastructure

The Canadian economy is the tenth-largest economy in the world. The Per Capita Income in Canada is high. Also, the Covid hit didn't blow much of its operations as many of the processes went online. Even with COVID, the unemployment levels in Canada were well below 5%. The wage rate for quality labour is competitive in Canada compared to other developed nations. Such a nation's accomplishments make its citizens financially stable in a financially mature and, more importantly, stable economy.

Canada sits on a pool of America's Natural Resources

Canada, as a North American Giant, is sitting on a pool of world resources. With most freshwater lakes and a vast amount of resources, such as the following have directly and indirectly fueled the nation's economy for a glacial period:

• Natural Gas
• Crude Oil
• Timber
• Minerals
• Coal

With robust economic infrastructure and abundant natural resources, Canada is an ideal destination for businesses worldwide to make inroads in the global Market.

Canada has a Business-friendly vibe

Canada has a favourable business ecosystem which aids in flourishing the Company's growth as Canada ranks high among the countries with excellent Ease of Doing Business. Such a flourishing environment for businesses, especially start-ups, drives the Market into a more productive phase. Additionally, Canadian Institutions offer credit to businesses at low-interest rates along with a line of multiple investors and investment opportunities.

Canada offers a Competitive Workforce to the budding Businesses

The workforce in Canada is among the most educated and professional workforces in the world. Therefore businesses registered in Canada can greatly benefit from the skilled workforce at their disposal. Also, Canada does not employ intensive labour law restrictions upon its workforce in comparison to other developed countries where labour laws are highly prevalent.

Who issues the Business certifications in Canada?

The primary regulatory Authority for Business Registration in Canada is Corporations Canada. It is specifically dedicated to Federal-Level Company registration. Also, Canada has appropriate provincial registration facilities for a Company in its respective province-specific authorities.

Eligible Criteria for Business Registration in Canada

To register your Business as a Corporate Entity in Canada, you must know the required eligibilities for each business models. In Canada, a registered Corporate can be categorized primarily into three types of business structures. We have detailed these business structures along with their required eligibilities in the oncoming sections for you.

Sole Proprietorship

• A Proprietorship is an informal business structure in Canada.
• It is the most common business structure for small businesses in Canada.
• As per the Canadian Taxation Regime, the Business and the Owner are the same entity.
• Revenue generated by the Proprietorship is termed the Proprietor's income.
• The Proprietor is liable for taxation for the Annual Income Tax filing process.
• You can use the such system as a source of tax management where you adopt the Proprietorship model for your side businesses.
• A Proprietorship Model aids in tax management.
• Proprietorship losses are compensated by the revenue gained from other sources.
• Proprietorship's revenue and obligations are of the Proprietor himself.
• This is one of the disadvantages of the Proprietorship model: the Proprietor is personally liable for all the debts and liabilities of its Proprietorship.

Partnership

• A Partnership is similar to that a Proprietorship but has multiple owners.
• These owners are termed as member partners.
• There is no legal structure for a Partnership arrangement in Canada.
• The terms and conditions govern a Partnership in Canada under the Partnership Agreement between its member partners.
• The Partnership Arrangement details the following details of the Partnership Arrangement:
  • Revenue Sharing
  • Owning Estates
  • Monthly and Annual Expenses
  • Tasks of Members and Directors

 

There are three types of Partnerships prevalent in the Canadian Corporate System, such as:

• General Partnership
• Limited Partnership
• Limited Liability Partnership

Corporation

• A Corporation is similar to a Company in other countries.
• A Canadian Corporation limits the liability of the investors toward its debts and obligations.
• A Corporation can raise capital from the Investors
• The Canadian Authority has optimized the tax payment for Corporations.
• Corporate Registration in Canada involves elaborate paperwork.
• The registration procedure requires hefty sums of money. 

Types of Corporations in Canada

The Canadian Corporate Legislature sub-categorizes the Corporations into the following five types:

• Canadian Controlled Private Corporation (CCPC)
• Other Private Corporation (OPC)
• Public Corporation (PC)
• Corporation Controlled by Public Corporation
• Other Corporation

Let us look at them one by one in detail.

Canadian Controlled Private Corporation (CCPC)

Each Canadian Controlled Private Corporation (CCPC) applicant must fulfill the following eligibilities at the end of the tax year:

• CCPC is a resident corporation in Canada
• A CCPC must be either incorporated in Canada or resident in Canada from the date of 18th June 1971 to the tax year’s end
• CCPC is a private corporation
• CCPC is not authorized to be under the direct/indirect control of one or more Public Corporations
• Exception to the rule is a Venture Capital Corporation. It is defined under the Income Tax Regulations as an exemption)
• A registered CCPC must not be under the control of one or more Non-Resident Canadians
• A registered CCPC cannot be under the control of a Canadian Resident Corporation whose shares are listed on a designated stock exchange outside the Country.
• A CCPC is not under the direct/indirect control of any persons mentioned under the previous conditions.
• If a non-resident person owns all the shares of the Corporation, by a public corporation (other than a prescribed venture capital corporation), or by a corporation whose shares are listed on a designated stock exchange were owned by one person, and such person does not own sufficient shares to control the Corporation.
• The shares of a CCPC must not be listed on a designated stock exchange.

Other Private Corporation

A corporation in Canada can be an Other Private Corporation or an OPC if it meets the following eligibility criteria at the end of the tax year:

• An OPC is not a Public Corporation in Canada
• OPC is a resident Corporation of Canada
• An OPC must not be controlled by Federal Crown Corporation(s). These Crown Corporations are defined in Regulation 7100 of Income Tax Regulations
• An OPC must not be under the control of any public corporation(s). The only exception to this is Venture Capital Corporation defined under Regulation 6700 of the Income Tax Regulations.
• An OPC must not be under the control of any of the corporations mentioned above. 

Public Corporation

A corporation in Canada can be a Public Corporation if it satisfies the following eligibility requirements at the end of the financial year:

• A Public Corporation must enlist its class of shares on a designated Canadian Stock Exchange.
• The Corporation has been elected as a Public Entity.
• The Canadian Minister of National Revenue has designated the applicant entity as a Public Corporation.
• The Public Corporation must comply with the Income Tax Regulations on the following:
  • Number of Shareholders
  • Public Share Trading
  • Dispersal of the ownership of the shares
  • Size of the proposed Corporation

Corporation Controlled by Public Corporation

• A Corporation Controlled by a Public Corporation is a subsidiary of a Canadian Public Corporation.
• This Public Corporation does not qualify as a Public Corporation when completing the T2 Corporation IT Return filing.

Other Corporation

If any of the corporate entities do not fit into the criteria of the corporations, then such entities are termed Other Corporations. Some examples of Other Corporations in Canada are

• Life Insurers
• Crown Corporations

Documents required for registering a Business in Canada

Every business applicant for Canada must submit the following documents along with the corporate registration application to further his candidature to the Authority:

• Articles of Association of the applicant Business
• Lease Agreement of the chosen Office space
• Title Agreement of the Registered Office space
• BoD Details (Board of Directors)
• Federal Business Number from Canadian Authority for corporate transactions
• For Foreign Shareholders, Proof of Residence
• Certified copy  of the Passport & Visa of the applicant
• Paid-Up capital Details for Company Incorporation
• Applicant Company's Founders Details, such as:
  • Address
  • Visa
  • Passports
  • Other relevant information
• Proof of Identity for the Company's shareholders, translated as well as notarized
• Details of the applicant Company’s managers and their corresponding identification proofs and appointment letters
• Company Registration processing fee receipt
• Fit and Proper Criteria of the appointed Managers
• Board Resolution, if needed

 

Procedure for Business Registration in Canada

Every Business registration applicant must conform to the following procedure for company registration in Canada:

• Select an appropriate jurisdiction for the applicant company
• Choose and Reserve the trade name for the applicant company
• Draft and Compile required documents for Incorporation
• Upload and submit the Incorporation Documents
• Form the essential Board of Directors for the new Corporation
• Maintaining Incorporation Documents and Purchasing the Corporate Seal for Signing Documents
• Arrange the Bye-laws, and additional Licenses for the Company
• Open the Corporate Bank Account for the Company

Select an appropriate jurisdiction for the applicant Company

The first step towards Company registration in Canada is deciding the jurisdiction in which the Company will be established. It will decide the place of activity for the Company. The applicant can choose from any of the 13 provincial jurisdictions of Canada or its Federal Jurisdiction. Entrepreneurs today choose their home province for the comfort of home. They also choose the federal-level registration as their jurisdiction to cater to the entire Canadian Market.

• Select an appropriate jurisdiction for the applicant company
• Choose and Reserve the trade name for the applicant company
• Draft and Compile required documents for Incorporation
• Upload and submit the Incorporation Documents
• Form the essential Board of Directors for the new Corporation
• Maintaining Incorporation Documents and Purchasing the Corporate Seal for Signing Documents
• Arrange the Bye-laws, and additional Licenses for the Company
• Open the Corporate Bank Account for the Company

Choose and Reserve the trade name for the applicant company

After deciding the jurisdiction, the applicant must choose the trade name for the Corporation. Different provinces have different guidelines for Company’s nomenclature in their jurisdiction.

We have enlisted some of the guidelines common to all the provinces in Canada in the selection of the name for the Corporation:

• Chosen name must not be in contravention of the Provincial Law
• Chosen name must not be similar to an already existing Corporate name/trademark.
• Chosen name must not deceive the public
• Chosen name can be in English, French, or a combined phrase or a combined English and French form
• Chosen name must have a distinct, descriptive element
• Chosen name must end with a suffix indicating the adopted legal structure of the Corporation

Check the Chosen Name:

The applicant must check the availability of the chosen corporate name before its submission to the Authority for submission. The applicant must check the availability in any of the following systems:

Ø  Newly Upgraded Automated Name Search system NUANS

Ø  System of Centre Informatique du Registre des Enterprises du Quebec, CIDREQ

Draft and Compile required documents for Incorporation

If the applicant wants to subscribe to a small Private business model in Canada, then he must prepare the following incorporation documents:

• Articles of Incorporation can be amended from time to time
• The applicant must have a maximum of two or three classes of shares
• The applicant must appoint a maximum of ten directors
• The applicant must choose and apply for the corporate name

If the applicant wishes to incorporate a big company, then he must subscribe to the custom incorporation plan, which includes the following:

• Name of the applicant Company
• Share Structure of the applicant Company
• Decided Limits on share transfer among the Company
• Number of Directors in the proposed Company

Upload and submit the Incorporation Documents

The applicant, after drafting the incorporation documents, must submit it, such as the Articles of Incorporation, along with the supporting documents, such as:

Ø  Name Search Report

Ø  Application Filing Fee

The documents must be submitted along with the appropriate government authority before Incorporation in Canada.

Form the essential Board of Directors for the new Corporation

The applicant thereafter must form the Board of Directors (BOD). To form the Board, the applicant must ensure that the BOD fulfils the required eligibility for becoming a director in the Company. The directors' names must be mentioned with their respective addresses along with their residency status at the time of their Incorporation.

Maintaining Incorporation Documents and Purchasing the Corporate Seal for Signing Documents

The Canadian Authority instructs every registered Corporation to maintain a record of their documents, such as:

• Articles of Association
• Corporate Byelaws
• Minutes of the Meetings
• Company’s Shareholder's Resolutions
• Board of Directors' resolutions
• Application forms filed with the Canadian Authorities
• Shareholding Agreement of the Company
• Share Transfer Register
• Securities Register

The applicant must also purchase a corporate seal must emboss the Corporation's trade name on its official documents. Most Canadian provinces have made it mandatory for newly incorporated Companies to have a corporate seal under their name.

Arrange the Bye-laws, and additional Licenses for the Company

The organizational structure of a Corporation is important. The organization of a newly incorporated Company is done by arranging a meeting of shareholders and directors. It can also be done through written resolutions signed by the Company’s directors/shareholders. The initial organization of the Company must comprise the following:

• Obtain the bye-laws approval
• Issue shares to the Company’s shareholders
• Elect the first directors of the Company
• Appoint the Officers as representatives of the Corporation
• Draft the Shareholding Agreement
• Other resolutions, as required
• Obtain the required business Licenses

The newly incorporated entity must also adhere to its legal obligations, such as the registration of the following:

• Federal Business Number
• Employer Health Tax and Worker's compensation as per the Provincial guidelines
• Sales Tax Account in the Province
• Non-Corporate Business Name
• Other required Provincial Licenses
• Required Municipal licenses

Opening of a Corporate Bank Account

After the incorporation procedure, the new Corporation must open a corporate bank account in its name. They must provide the bank with a copy of the Articles of Incorporation along with the signatures of all their authorized officers. In some cases, Banks can also ask for the Company's by-laws and resolutions.

After incorporating the steps mentioned above, the Company’s management can begin with their business operations. All registered companies in Canada must pay their corporate taxes. For the CCPCs (Canadian-Controlled Private Corporations) claiming the small business deduction, the Authority can reduce the tax rate to 9%.

Our Assistance in registering your Business in Canada

Our Incorporation experts provide you end to end company incorporation services in Canada  by assisting you in the following manner:

• Collecting and Organizing the requisite Documents
• Compiling the necessary documents for registration
• Reserving the chosen name with the Canadian Authority
• File the certification application for Company’s Incorporation on your behalf
• Appoint the Board of Directors for your Firm
• Prepare the requisite by-laws for the Corporation
• Assist in the appointment of the first directors in the Company
• Obtain the required business licenses for running the Company in Canada
• Open the Corporate Account of the newly incorporated Company

We ensure that your company incorporation services requirements for Canada are always on time. Our professionals understand the intricacies of company incorporation procedures in Canada. Thus, we have expedited the process – helping you incorporate your Company at an affordable price.

So, reach out to our Incorporation Experts and realize your dream of starting your own Company in Canada.