There are several advantages to starting a business in Canada. The economy is very stable, and it’s close to the US, among several other benefits that attract foreigners to start or expand their business into Canada. So, what do you need to know about starting a business in Canada as a foreigner?
Foreigners can start a business in Canada through expansion, start-up visa, or partnering with a resident. In all cases, the steps for establishing the business vary across provinces. But they generally include choosing the business entity, name search, and preparing the necessary documentation.
Even though the process for starting a business in Canada might seem complex, it isn’t really difficult. As long as you know the type of business you’re starting and the mode of establishing the business. Then, you’re good to go. Here, we look at the process of starting a business in Canada as a foreigner.
Modes of Starting Business in Canada as Foreigner
As a foreigner, there are several ways to start your business in Canada. But whichever model you employ will fall within any of these modes.
1. Business Expansion
In a case where you already have an established foreign business and want to expand into Canada, the process is quite simple. Each province has its rules for registration and the fees you have to pay. Generally, you’ll have to register such business as an extra-provincial corporation, and such business must have an Agent for Service. Such an agent can be an individual who must be 18 years and a resident in the province or a corporation with a registered office in the province.
2. Starting a Business in Canada by Immigrating
If you’re thinking of starting a business in Canada and living there, you can start as a business immigrant. There are two ways you can do this, either with a start-up visa program or the self-employed program. The start-up visa is for entrepreneurs who’ll establish a business in Canada and provide jobs. Using this program allows you to fast-track your immigration process and become a permanent resident if you qualify.
In order to qualify for the program, you must have a qualifying business with support from a designated organization in Canada. Such organizations could be venture capitals, business incubators, or angel investors. You must also pass the language proficiency for either English or French and have enough money to live in the country till your business starts making money.
3. Starting a Business in Canada without Living There
You can also start a business in Canada without even living there. In this case, you’ll most likely have to partner with someone who lives in Canada to establish the business. Even though the rules vary from one province to another, it’s almost impossible for a non-resident to run a business solely in Canada. Even British Columbia, which has the most flexible rules on non-residents starting a business, still requires that there must be a physical address. For most provinces, no foreigner can start a business without a physical address and work permit. Thus, you’ll not be able to establish a sole proprietorship. But you can still start a partnership or corporation without living in Canada.
Steps of Starting a Business in Canada
The steps for starting a business in Canada largely depend on the province you find yourself in. Each province has its laws on the establishment of business by foreigners. However, there are steps you have to take to start a business in Canada regardless of which province you find yourself in. They are.
1. Choose a Business Entity
There are four common types of business entities that foreigners can choose between. These are partnership, cooperative, sole proprietorship, and corporation. Each of them has its peculiarities, and the one you go for will depend on the kind of business you want to establish.
2. Name Search
The next step is to carry out a name search which helps you to know if the name you want to pick for your business already exists or a similar name exists. A Nausns name search helps you avoid trademark issues, and it’s compulsory if you want to incorporate your business federally.
3. Prepare the Necessary Documents
There are several documents that you’ll need to submit before you can register your business. These documents vary based on which business entity you’re registering as. Documents you’ll need include certificates of incorporation, NUANS report not later than the last 90 days, names and addresses of director(s) and shareholder(s), business licenses, resume, work permits, bank reference letters, lease contracts for office addresses, etc.
There are incorporation services that can help you handle all that paperwork necessary for business registration.
Federal or Provincial Incorporation
When registering your business, one of the major decisions you’ll need to make is registering in the province or federally. Both of them have advantages, but they have downsides too. Here are some of the key differences between the two
1. Protection of Business Name
The protection on your business name is higher when you incorporate federally than at the provincial level. Generally, both jurisdictions conduct name searches. But the federal name search is more comprehensive. The search cross-checks the name against all the business names in the country, which means it’s more challenging to pass through. But once it passes through, you get maximum protection. In addition, registering federally means you can operate your business anywhere in Canada, and you don’t need to register your business name separately in each province.
2. Cost of Registration
Incorporating your company provincially will cost you less. However, when you register your business with the federal government, you’ll still need to do extra-provincial registration for any province you want to operate in except Prince Edward Island and Ontario. This means extra fees for registration in all these provinces.
Starting a business in Canada as a foreigner might be a great decision for you. But it’s a complex one too. The process for doing this will depend on whether you’re moving to Canada, expanding your business to Canada, or establishing your business there while being a non-resident. Regardless of the path you’re on. You’ll still need to register your business.