Company Registration in Canada
Enterslice provides complete assistance with establishing your ideal company in Canada.
- Name Reservation
- Assistance in opening a Canadian bank account for your company
- Registering with tax authorities and afterwards obtaining a GST from the revenue department
- Trademark Registration in Canada
- Accounting and Auditing Services for your business
- Drafting of required documents
- Post Registration compliance support
- Preparation of forms to be filed
- Online Filing of company incorporation application
- Liaising with the concerned department
- End-to-End Assistance in from paper
Canada Company Registration- An Overview
The tenth-largest economy in the world, Canada, allows anyone to start and run businesses. Every investor or entrepreneur can easily launch a business in Canada thanks to the country’s abundance of resources. Incorporating and establishing a business in Canada is open to anyone on the planet. The government provides a variety of advantages for business owners to operate in Canada. In addition, a lot of investors move to Canada because the opportunity there makes it simpler to register a firm. It is a noteworthy nation that is regarded as one of the important G7 countries. In addition to this, it ranks highly on the global index of business accessibility. Depending on your line of business, you can select from a variety of business structures.
Benefits of Company Registration in Canada
Following are the benefits of company registration in Canada:
- Reduced corporate tax rate
For businesses all over the world, the corporate tax rate is the most important consideration when deciding whether to relocate or where to launch a new enterprise. Businesses can save money and reinvest the surplus into their operations thanks to lower corporate tax rates. Canada has kept its corporate tax rates significantly lower than those of other developed nations, dropping them from 18% to 15% in order to draw investors from all over the world, making it the most sought-after location to launch a firm.
- Free trade agreements’ advantages
Canada has ratified a number of free trade agreements that grant Canadian companies unrestricted access to international markets. Canada has signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the North American Free Trade Agreement (NAFTA), and the Comprehensive Economic and Trade Agreement (CETA) with the EU, all of which grant it favourable access to these sizeable markets.
- Strong protections for intellectual property –
Innovation is safeguarded by a robust Canadian law of intellectual property rights. In order to better protect Canadian firms, the system in Canada is always being improved upon and evolving. In addition, Canada has ratified a number of international agreements and treaties relating to the protection of intellectual property, including the Hague Agreement, the Madrid Protocol, the Singapore Treaty, the NICE Agreement, and the WIPO Patent Law Treaty, among others.
- Benefits of a developed economy include:
With pre-Covid unemployment numbers below 5%, the Canadian economy is developed. Also, the pay rate has been maintained competitive compared to the other industrialised countries of the world, making Canada financially secure with a mature and stable economy.
- Natural resources are abundant.
Natural gas, crude oil, wood, minerals, coal, and other abundant resources that Canada has been endowed with have long supported its economy. Canada is viewed as the best location for enterprises all over the world to enter the Canadian market due to its strong economic foundations and wealth of natural resources.
- favourable business environment
Canada also provides a supportive business environment that allows companies to grow. Because of this, Canada has consistently ranked among the top nations for ease of doing business. By providing low net effective tax rates, one fosters the growth of enterprises, especially start-ups. Businesses can also get financing at extremely low rates and have access to a variety of investment options.
- Competent and Educated Workers
The Canadian workforce is one of the most competitive and highly educated in the world, providing several chances for businesses to gain from a talented workforce. The absence of strong labour law limitations, which are very common in most developed nations, is another appealing aspect of the Canadian economy.
Regulatory Authority/ Body for Company Registration in Canada
The principal regulatory body for Canadian company registration For federal-level business registration, Corporations Canada is the appropriate authority, while for provincial-level company registration, there are corresponding province-specific authorities.
Eligible Business Structures under Company Registration in Canada
In Canada, there are essentially 3 different business structure kinds. The business formats listed below are available to Canadian entrepreneurs:
- Single-person business –
The most informal and typical business structure for small firms is that of a sole proprietorship. The business and the operator are one and the same in the eyes of the law and the tax authorities. The sole proprietor’s earnings are his or her own earnings and are as a result subject to taxation on the personal income tax form.
In cases where people choose the sole proprietorship structure for their side enterprises, it is also employed as a tool for tax management. They benefit from better tax management since they can utilise business losses to offset other sources of revenue. In this case, the proprietor is personally responsible for the business’ finances and obligations.
When there are multiple proprietors, a partnership is a similar arrangement. The terms and conditions outlined in the partnership agreement, which regulates the sharing of profits, expenses, and tasks, among other things, control a partnership even though it lacks a formal legal structure.
The Canadian legal system recognises three different types of partnerships: general partnerships, limited partnerships, and limited liability partnerships.
- common partnership
- Limited Liability Company
- Limited Liability Company
- Organization –
The idea of a corporation in Canada is comparable to that of a company in other countries in that the investors’ liability for the corporation’s debts and obligations is constrained, the investor can raise capital from investors quite easily, and the tax payment can be optimised in a variety of ways. However, a company requires extensive documentation and significant financial outlays for their governance, incorporation, etc.
The 5 categories of corporations recognised in Canada are as follows:
- It is a corporation that, between June 18, 1971, and the conclusion of the tax year, was either incorporated in Canada or was a resident of Canada.
- It is a privately held company.
- It is not directly or indirectly controlled by one or more publicly traded companies (other than prescribed venture capital corporation as defined under Regulation 6700 of the Income Tax Regulations)
- It is not governed by a non-resident or non-residents.
- It is not managed by a corporation with Canadian residents whose shares are listed on an authorised exchange outside of Canada.
- It is neither directly or indirectly controlled by any of the people named in the preceding three circumstances.
- If a non-resident individual owns all the shares of a public corporation (except from a prescribed venture capital corporation) or a corporation whose shares are listed on a specific stock exchange, and this individual does not own enough shares to control the corporation.
- There aren’t any classes of the corporation’s shares that are traded on a specific stock exchange.
- Other Private Corporation: A corporation is considered an Other Private Corporation if it meets all of the following criteria at the end of the tax year:
- It is not a publicly traded company.
- It is a Canadian inhabitant.
- It is not controlled by any of the listed federal crown corporations (as defined in Regulation 7100)
- It is not governed by a public corporation or groups of corporations (other than prescribed venture capital corporation as defined under Regulation 6700 of the Income Tax Regulations)
- It is not governed by any corporate entity or entities listed in the first two clauses.
- Public Corporation: At the end of the tax year, a corporation is considered to be a public corporation if it meets one of the following criteria:
- If it has a class of shares that are listed on a specific Canadian Stock Exchange; if it has been chosen to be a public corporation; or if the Minister of National Revenue has so designated. The corporation has satisfied with the requirements set forth in Regulation 4800(1) of the Income Tax Regulations with regard to the number of shareholders, the open market trading of its shares, the distribution of ownership of its shares, and the size of the corporation.
- Company Controlled by Public Corporation: If a Canadian subsidiary of a public corporation, a company is considered to be a corporation controlled by a public corporation. While filling out your T2 Company Income Tax Return, you cannot choose this corporation as a public corporation as the type of corporation.
- Other Corporation: Companies are referred to as Other Corporations if they do not meet the requirements of the aforementioned corporations. General insurers and crown corporations are two prominent examples of other corporations.
Procedure for Company Registration in Canada
A potential applicant must adhere to the following steps in order to register a business in Canada:
- choosing a JURISDICTION that is suited for the corporation
- the choice of the corporation’s NAME
- determining whether the name of the corporation is available
- Producing the Incorporation Papers
- document submission and registration for incorporation
- creation of the corporation’s board of directors
- Upkeep of Records and Corporate Seal
- issuance of shares, completion of organisational minutes, and adoption of bylaws
- Extra Permits and Licenses to be Arranged
- Registration of the Business and Creation of a Corporate Bank Account
- choosing a suitable JURISDICTION for the corporation
The business owner must first choose the jurisdiction in which he or she wishes to register the company before registering it. The jurisdiction determines the boundaries of the company’s permitted business activity. The entrepreneur has the option of incorporating the business in one of 13 provincial or federal jurisdictions. Entrepreneurs typically select their home province or the registration at the federal level as the jurisdiction for their business.
- The choice of the corporation’s NAME-
The following stage is for the business owner to select the name of the corporation. This is a little challenging because the rules and specifications for approving corporate names vary between jurisdictions.
The following are some of the rules that apply to name selection in all jurisdictions:
The name shouldn’t go against the established law of the country.
The name shouldn’t be the same as or similar to a trademark or business name that already exists. The name shouldn’t be used in a way that misleads the public.
The name may be written in either English, French, both English and French, or a combination of English and French.
The name should have a unique and descriptive component.
The name should always be followed by a suffix that describes the company’s legal structure.
- Checking the availability of the Corporation’s name –
The availability of the selected name must be confirmed prior to submitting the corporate name for the corporation. The Newly Upgraded Automated Name Search (NUANS) system or the system of the Centre Informatique du Registre des Entreprises du Quebec (CIDREQ) can be used to check the name availability.
- Making the Incorporation Papers –
When a business owner considers establishing a small or private company, a basic pre-packaged incorporation plan can be made, which comprises the following:
- Model Articles of Incorporation have already been written (which can be amended later on)
- maximum of two or three share classes, a maximum of ten directors, and a designated and numbered company name.
- However, if the business owner is considering forming a larger organisation, a tailored incorporation plan is available and includes the following:
- Kra Paymall, its share structure, restrictions on the transfer of shares, and the number of directors it has. Restrictions the entrepreneur wishes to place on the business.
- Submission and Registration of Articles of Incorporation –
The next stage is for the business owner to submit the required paperwork to the relevant government agency before forming a corporation in Canada. This paperwork includes the Articles of Incorporation as well as supporting materials including a name search report and a filing fee.
- Establishment of the corporation’s board of directors –
Also, the founder must create the corporation’s board of directors (BOD). The eligibility requirements for serving as a director of the corporation must be met while the BOD is being formed. Each director’s first and surname names, as well as their respective addresses, must be stated when incorporating. When they incorporate, the residency status must also be stated.
- Maintenance of Documents and Purchasing the Corporate Seal –
Every corporation is required by law to have a copy of its articles of incorporation on file. The following is just a partial list of the documents:
- Corporate Bylaws Copies of the Articles of Incorporation
- the shareholder meetings’ minutes
- Resolutions of the shareholders
- Director decisions
- a copy of the documents submitted to the government bodies
- Ownership agreement
- Register for share transfers
- register for securities
In order to emboss the corporation’s legal name on formal business documents, a corporate seal must be purchased. All Canadian provinces, with the exception of a handful, have made it a requirement that every corporation have a corporate seal next to its name.
- Completion of by-laws, Organisational minutes and issuance of shares –
Once the corporation has been incorporated, it is crucial to organise its organisational structure. A meeting of shareholders and directors may be called, or written resolutions may be adopted and signed by the directors or shareholders. The initial structure of the business is made up of the following:
Getting the corporate by-laws approved
- distributing shares to stockholders
- choice of the directors
- appointing the corporation’s officers
- Ownership agreement
- Further organisational decisions
- Arranging Additional Permits and Licenses –
After being incorporated, a corporation has additional legal tasks to fulfil. These requirements entail acquiring additional licences and permits, such as the ones listed below:
- getting a federal business number registered
- Getting registered for worker’s compensation and the provincial employer health tax
- opening an account for the provincial sales tax
- Creating a non-corporate business name registration
- additional municipal and provincial licences
- Establishing a Business Bank Account
A corporate bank account must be opened by every corporation. A copy of the proposed corporation’s articles of incorporation must be given to the bank by the applicant. All of the company’s authorised officers must provide their signatures. A copy of the corporation’s by-laws or resolution may also be required by the bank in some circumstances before they are permitted access to the bank account.
- starting with the business’s operations –
The applicant can start operating their business once the management has successfully completed all the aforementioned processes.
Corporate Tax in France
Corporate tax must be paid by all legally existing Canadian corporations. There would be the ensuing taxes:
- 15% of net corporate tax is due in Canada.
- The net tax rate drops to 9% for private corporations under Canadian ownership that are using the small business deduction.
Documents for Company Registration in France
Articles of incorporation Lease agreement or title deed of the Registered office Name Search report to demonstrate to the authority that sufficient
- procedures have been made in relation to searching the name and reserving the same
- Details from the competent Canadian revenue body regarding the Board of Directors Federal Business Number for conducting corporate transactions
- If the Shareholders are foreign nationals, Canadian address documentation is required.
- a copy of the passport or visa showing the foreign stockholders’ Canadian addresses
- information about the company’s paid-up capital
- Information about the Company’s Founders: This will include their address, passport numbers, visa numbers, and other pertinent data.
- Translation and notarization are required for the shareholder identification documentation for the company.
- Details on the company’s managers, including copies of their identification documents and letters of appointment
- Registration and Fee Application Form
- a declaration that the management has never been convicted of a crime
- Board Decision ( If required)
Frequently Asked Questions
In Canada, can foreigners establish a business?
Absolutely, foreigners are permitted to establish businesses in Canada under the same guidelines as residents.
What steps are involved in registering a business in Canada?
In Canada, forming a company is entirely done online. However, the applicant may also choose to submit their application offline. The applicant may submit a registration application for a corporation based on the requirements.
What kinds of corporate forms are permissible in Canada?
Sole proprietorship, partnerships (general, limited, and limited liability), and corporations (Canadian Controlled Private Corporation (CCPC), other private corporation, public corporation, corporation controlled by public corporation, and other corporation) are among the business structures that can be established in Canada.
Why should I think about registering my business in Canada?
One of the G7 countries with the highest levels of global competition, Canada presents a vibrant investment environment. In addition, the government encourages many types of enterprises and offers incentives. An investor can take advantage of this nation’s highly productive labour force. According to World Bank data, Canada is the third-easiest country in which to conduct business.
Who is Canada’s primary regulatory body for the registration of businesses?
The following two levels of company registration are available in Canada:
- government incorporation
- territorial incorporation on a provincial level.
- These corporations that are federally registered are governed by federal laws. Different territorial regulations apply to the corporation depending on where it was created, whether it was in a province or territory. As a result, if the firm is founded in Alberta, Albertan rules and laws will also apply to the company. In addition, Corporations Canada is the principal regulator of the company registration procedure in Canada.
- Do I require a Canadian business bank account?
- Upon incorporation, a business bank account needs to be opened.
What are the many advantages of the Canadian government for business ease?
The following are a few advantages provided by the Canadian government to make doing business easier:
- Advantages of Free Trade Agreements include Reduced Corporate Tax Rate
- Benefits of a sophisticated economy Strong intellectual property laws
- the wealth of available natural resources
- favourable business environment
- Competent and Educated Workers
How may a Canadian company lessen its exposure to taxes?
Securing the Small Business Deduction percentage of tax, which lowers the net effective tax rate to 9%, is one strategy to reduce tax exposure. In addition, the business has 20 years to carry losses forward. Also, shareholders have the option of deferring any personal income taxes. This can be achieved by keeping profits within the company.
What is the crucial procedure to complete in order to register a business in Canada?
The decision of the company’s appropriate business structure is the most crucial step in the registration of a company in Canada.