Starting a business can be both exciting and rewarding. However, incorporating a company in Canada is an excellent move for entrepreneurs who want to build a strong foundation for their business.

Incorporation offers several benefits for entrepreneurs and business owners in Canada. These benefits go beyond just providing legal protection. Incorporation is a smart move and a relatively simple process with many advantages for business owners. This is regardless of their citizenship status in Canada.

If you’re an entrepreneur considering this, we’ll walk you through incorporating a business in Canada in this article. This includes insights on the benefits, costs, and whether or not foreigners can do so. 

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How to Incorporate a Business in Canada

Let’s understand what incorporating a business means before we get into the process. Incorporation simply means legally establishing a separate company independent of its owners, which provides certain benefits and protections.

Here are the steps to incorporate a business in Canada:

1. Choose where to register

This is the first step in incorporating a business in Canada. You may either incorporate your business federally or in specific provincially. You may also choose to incorporate both federally and one or more provinces.

The federal registration protects the business from having similar names in all 10 provinces while the provincial registration protects the business only in the province of registration.

It is important to note that businesses incorporated Federally will need to process an Extra-Provincial Registration in the specific province where it will carry out business activities. This is also necessary for tax purposes, opening bank accounts, getting city licenses and other business and official procedures.

2. Choose a Business Name

After deciding the region to incorporate in, the next step is to choose a name. In Canada, you may either opt for a Numbered Name or a Unique Name. A numbered name is simply a set of unique numbers assigned to the company by the Corporate Registry Office while a unique name is the specific name you choose for your company.

To use a unique name, you have to ensure that it complies with the laws and guidelines that the government has established. You also have to verify whether the name you’ve chosen for your company is available through the Canadian government’s online database.

2. Determine the Business Structure:

Decide whether your company will be organized as a corporation, partnership, or sole proprietorship. Regardless of what structure you choose, know that each structure has pros and cons So, do your homework and select the one that best meets your requirements.

3. Prepare the Incorporation Documents

Write the Articles of Incorporation. This usually contains important information about your company, including its name, objectives, and registered office location.

4. Register Your Business

Register your business through the relevant territory or provincial authority. The registration procedure could change a little depending on where your company is located. However, you must supply essential details, which include your company name, address, and organizational structure.

5. Appoint Directors

Select the individuals who are going to be directors of your company. For this, 25% of directors of corporations resident in the country are required federally and in some states. However, some states do not have these requirements. These include Alberta, Quebec, Nova Scotia, Prince Edward Island,  Ontario, New Brunswick and British Columbia.

6. Obtain Business Permits and Licenses

To do lawful business in Canada, you might need certain permits and licenses. This largely depends on the type of business, though. Also, examine the specifications for your sector and make sure all applicable laws are being followed.

7. Obtain a Business Number

Submit an application to the Canada Revenue Agency (CRA) for a Business Number (BN). The BN is a special identification number for your company that is needed for some tax-related reasons.

8. Register for Taxes

Once you’ve registered your federal corporation in Canada, it’s important to secure extra-provincial registration if you plan to operate outside the province where you initially registered. This additional step ensures legal compliance and enables you to conduct business across different provinces without any issues.

Benefits of Incorporating a Business in Canada

Incorporating your business in Canada offers several advantages:

• Limited Liability Protection: One of the significant benefits of incorporation is that it keeps your personal assets separate from the company’s obligations. Because of the limited liability protection that this separation offers, your assets are often shielded from business obligations and claims.
• Credibility and Professionalism: A corporation is seen as having greater credibility and professionalism when compared to other business structures. It may draw partners, investors, and customers who would instead do business with well-established companies.
• Tax Benefits: In Canada, corporations can postpone taxes and take advantage of small company tax deductions, among other tax benefits. These benefits may minimize your tax responsibilities and result in financial savings for your company.
• Continuity and Succession Planning: A company can continue without interruption, even if its shareholders or owners change. This is known as perpetual or eternal existence. This ensures the long-term sustainability of your company by providing stability and assisting with succession planning.
• Access to capital: If you’re a corporation, you may apply for business loans or issue shares to investors to raise funds.

Because of these advantages, incorporation is a preferred option for many business owners wishing to create a stable and long-lasting company presence in Canada.

Cost of Incorporating a Business in Canada

The province or territory and the intricacy of your business structure are the two main factors that affect the cost of incorporating a business in Canada. Sidebrief is here to assist entrepreneurs in the process of registering their business in Canada.

We provide two distinct pricing options for incorporating Corporations: the Pro package at $1,800 and the Premium package at $2,200. Choose the option that best suits your business needs with Sidebrief’s comprehensive registration support.

Can a Foreigner Incorporate a Company in Canada?

Yes, foreign entrepreneurs are welcome in Canada and can establish their businesses there. However, there are a few requirements to keep in mind:

• Canadian Resident Director: the company’s directors must consist of 25% resident directors. This person may be a citizen of Canada, a permanent resident, or a person with work authorization in Canada. If you’re not a Canadian citizen, you can employ a nominee director service or designate a Canadian resident as a director.
• Registered Office: Your company must have a registered office in Canada, the official address for official government and legal correspondence.
• Extra-Provincial Registration: You must get an extra-provincial registration for your corporation after you’ve registered your federal corporation in Canada. This is especially if you plan to do business outside your home province. This step ensures you’re legally allowed to operate in other provinces and keeps everything running smoothly across different regions.
• Tax Obligations: Foreign-owned businesses could be subject to extra tax requirements, such as withholding taxes on specific kinds of revenue. For these tax purposes, your company must also get a Business Number from the Canada Revenue Agency (CRA).

Establishing a company in Canada is a big step in laying a solid foundation for your entrepreneurial endeavors. It’s a simple procedure with many advantages, including continuity, credibility, tax benefits, and limited liability protection. Foreigners are welcome to start firms in Canada, and incorporation costs vary.

SIDEBRIEF

Sidebrief is a RegTech startup that has helped founders, entrepreneurs, and business owners across borders register their companies with ease and comply with regulations. We provide the tools for founders to start and scale businesses across borders from a single interface.

For further information, contact us today.
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