DOING BUSINESS IN CANADA IN 2017
Since 2003, Healy Consultants Group PLC has assisted our Clients with starting their company in Canada. Our services include i) Canada business registration ii) assistance to license the company iii) corporate bank account opening services in Canada and abroad iv) employee recruitment v) visa strategies and vi) office rental solutions.
|Summary||LLC||LLP||Representative office||Branch office||PLC|
|Also known as||Private corporation||Limited Liability Partnership||Representative office||Branch office||Public corporation|
|Best use of company?||All purposes||Professional services||Marketing & research||Specific projects||Exchange listings|
|How soon can you invoice Clients\sign sales contracts?||3 weeks||3 weeks||Cannot||4 weeks||4 weeks|
|How soon can you hire staff?||5 weeks||5 weeks||5 weeks||6 weeks||6 weeks|
|How soon can you sign a lease agreement?||3 weeks||3 weeks||3 weeks||4 weeks||4 weeks|
|Corporate tax rate on annual net profits?||31%||0||0||31%||31%|
|Legally tax exempt if properly structured?||No||Yes||Yes||No||No|
|Government grants available?||Yes||Yes||No||Yes||Yes|
|Resident director/partner/manager required?||Yes||No||Yes||Yes||Yes|
|Minimum paid up share capital?||$1||$2||None||None||$1|
|Can bid for Government contracts?||Yes||Yes||No||Yes||Yes|
|Corporate bank account location?||BMO||RBC||Scotia bank||TDB||CIBC|
|Can secure trade finance?||Yes||No||No||Yes||Yes|
|Limited liability entity?||Yes||Yes||No||No||Yes|
|Average total engagement costs?||12,100||12,500||12,100||13,100||12,100|
|Average total engagement period?||12 weeks||12 weeks||12weeks||13 weeks||13 weeks|
|Accounting and tax considerations||LLC||LLP||Representative office||Branch office||PLC|
|Must file an annual tax return?||Yes||Yes||Yes||Yes||Yes|
|Access to double taxation treaties?||Yes||Yes||No||Yes||Yes|
|This entity enjoys Government incentives?||Yes||Yes||No||No||Yes|
|Company Registration||LLC||LLP||Representative office||Branch office||PLC|
|Minimum number of shareholders/partners?||1||2||Parent company||Parent company||1|
|Minimum number of directors/managers?||1||2||1||1||3|
|Shelf companies available?||Yes||No||No||No||No|
|Time to incorporate a new entity?||3 weeks||3 weeks||3 weeks||3 weeks||3 weeks|
|Can easily convert to a PLC?||Yes||No||No||No||Yes|
|Public register of shareholders and directors?||Yes||Yes||Yes||Yes||Yes|
|Can have preference shareholders?||Yes||Yes||No||No||Yes|
|Business Considerations||LLC||LLP||Representative office||Branch office||PLC|
|Restrictions on nature of business activities||None||Yes||Yes||Yes||None|
|Good entity for trademark registration?||Yes||Yes||No||No||Yes|
|Can secure an import and export license?||Yes||No||No||Yes||Yes|
|Group HQ tax incentives?||Yes||Yes||No||No||Yes|
|Must file annual financial statements?||Yes||No||Yes||Yes||Yes|
|Must appoint an independent statutory auditor?||No||No||No||No||Yes|
|Withholding tax on payments to parent company?||Up to 25%||Up to 25%||Up to 25%||Up to 25%||Up to 25%|
|The entity will likely be regulated by?||CRA|
|Travel required for business setup?||No|
|Travel required for bank account opening?||No|
|What will be included in my customer sales invoice?||(Click link)|
|This country has signed free trade agreements?||Yes|
|This country is a member of WIPO/TRIPS?||Yes|
|This country is a member of the ICSID?||Yes|
|Average customs duties suffered?||0.032|
|Government foreign investment approval required?||No|
|Average monthly office rental? (US$ per sq m)||40|
|Average hourly CAD$ salary for local skilled employees?||26|
|CAD$ deposit interest rate? (1 year average)||0.013|
|US$ deposit interest rate? (1 year average)||0.01|
|Overseas remittance currency controls?||No|
|Multi-currency bank accounts available?||Yes|
|Corporate visa debit cards available?||Yes|
|Quality of e-banking platform?||High|
|Crowd funding available in this country?||Yes|
|Can be wholly foreign owned||Yes|
|GST payable on sales to local customers?||5%|
|Withholding tax on payments to shareholders?||Up to 30%|
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Advantages and disadvantages
Advantages of Canada company registration
- It is easy to start a business in Canada as only i) one shareholder and ii) one director are required to establish the company. There is also no restriction on their nationality and the minimum paid-up capital for registration of a Canadian company is only US$1 (CAD1);
- Our Clients often choose to start their company in Canada to access foreign markets because:
- A company registered in Canada and exporting locally manufactured products and services to the United States and Mexico can do so free of custom duties, thanks to the North American Free Trade Agreement (NAFTA);
- Such advantage allow Canadian businesses to tap into a market representing i) 480 million people and ii) an aggregate value of USD21,000 billion, the second largest in the world after the European Union;
- Canada has also signed 15 free trade agreements with over the quarter of the world countries. Local companies hence benefit from the 13th largest foreign market size in the world according the World Economic Forum;
- Our Clients running a company in Canada will also be able to use excellent infrastructure to sell their products and services abroad: local road, railroad and maritime networks are ranked amongst the 25 best in the world;
- For all the reasons listed above, the World Bank ranks Canada as the 44th best place to trade across borders.
- Our Clients running their business in Canada will pay lower taxes than they would elsewhere because:
- The federal tax rate for Canadian-controlled small businesses only reaches 11% thanks to the small business deduction. Corporate tax rates payable at the provincial level are in a range of 3% to 16%;
- Business setup in Canada also confers certain tax benefits: losses can be carried forward up to twenty years. It is also possible for a shareholder to defer some personal income tax by retaining earnings at the company level;
- Canada has 95 double taxation avoidance treaties currently in force with countries including i) the United States ii) Australia iii) Singapore iv) the United Arab Emirates v) India vi) Germany vii) France viii) Russia and ix) the UK. These treaties provide several advantages to reduce withholding tax payable after Canada business formation;
- For all the reasons listed above, Canada is ranked by the World Bank as the 9th best country in the world for its tax system. Total taxation over a business’ earning only averages 21%, to be compared with 41% amongst OECD countries.
- Forming a company in Canada also confers the following advantages:
- It is easy to open corporate bank accounts all over the world for a Canadian company;
- It is possible to obtain employment and entrepreneurial visas for yourself and your staff after Canada business setup.
Disadvantages of Canada company registration
- All Canadian companies have to appoint at least one resident director. If needed, Healy Consultants can provide our Clients with nominee services for Canada director. Kindly refer to this resident director page for further details;
- Companies for which over 50% of the voting shares are held by non-residents are subject to higher corporate tax rates, which can reach up to 36% depending on the province of incorporation.
Steps to start a company and obtain a visa for Canada
Over the course of a six-month engagement, Healy Consultants will be pleased to assist our Clients to i) establish their company in Canada ii) open a corporate bank account for the company and iii) obtain a residency permit for them and/or for their foreign employees. During the engagement, we will also prepare all supporting documents for the visa application, including a comprehensive business plan detailing our Client’s proposed business activities in Canada, a market analysis and financial projections, and a convincing outline of reasons for migration to Canada. Click on the attachment for detailed steps to completion of the engagement.
Different types of Canada visasCanada offers some of the most established investment immigration programs in the world, conferring permanent residency status upon qualified workers and investors. This permanent residency status is particularly worthwhile given the requirement for every company’s board to comprise at least 25% Canadian citizens and permanent residents living in the country. These various types of visa programs enable entrepreneurs, investors and skilled workers to migrate to the country. Granted through a points system, these visa types are:
Entrepreneur Start-up Visa
- Our Clients looking to establish a company in Canada may apply for an Entrepreneur Start-up Visa if they i) have obtained a letter of commitment from a government-approved funding organization ii) meet the required language abilities in French or English iii) hold at least 1 year of post-secondary school educational qualifications iv) they possess enough funds to ensure their upkeep and v) they pass the Canadian medical and security clearances;
- For a successful application, our Clients are required obtain a stipulated minimum funding of at least i) CA$200,000 if funded by a designated Canadian venture capital fund or ii) CA$75,000 if funded by an angel investor group. Clients are not required to invest their own capital in the startup;
- The Canadian government only allows up to five individuals to apply for an Entrepreneur Start-up Visa under the same business venture. Any applicants above that cap will automatically be rejected;
- Quebec is the only Canadian province not to admit applicants under this visa program. Our Clients using this scheme must therefore live and conduct their business in another province such as Ontario, New Brunswick or British Columbia.
Express Entry Visa
- The Canadian government selects skilled migrants to qualify for the express entry visa based on the applicant’s ability to settle in the country and to participate in building the economy;
- Express Entry has two main tracks: skilled professionals (Federal Skilled Workers) and skilled tradesmen (Federal Skilled Trades). These are both restricted to lists of job functions that are in short supply in Canada;
- The Federal Skilled Worker track requires that the applicant’s qualifications and job role fall into bands 0, A or B on Canada’s list of occupational classifications;
- The Federal Skilled Trades program is more restrictive, being limited to a subset of occupational classifications in band B. In addition, visa applicants under the Federal Skilled Trades program may not live or work in Quebec. Our Clients who would otherwise be eligible for this visa type but wish to live in the province, for example in Montreal, must use a Quebecois scheme to do so;
- After the first steps of application, the applicants are selected and placed in an Express Entry pool where they are awarded ranking points. The highest scorers in the pool will be invited to apply for the permanent residency permit;
- Healy Consultants assists Clients who wish to gain permanent residency though this program to create an online Express Entry profile to determine the Client’s eligibility for the visa. Building an online profile requires i) a valid passport ii) your work experience or skill type known as the National Occupational Classification (NOC) iii) English or French language test results iv) academic credentials and v) a written job offer from a Canadian employer;
- In case a Client does not have a ready job offer or a nomination from a specific Canadian province, Healy Consultants will thereafter assist our Client to register with the Canadian Job Bank.
Self-Employed Immigration Visa
- This program is only open to those individuals who have had a prior self-employment experience in a capacity such as being i) an international athlete ii) a professional farmer or iii) an experienced artisan;
- Clients looking to obtain residency through this program must i) have at least 2 years’ experience in their fields and ii) prove that they possess relevant expertise and experience in farm management, athletics or arts that can guarantee them self-employment and significant contribution to Canada’s sporting, agricultural or cultural environment;
- As with the other visa applications, applicants through this program will also be evaluated based on their language skills, level of education, age and relevant experience. Clients can view the list of approved professional, skilled and technical occupations here.
Immigrant Investor Venture Capital Program (IIVC)
- This immigration program is only open to international investors involved in specific ventures including i) management or ownership of commercial institutions ii) private or public equity investments and placements;
- In order for an investor to qualify for this program they should fulfill the following requirements: i) having an individual net worth of CAD10million, ii) being prepared to invest at least CAD2million into the IIVC program for 15 years, iii) possessing an academic qualification equivalent to Canadian post-secondary school degree and iv) exhibit satisfactory proficiency either in English or French;
- Applicants under the IIVC program must live outside of Quebec. Investors wishing to gain residence in Quebec through investment should apply through the Quebec Business/Investor program, described below.
Quebec Business/Investor ProgramThis program is only available to those investors looking to become permanent residents in the province of Quebec. There are three sub-programs under this heading, including:
Investor ProgramUnder this program, the investor must i) have an individual net worth of CAD1.6million ii) be prepared to make a government investment of CAD800,000 for a 5-year period iii) possess business management skills.
Entrepreneur ProgramTo be eligible under this program, the entrepreneur must i) possess an individual net worth of CAD300,000 ii) be able to set up a business in Quebec in which they will invest CAD100,000 iii) create through the new business at least one job opportunity in the province for at least one of the first three years of operation and iv) possess managerial experience from a previously-owned business.
Self-Employed Person ProgramEligible applicants under this program must have an individual net worth of at least CAD100,000 and possess relevant experience and expertise in their intended venture in Quebec.
Provincial Nomination Program (PNP)Under this program, different provinces within Canada nominate individual applicants depending on their business and required qualifications as below.
ManitobaTo qualify for permanent residency in Manitoba, the applicant must have i) a minimum net worth of CAD350,000 ii) invest CAD$150,000 and own at least 75% shares of an eligible business iii) a 3 years of business ownership or management experience iv) deposit at least CAD100,000 with the government fund.
SaskatchewanAn investor must i) have an individual net worth of CAD500,000 ii) invest CAD200-300,000 (depending on the community invested in) and own at least a third of the shares iii) have at least 3 years’ business management experience and iv) create at least job opportunities for Canadians or unrelated permanent residents in Saskatchewan. Visit the government website for more information about the Saskatchewan entrepreneur scheme.
British ColombiaTo qualify in this province, the entrepreneur must i) have a personal net worth of CAD600,000 and ii) be willing to invest at least CAD200,000. Successful applicants under the British Columbia Entrepreneur Immigration Scheme must create at least one new full-time job for a Canadian citizen or permanent resident.
Prince Edward IslandFor a new company, the provincial administration requires an investor to i) have an individual net worth of CAD600,000 ii) invest at least US$150,000 iii) deposit with the government at least US$200,000 in a non-interest-baring escrow agreement. Certain businesses are ineligible for the provincial nominee program on PEI.
OntarioInvestors can only be eligible for business immigration in Ontario if i) they are looking to invest CAD3million and own at least a third of the company shares and ii) create at least five skilled job opportunities for Canadians and permanent residents in the province.
For investors to qualify for the Yukon business nominee program, they must i) have a personal net worth of CAD250,000 with CAD150,000 in liquid assets ii) invest at least CAD150,000 and own at least one third of the company’s shares iii) possess 2 years of business management experience.
There are also provincial nominee programs for skilled workers. However, as Healy Consultants specializes in helping entrepreneurs and business owners to set up and relocate their businesses, this page’s focus is on Canada’s investment and business startup programs.
Success tips when doing business in Canada
- Entrepreneurs must prepare a substantial study of the target Canadian markets. It should include i) an understanding of different market demands & changes ii) a substantial feasibility study and iii) research on local competition;
- International entrepreneurs should always keep in mind that, while Canadians may look like Americans and speak like Americans, there are many substantial differences between the two countries;
- Business meetings in Canada are usually more formal than in the US, relying on reserved approach;
- Canadians are generally very polite and accessible. During phone conversations thrive to be polite as much as possible;
- When introducing your colleagues to other businessmen, always strictly present them by rank, not by name;
- Eye contact is important and should be maintained throughout the conversation. Lack of the above speaks of disinterest and is frowned upon;
- Substantial exaggerations during negotiations are not well received and should be minimized;
- French speaking entrepreneurs will benefit greatly from doing business in Quebec where French language is most widely spoken. Conveniently, there are large numbers of Francophone people;
- Foreign entrepreneurs need to look beyond the southern parts of Canada as the only suitable places to do business. There are many growth opportunities in the middle and northern regions as well;
- Women are equal to men in the business world of Canada, as they occupy high positions in both public and private entities. When you negotiate with a female executive always demonstrate she is taken seriously.
Compare Canadian states
- Time to incorporate: Three weeks
- Cost to set up: US$12,100
- Minimum capital: US$1
- Physical office required: No
- Shareholders: 1
- Directors: 1
- Company secretary: No
- Resident director: Yes
- Corporate tax rate: 31%
- Corporate tax base: Worldwide
- Shelf companies: Unavailable
- Main company type: Limited company
Useful links for Canada
Government and public authority websites:
- Canada Tax Authority
- Canada Company Registrar
- Canada company name search
- Central Bank of Canada
- Canada Stock Exchange
- Investment Authority
- Chamber of Commerce
- Canada airports
- Visiting Canada
- Deloitte – The future of productivity – A wake-up call for Canadian companies
- KPMG Canada – Tax Facts
- Australian Government – Canada Fact Sheet
- Business Corporations Act – SSB
- Steps to Incorporating a Company in British Colombia – BC Registry Services
- Guide To Federal Incorporation – Corporations Canada
- Canadian Banks 2013 – A new normal (PWC)
- Welcome To Canada – What you should know (CIC)
- The Foundations of a Competitive Canada – Canada Chamber of Commerce
- Invest in Canada