How to register a company in CANADA in 2021
Since 2003, Healy Consultants Group PLC assists our Clients with doing business in Canada. Our services include, but are not limited to i) Canada company registration ii) securing relevant licences iii) opening a corporate bank account in Canada or overseas iv) recruiting employees, including visas for non-Canadian staff and v) assisting with office rental solutions for our Clients.
Popular business entities in Canada
|Compare different Canada entities||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?||US$12,200||US$12,500||US$12,100||US$13,100||US$12,100|
|Average total engagement period?||12 weeks||12 weeks||12 weeks||13 weeks||13 weeks|
|Accounting and tax considerations||LLC||LLP||Representative office||Branch office||PLC|
|Must file an annual tax return?||Yes||Yes||Yes||Yes||Yes|
|Access to double taxation treaties?||Yes||Yes||No||Yes||Yes|
|This entity enjoys Government incentives?||Yes||Yes||No||No||Yes|
|Company Registration||LLC||LLP||Representative office||Branch office||PLC|
|Minimum number of shareholders/partners?||1||2||Parent company||Parent company||1|
|Minimum number of directors/managers?||1||2||1||1||3|
|Shelf companies available?||Yes||No||No||No||No|
|Time to incorporate a new entity?||3 weeks||3 weeks||4 weeks||4 weeks||4 weeks|
|Can easily convert to a PLC?||Yes||No||No||No||Yes|
|Public register of shareholders and directors?||Yes||Yes||Yes||Yes||Yes|
|Can have preference shareholders?||Yes||Yes||No||No||Yes|
|Business Considerations||LLC||LLP||Representative office||Branch office||PLC|
|Restrictions on nature of business activities||None||Yes||Yes||Yes||None|
|Good entity for trademark registration?||Yes||Yes||No||No||Yes|
|Can secure an import and export license?||Yes||No||No||Yes||Yes|
|Group HQ tax incentives?||Yes||Yes||No||No||Yes|
|Must file annual financial statements?||Yes||No||Yes||Yes||Yes|
|Must appoint an independent statutory auditor?||No||No||No||No||Yes|
|Withholding tax on payments to parent company?||Up to 25%||Up to 25%||Up to 25%||Up to 25%||Up to 25%|
|The entity will likely be regulated by?||CRA|
|Travel required for business setup?||No|
|Travel required for bank account opening?||No|
|What will be included in my customer sales invoice?||Read more|
|This country has signed free trade agreements?||Yes|
|This country is a member of WIPO/TRIPS?||Yes|
|This country is a member of the ICSID?||Yes|
|Average customs duties suffered?||5%|
|Government foreign investment approval required?||No|
|Average monthly office rental? (US$ per sq m)||CAD$22|
|Average hourly CAD$ 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%|
Advantages and disadvantages of doing business in Canada
- Despite geopolitical risks, some sectors of the Canadian economy benefit from the ongoing US-China trade war. For example, Canada supplied 60% of China’s wheat imports in 2018-2019, almost double the previous year. This uptick was at the expense of US wheat exporters.
- Canada is a major G7 global economy which ranks as one of the world’s most competitive with i) an educated population where almost one in three adults holds a university degree ii) one of the world’s most productive labour forces iii) the world’s 24th highest per capita income and iv) stable, well regulated financial system which provides comfort to investors and allows unrestricted international multicurrency transactions.
- Canada’s national investment promotion agency aims to attract investment in i) technology ii) advanced manufacturing iii) natural resource iv) entertainment and media v) agribusiness vi) clean technology and vii) life sciences.
- Canada company set up is straightforward and inexpensive for multinational Clients because i) only one shareholder and one director are needed, who can be any nationality and ii) the paid-up capital requirement is only C$1 and iii) company registration formalities are clear, with the certificate of incorporation issued within three weeks on average. The World Bank rates Canada the world’s third easiest country in which to start a business.
- The World Bank also ranks Canada highly for the ease of running and maintaining a company, for example i) registering property ii) getting credit iii) protection of minority investors iv) ease of paying taxes and v) resolving insolvency.
- A Canadian subsidiary is an excellent vehicle to conduct cross-border trade because:
- The US-Mexico-Canada (USMCA) free trade agreement grants Canadian exporters zero-customs access to vast US and Mexican markets, with a combined 480 million consumers.
- Canada’s extensive network of free trade and investment promotion agreements offers Canadian firms low-tariff access to key markets around the world.
- The smooth flow of Canadian imports and exports is facilitated by good infrastructure, including modern road and rail networks linking to ports on both east and west coasts.
- Canada is one of the world’s least corrupt countries, and foreign investors can expect i) project qualification and tendering processes to be transparent ii) their investments (including intellectual property) to be protected by law and iii) to be treated fairly in Canadian courts case of disputes.
- A Canadian company can reduce its tax exposure by i) accessing the small business deduction by which the federal tax rate for a Canada-controlled small business is only 11% ii) carrying forward losses for up to 20 years and iii) a shareholder deferring personal income tax by retaining earnings at company level iv) accessing one of the 94 double taxation treaties Canada has signed with key economic partners including a) USA b) Australia c) Singapore d) UAE e) India f) Germany g) France h) Russia and j) the UK, which reduce withholding taxes.
- A Canadian company looks good to customers and suppliers. In addition, international banks welcome quality applications for multicurrency corporate bank accounts from Canadian companies.
- Canada is cost competitive compared with other G7 economies such as the US, UK, Germany or Japan. For example, i) the average cost for grade A office space in downtown Toronto was C$35.38 per square foot in the second quarter of 2020 (compared to US$66.96 per square foot in New York and ii) the average salary in Canada for a skilled worker is C$50,000 (compared to US$94,700 in the USA).
- Canada’s economy shrank 40% in the second quarter of 2020 because of the effects of the COVID-19 pandemic. In August 2020, Canada’s unemployment rate was 10.2%.
- Canada’s economic health is closely linked to the US and Ottowa’s geopolitical relations with its neighbour. Since 2018 President Trump has threatened to impose tariffs on Canadian steel, aluminium and other resources. Canadian car assembly factories also depend on the tariff-free flow of parts and supplies from the USA.
- Canada’s relations with China are tense following Canada’s 2018 arrest of the CFO of Huawei. China retaliated by blocking imports of canola and pork from Canada.
- The USMCA agreement gives the US veto over Canada and Mexico’s future free trade agreements with China.
- Because of the economic damage inflicted by the COVID-19 pandemic, business sentiment in Canada is weak and the central bank’s forecast of business conditions fell in mid-2020 to its lowest levels since the Great Depression.
- A Canadian company must appoint a resident director. If required, Healy Consultants Group PLC will be the nominee resident director to fulfil this legal requirement.
- The Canadian dollar is vulnerable to i) weak energy and natural resource markets ii) a weak national economy and iii) the global risk trade preference for the US dollar. A strong Canadian dollar makes Canadian exports more expensive and imports cheaper for Canadian companies.
- It is challenging to open a corporate bank account for a Canadian company if shareholders, directors and bank signatories live outside Canada. There is a 20% chance that shareholders, directors and bank signatories will need to meet the bank in Canada for an interview.
- It is challenging to recruit skilled non-Canadian workers. When applying for a Canada work visa for a foreign employee, a Canadian company must i) undergo a Labour Market Impact Assessment demonstrating a need to hire a foreign worker for the role on offer and ii) have a job offer approved by Employment and Social Development Canada.
- In 2020 Canada’s net migration rate declined for the fourth consecutive year. In practical terms, this means that the availability of skilled workers in specific industries. Canada currently has shortages of i) doctors ii) chartered accountants iii) software engineers and iv) mechanical engineers, for example.
- A company incorporated in a specific province (e.g. Ontario) is required to also register in other provinces, in case such company wants to conduct business activities across provincial borders. A solution to overcome such restrictions is to register a federal corporation. However, federal corporation have to complete 2 separate filings for annual and tax returns per year, versus a single filing for a provincial corporation.
Typical Canada engagement steps and timeline
Typical Canada engagement steps
- Our Client i) settles Healy Consultants Group PLC’s fees ii) e-mails a scanned, signed copy of our engagement letter and iii) submits due diligence documents.
- We agree with our Client i) the most suitable entity for the business ii) preferred corporate structure iii) licensing requirements (if any) and iv) multicurrency corporate bank account preferences.
- Healy Consultants Group PLC prepares a detailed engagement plan for the Client, providing a weekly, step-by-step roadmap to engagement completion.
- We submit a full incorporation file with Corporations Canada and receive a certificate of incorporation within three weeks.
- We apply to open a corporate bank account either in Canada or overseas for the new company.
Typical Canada engagement timelineStartEngagement Planning
1 weekCompany incorporation
3 weekCorporate bank account approval
4 weeksCorporate internet banking approval
3 weeksEngagement completion
1 week12 weeks
Additional support services
Opening a corporate bank account for a Canadian company
Healy Consultants Group PLC can open a corporate bank account in Canada for a locally-incorporated or foreign company. There is a 20% chance the bank will ask directors, shareholders and bank signatories to travel to Canada for an interview before opening the account.
Canada accounting & tax considerations15% (federal)11.5-16% (provincial)
Corporate tax5% (federal)
Goods & Services Tax33%
Personal Income Tax30 April
Deadline for e-filing corporate tax return
- Start-Up Visa for businesses which have raised at least i) C$200,000 through a Canadian venture capital fund or ii) C$75,000 through a Canadian angel investor group.
- The Canada-United States-Mexico (CUSMA) agreement, where citizens of the three countries can fast access each country for temporary business of investment.
- Work permits for non-Canadians with approval to take up a job in Canada.
- The Quebec Investor Program.
Frequently asked questions
Latest information as of 2021