Canada is a wonderful place to start a business for a vast range of reasons. For one, it boasts of a skilled workforce, access to a wide array of government grants and tax credits, a considerable cost of living, and opportunities to obtain venture capital and seed money for your business.
Note that these perks are not only for Canadian citizens, especially since there are many options for foreign entrepreneurs who choose to do business in the country.
Before you start investing in the process, it’s necessary to understand that each Canadian province and territory has its own rules of business. Owing to that, the process for starting your business in Canada will vary based on where you intend to start and run your business. Coupled with registering your business provincially, you can also register on a federal level.
Note that businesses registered federally can operate all across Canada with increased name protection and a different set of annual filing rules. Even if you are registered federally, have it in mind that your business may still be expected to register as an extra-provincial corporation with each of the different provinces in which you intend to operate.
Which Canadian Province Do You Want to Start a Business?
1. Alberta | 2. British Columbia | 3. Manitoba
4. New Brunswick | 5. Newfoundland and Labrador
6. Northwest Territories | 7. Nova Scotia
8. Nunavut | 9. Ontario | 10. Prince Edward Island
11. Quebec | 12. Saskatchewan | 13. Yukon
As a foreigner, there are numerous ways to start your business in Canada. Here are three different approaches you can easily take;
Modes of Starting Business in Canada as a Foreigner
Table of Contents
- Business Expansion
- Starting a Business in Canada without Living There
- Starting a Business in Canada by Immigrating
- 1. Choose a Workable Business Idea or Niche
- 2. Conduct Your Feasibility Studies and Market Survey
- Economic Analysis
- 3. Choose a Business Entity
- 4. Conduct a Name Search
- 5. Prepare and Submit the Necessary Documents
- 6. Write a Workable Business Plan
- 7. Register Your Business Name
- 8. Source for New Business Financing
- 9. Apply and Obtain the Needed Business License and Permits
- Business Licenses and Permits You Need
- List of Government Agencies In-charge of Registering Businesses and Issuing Licenses and Permits in Canada
- 10. Register for the Goods and Services Tax/ Harmonized Sales Tax (GST/HST)
- 11. Register for Provincial Sales Tax (PST)
- 12. Purchase the Needed Business Insurance
- 13. Lease or Rent and Ideal Office Location
- Top 5 Best Cities to Do Business in Canada
- Possible Threats and Challenges You will Face
In a case where you already have an established foreign business and want to expand into Canada, the process is quite simple. You may not necessarily need to have Canadian citizenship or permanent resident status, but you will need someone who does to proceed.
If you plan to run your business in more than one province or territory, then you will be expected to register as an extra-provincial corporation. Have it in mind that some provinces, like Ontario, mandate foreigners to use an Agent of Service to register as an extra-provincial corporation. This agent will have to be an individual who is 18 years and a resident in the province or a corporation with a registered office in the province.
Starting a Business in Canada without Living There
Even if you do not immigrate to Canada and are not a Canadian citizen or a landed immigrant (has permanent resident status), you are still allowed to start a company in Canada. Note that the most important thing to understand is the rules about who can and who can’t start certain types of businesses, which are most often determined by Canada’s provinces and are different from province to province (or territory).
Even though the rules vary from one province to another, it is almost impossible for a non-resident to run a business in Canada. Even in British Columbia, known to have the most relaxed of rules on non-residents starting a business, you will still be expected to have a physical address.
And in most provinces, no foreigner is allowed to start a business without a physical address and work permit. You’ll not be able to establish a sole proprietorship, but you can form a partnership or corporation without living in Canada.
Starting a Business in Canada by Immigrating
If you wish to live in Canada, you could apply to come to Canada as a business immigrant. This is the only way you will be able to both start a business in Canada and live there. Know that 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 primarily for entrepreneurs who plan to establish a business in Canada and provide jobs.
By leveraging the above program, you can genuinely fast-track your immigration process and become a permanent resident if you qualify. But to qualify, you will be expected to have a qualifying business with support from a designated organization in Canada. These organizations could be venture capitals, business incubators, or angel investors.
Steps to Start a Business in Canada as a Foreigner
The steps necessary to start and run your business in Canada will most often depend on the province you intend to operate. In Canada, every province has its laws on the establishment of business by foreigners. Regardless of the province you intend to start your business, here are the necessary steps you have to take;
1. Choose a Workable Business Idea or Niche
No serious entrepreneur registers a business without first settling for a workable business idea or niche. So, the first step that you are expected to take if you’re serious about starting a business in Canada is to come up with a workable business idea; an idea that can get the support of the Government and of course that can attract clients.
For example, if you are not too sure whether starting a Marijuana dispensary business is legal in Canada, why choose such business idea? So, the rule of thumb is that you must ensure that your business idea falls in line with what is acceptable in Canada.
Another thing you would need to evaluate is what kind of business will be best for you, and if it will better for you to start from the scratch or buy a franchise. Before buying a franchise in Canada, you should be knowledgeable about Canadian laws regarding buying franchises. All these should be done before you write out your business plan. Your business plan is a guide that shows how you intend to run your business.
2. Conduct Your Feasibility Studies and Market Survey
Irrespective of the country or city that you decide to start a business, the one important step that you are expected to take is to conduct thorough feasibility studies and market survey. In other words, once you have settled with a business idea, the next step to take is to conduct thorough feasibility studies and market survey.
With the result from your feasibility studies and market survey, you will be able to make informed decisions, especially as it relates to the type of business to settle for, the location for your office, the demographic composition of those who would need your services or product, the competitions that you will be confronted with, how to source for raw materials or goods and loads of other factors that can either make or mar your business.
One of the factors to consider is the economy of Canada itself. You should know how well the country fares against other G-7. Canada’s economic fundamentals are quite strong and are supported by an independent judiciary that ensures that an effective rule of law is enforced. Most large advanced economies have been struggling with the burden of high government spending that has resulted into fiscal constraints. However, that of Canada has been prudent.
Canada has a high figure of small operational businesses that have at least one employee on their payroll pegged at 1,138,761. As at 2005, small businesses in Canada accounted for an estimate of 42% of the GDP for the country’s private sector. Canada’s economic fundamental are strong and is supported by an independent judiciary as well as a solid protection of property rights. Canada was ranked 6th globally for its economic freedom, and 1st in Northern America.
Canada has one of the largest mining operations in the world, with over 20 active mines producing more than 60% minerals and metals. As at 2012, mineral exports totaled $92.4 billion, this accounted for 20.3% of total exports in Canada. This has made Canada to be the top destination for mineral exploration.
Canada’s internationally acclaimed postsecondary education system produces across all fields, thousands of highly skilled graduates yearly. This has resulted in a diverse workforce with the highest proportion of any Organization for Economic Cooperation and Development (OECD) country.
According to an index report from Aon Hewitt; Toronto, Montreal, and Vancouver, were among the 10 lowest-risk cities in terms of recruiting and employing workers. Canada also has in place an efficient immigration system that attracts and retains top talents from other countries.
Another thing that works in Canada’s favor is its climate which isn’t harsh as well as its abundance of natural resources. It shares great business and economic connections with America, Mexico, and Asia.
3. Choose a Business Entity
In Canada, there are four common types of business entities that foreigners can choose from. These are partnership, cooperative, sole proprietorship, and corporation. Note that every one of them has its pros and cons, and the one you go for will depend on the kind of business you want to establish.
Unlike the United States, Canada does not have an equivalent of an LLC (limited liability Company), therefore if you are seeking more limited liability protection, you will have to choose a corporation as your business entity type.
4. Conduct a Name Search
Before registering your business, you will be expected to carry out a name search to make sure the name you intend to work with isn’t in any way similar to existing company names. To do this; you will have to conduct a NUANS name search to ensure your desired business name is available.
A NUANS report is a list of existing corporate and business names, as well as trademarks, that are similar to the one being proposed. A NUANS report helps avoid selecting a name that is already in use. This search is mandatory when registering a Federal Corporation in Canada.
5. Prepare and Submit the Necessary Documents
You will also be expected to submit certain documents before you can register your business. These documents vary based on which business entity you’re registering as, however, here is a basic list of requirements that you should gather as a starting point:
- Certificates of Incorporation
- NUANS report conducted in the last 90 days
- Full Registered Name of the Business
- List of names and addresses for each director (minimum of 1 is required)
- List of names and addresses for each shareholder (minimum of 1 is required)
- Description of company’s business or business idea – mission statement and explanation of the purpose
- Bank reference letters
- Copies of Passports
- Business License(s)
- Resume and Photo
- Lease contracts of any Canadian office addresses
6. Write a Workable Business Plan
No matter the type of business or size of business you intend starting in Canada, it is a wise decision to first write a good business plan before taking any action. The truth is that in order to successfully run a business, you would need to have a good and workable business plan in place. With a workable business plan in place, you will reduce the trial and error approach of doing business.
So if you want to start your own business in Canada, you are required to write a detailed business plan that can pass muster; you should work with the facts, figures and other indices in the industry as it applies to the location you intend establishing your business.
7. Register Your Business Name
Once you are able to complete the above listed points, then you can go ahead to register your business name. Of course, you must have already done the necessary business name search so that you will not pick an already used name.
As regard your registration and licensing requirements, you should visit your municipal, provincial and federal government to get the process started. You would need to register your business by selecting a province or territory out of the 10 provinces in the country.
Your decision on a territory should be based on tax options for your company especially as regards the Goods and Services Tax (GST), and Harmonized Sales Tax (HST) which can be quite confusing for new business owners; if you have a sizeable demographic and psychographic composition of those who would go for your services; and the guiding local laws for your kind of business.
When you have registered your business name, you will be issued with a Business Number, registered business name and a GST/HST account.
Please note that you can register your business name online via Canada Revenue Agency’s Business Registration Online portal; they take care of all of your federal business registration requirements. If you want to launch and operate your business in the province of Quebec, you will be required to register using Revenue Québec’s Businesses Portal.
You can also go ahead to register for a business number, GST/HST, corporation income tax, payroll and import/export accounts on the online portal.
8. Source for New Business Financing
One of the reasons why Canada is considered a top destination when it comes to doing business is because there are financial institutions that are established to help finance new businesses. So, the next step you are expected to take if you have successfully registered your business and obtained the required document is to ensure that you source for new business financing. The only reason why you should ignore this step is if you already have the required startup capital.
9. Apply and Obtain the Needed Business License and Permits
Please note that licensing for businesses in Canada is different from business registration and it is the city’s Municipal Licensing and Standards Division that handles the application process. If you want to apply for business license, you would need to go along with photo identification, proof of work status, a copy of the registration along with notarized controlling interest forms.
If you are not sure on the type of business license and permit to apply for, then you should visit Industry Canada’s BizPaL. They have useful tools for finding out what federal, provincial/territorial and municipal permits and licenses you will need for your business. As a matter of fact, BizPaL will provide a personalized list of the business documents you need for all levels of government.
Business Licenses and Permits You Need
Starting a business in Canada is subject to laws especially laws from the federal, provincial and municipal levels of government. You would need to carry out a research to know the business licenses and permits that your business would be required to have depending on where you intend to locate your business. Some of the common licenses and permit include:
- Municipal zoning and licensing – Municipal are responsible for issuing licenses to businesses such as vehicular businesses, stationery businesses, trades and other professions.
- Provincial licenses, permits, and regulations – This is usually required by many industries.
- Retail home sales business licensing regulation
- General licensing and security regulation
- Tobacco retail dealer’s permit
List of Government Agencies In-charge of Registering Businesses and Issuing Licenses and Permits in Canada
Different licensing bodies exist in Canada that handles the businesses and the permits and licensing that they might seek. These are the agencies you would need to visit if you expect to be fully licensed. The list includes;
- Canada Revenue Agency (CRA)
The CRA is responsible for assigning a Business Number (BN) to a business or other non-profit organizations such as a charity, so as to help with tax matters that are related to business in Canada. The BN ensures that your business dealings with other businesses, organization, and government agencies are made easy.
- Ministry of Community Safety and Correctional Services
This agency is responsible for regulating the private security industry in Ontario. This includes the licensing of private investigators and agencies, security guards, as well as the registration of employers that directly employ in-house security staff.
- Canadian Environmental Assessment Agency
This agency is in charge of delivering high quality environmental assessments, and is also expected to be an expert on the subject matter within the Canadian government.
- Canadian Food Inspection Agency
This is a science-based agency that is responsible for protecting the Canadian people from health risks related to food and zoonotic diseases that can be preventable. The agency is within the health portfolio and works to eradicate risks to food safety by working in partnership with relevant partners in the private and public sector.
- Canadian Intellectual Property Office
This agency is a part of Innovation, science and Economic Development Canada. They are responsible for administering and processing of Intellectual Property (IP) in Canada.
10. Register for the Goods and Services Tax/ Harmonized Sales Tax (GST/HST)
The next step that you are expected to take is to ensure that your register for the goods and services tax / harmonized sales tax (GST/HST) in your province. If your new small business’s gross income exceeds $30,000, it is mandatory to register for GST/HST. (Note that this Small Supplier exemption doesn’t apply to all businesses: taxi and limousine services, for instance, always have to register for GST/HST.)
In order to be on the good book of the law when operating your business in Canada as a new business that is not making up $30,000, it is still to your advantage to register for GST/HST immediately because of Input Tax Credits, which are basically your way of getting back the GST/HST your business has paid out on purchases for business use.
If you are interested in finding out more information on the GST/HST, visit Answers to Common GST/HST Questions and/or the GST/HST library.
11. Register for Provincial Sales Tax (PST)
The next step to follow to ensure that your business is starting on the right footing is to ensure that you register for provincial sales tax (PST). For example, if you choose to start your business in Saskatchewan or British Columbia or Manitoba, it is compulsory to register as a collector of provincial sales tax (PST).
But, if you decide to start your business in Quebec, you will need to register for Quebec Sales Tax (QST). Please note that some provinces have not harmonized their sales taxes with the federal goods and services tax (GST) and in those provinces, you will also have to register to collect and remit the appropriate provincial tax.
12. Purchase the Needed Business Insurance
The rule of business engagement in Canada and in most countries of the world is that, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your business.
You might want to consider buying some or all of these insurance policy covers for your business; General insurance, Health / Medical insurance, Liability insurance, Workers Compensation, Overhead expense disability insurance, Business owner’s policy group insurance and Payment protection insurance.
Please note that if you are going to operate your business from home, then you need to learn about home-based business insurance and how to save money on the cost of business insurance in general.
13. Lease or Rent and Ideal Office Location
Another important step to follow when establishing a business in Canada is to choose an ideal location for your office. When it comes to renting an office facility in Canada, the nature of the business you want to do should serve as a guide. Besides, you would need your business license and permit as part of the document to be tendered before any landlord or realtor will sign any leasing agreement with your business in Canada.
Top 5 Best Cities to Do Business in Canada
Even though Canada has been ranked as one of the best countries to do business in, this does not mean that all the cities in all its provinces will be suitable enough to start a business in. Different businesses will work better in some places/regions than in others due to the laws guiding each region and city. Here is a list of top 5 best cities and their states to do business in Canada;
- Milton, Ontario
- Calgary, Alberta
- Winnipeg, Manitoba
- Burlington, Ontario
- Whitby, Ontario
14. Hire the Required Employees
The only reason why you should ignore this step is if you want to run a one-man business. If you want to operate a business in Canada, it is mandatory to hire only those that are legally permitted to work in Canada or else your business might be fined or shut down.
This is why once you have hired employees, your business will probably need to register with the Worker’s Compensation Board in your province. You can find out more about hiring employees, employment standards, E.I. and other employee issues from the appropriate authority in your province if you are not sure of how the process works.
15. Advertise and Market Your Business
One thing is certain, if you choose to start any business in Canada, you can be rest assured that there are competitors waiting to compete with you for the available market share. So, if you want your business to do well, you must fashion out ways to advertise and market your products or services.
The truth is that if your business or brand is always in the eyes of the public, they will be tempted to buy from you. You can use both print and electronic media to promote and advertise your business, but you must ensure you check up with the government of your country to know the rules and regulation governing the advertising of the type of business you are operating.
Facts and Figures of Canada That Will Interest You as an Investor/Entrepreneur
Canada has a strong and stable financial system, low corporate taxes, and one of the highest living standards in the world. One attractive factor about Canada is its outstanding connections to top markets around the world like USA, where in North America alone it has access to almost 500 million consumers.
- Canada’s largest cities act as a united front so as to international companies the best strategies to expand their businesses.
- Another plus for Canada is its well maintained transportation infrastructure that is perfect for moving goods, especially when it pertains to international trade.
- Between 2008 and 2012, Canada had an average real GDP growth rate of 1.2%, leading the G-7
- Canada has the lowest net debt-to-GDP ratio.
- According to the World Economic Forum in 2013, Canada’s banking system was the soundest in the whole world.
- According to the Economic Intelligence Unit, Canada is the best country amongst the G-7 to start a business in between 2014 and 2018.
- Businesses in Canada have easy access to one of the largest consumer markets in the world due to North American Free Trade Agreement, NAFTA’s influence.
- Canada according to survey ranks among top 10 for quality of life out of 132 countries.
Any investor looking to invest in Canada should be assured that Canada is a dynamic and prosperous country, where an investment could afford an investor the opportunity to play on the world stage. There are several incentives that attract investors to Canada and they are;
- Strong growth record
- Welcoming business environment
- Highly educated workforce
- Unparalleled market access
- Low business tax costs
- Financial stability
- Competitive R&D environment
Possible Threats and Challenges You will Face
Every country no matter how stable has volatile business environments that might be caused by a number of factors, thereby throwing challenges and threats to businesses operating in the country. When doing business in Canada, here are some of the threats and challenges you might face;
- Geopolitical instability
- Political environment
- Sinking commodity prices
- Rise in interest rates
- Debt loads
- Global instability and terrorism
- Tanking oil prices
List of 10 Well Known Foreign Brands Doing Business in Canada
The brands listed below have over the years proven themselves adept in their different fields of endeavor. The list also goes to show that the stable environment for businesses in Canada has ensured that the businesses compete with local ones and become well known;
List of 10 Well Known indigenous Entrepreneurs in Canada
The fact that foreign brands are doing so well in Canada does not mean that there aren’t indigenous entrepreneurs that are making their mark as well. Even though Canada isn’t traditionally known for successful entrepreneurship, these indigenous entrepreneurs have started from scratch and have become well known in Canada.
Listed below are indigenous entrepreneurs doing business in Canada;
- Mike Lazaridis – Research in Motion (R.I.M)
- John Molson – Molson Brewery
- Harrison and Wallace McCain – McCain Foods Limited
- Samuel Bronfman – Distillers Company Limited
- Joseph-Armand Bombardier – Bombardier Limited
- Shannon Rogers – Global Relay Communication Inc.
- Janet Stimpson – White House Design Company Inc
- Allison Grafton – Rockwood Custom Homes Inc
- Tonia Jahshan – Steeped Tea Inc
- Andrea Shaw – TwentyTen Corp.
List of 10 Most Popular Indigenous Business Brands
Every country no matter how economically unstable it is have popular indigenous businesses that the people identify with, much less a stable country like Canada, who would have enough indigenous brands that are popular with the people, and with whom the people take pride in for having Canadian roots. Some of these indigenous brands have transcended the country’s boundaries into the shores of other countries. Here are 10 most popular indigenous businesses in Canada;
- Tim Hortons
- TD Bank
- Canadian Tire
- Shoppers Drug Mart
- Jean Coutu Group
Tips for Starting a Business in Canada
After you must have understood how to start a business in Canada as a foreigner, you must consider these few helpful tips to ensure you achieve business success in the country.
Embrace the Culture
When starting a business in a new country, you must learn as much as you can about the culture of the country. Note that to successfully market your business, you will need to know your potential customers and understand their purchasing behavior. You can do this by getting involved in local groups, volunteering, or becoming a member of a business organization that offers you the platform to network with fellow business owners.
Be Financially Ready
Coupled with obtaining your visas and all other necessary permits, you may be required to prove that you are financially ready to start a business in Canada. This simply entails having adequate funds to cover your expenses while you wait for your business to start making a profit, and this can take a while. It is also recommended that you have adequate funds to cover your expenses for the first six months.
Build Your Credit Score
It is imperative to note that a good credit score is very crucial for businesses operating in Canada because banks will check your score when deciding whether or not to approve a loan for you. According to experts, one of the most convenient ways to get a credit score is by signing up for a Canadian credit card and using it to make purchases. However, ensure to pay off your balance every month, and within six months you should have a viable credit score.
Get a Mentor
Note that a good mentor or business coach will surely be an asset to any entrepreneur, more especially a foreigner who will steadily need guidance from someone with local experience. Without doubts, there are numerous organizations and groups in Canada that can assist in finding a mentor.
Canada is full of opportunities! There isn’t one specific “good” business to start in Canada as a foreigner especially since any type of business can succeed. Note that the process for starting your business will vary based on whether you’re moving to Canada, expanding your business to Canada, or establishing your business there while being a non-resident.
Even though the processes can be quite challenging and complex, it isn’t really difficult. As long as you know the sort of business you intend on starting and the mode of establishing the business, every other thing can be put in place.