Is it possible to start a business in Canada with open work permit? Here is everything you must know about doing business in Canada as a foreigner with open work permit.
Table of Contents
- Types of Open Work Permits in Canada
- Is It Possible to Start a Business in Canada With an Open Work Permit?
Types of Open Work Permits in Canada
There are two kinds of open work permits: unrestricted open work permit and occupation restricted open work permit. Under an unrestricted open work permit, a foreign national can work in any job, in any place and for any employer. An unrestricted open work permit will be given to eligible workers who have passed the medical exam (Medical Exams for Temporary Foreign Worker Applicants).
For an occupation restricted open permit, an eligible person may work for any employer but the job in which the person must work will be specified. Occupation restricted open permits are given to eligible workers who have not completed a medical exam. Hence, holders of occupation restricted open permits are usually not allowed to work in jobs related to health.
Is It Possible to Start a Business in Canada With an Open Work Permit?
No, it is nearly impossible to start a business in Canada with an Open work permit. An open work permit simply allows a foreign national to work for any Canadian employer he / she wants over a specified period of time. Some open work permits may restrict the kind of job or place in which the foreign national may work.
A worker may apply for an open work permit from outside of Canada, within Canada or at a Canadian port of entry. Therefore, it is against the law to start a business in Canada with just a work permit.
To start a business in Canada you are expected to satisfy a residency requirement by providing a Canadian address. With an open work permit, you are not yet a Canadian citizen or landed immigrant, but there are still ways around these regulations. You may be able to start a business in Canada, but your options will be limited.
How to Start a Business in Canada With an Open Work Permit
There are only two ways you can marginally start a business in Canada with just an Open work permit. You either have to form a partnership with a Canadian living in Canada and then use their address for starting your business, or you can start an incorporated business.
Have it in mind that you will still need a Canadian address to enjoy the tax benefits of having a Canadian controlled private corporation (CCPC), as well as have the correct number of Canadians on your Board of Directors and meet all the other requirements for such a corporation.
Note that the exact number of resident Canadians depends on the jurisdiction in which you incorporate. In Canada, you may incorporate federally or provincially. It is important to understand the advantages and disadvantages of each form of incorporation, as well as the required procedures.
1. Incorporate your Business in the Desired Province
Note that this first step can be done remotely and you do not need to be in Canada to form incorporation or start a business in Canada. For certain jurisdictions, businesses and provinces, you may need to have a Canadian resident director on the incorporation.
Even though the Canadian resident does not necessarily need to own any equity in the corporation, they may need to assume some liability. Remember that the only jurisdiction in Canada that does not require a Canadian resident director is the province of British Columbia. It is possible as a foreign national to own 100% and be the only director on a British Columbia corporation.
2. Apply for an Owner Operator LMIA (Labour Market Impact Assessment) through ESDC Canada
Having your business incorporated in Canada still doesn’t mean you have the right to do business in Canada even though you have started your business in Canada. Note that this is a lengthy process and involves a few moving parts. You cannot simply obtain an Open Work Permit without first having an approved LMIA (Labour Market Impact Assessment) by ESDC (Employment and Social Development Canada).
The aim behind the LMIA requirement is that Canada needs to prove that as a foreign national by working in your company, that you will not negatively impact the labour market in Canada: that is to say, reduce jobs available for Canadians in Canada or shrink the market. Part of the approval process is to show a business plan and how you intend to hire at least one Canadian or permanent resident by launching your business in Canada.
Also note that LMIA Owner Operator applications are lengthy and there is a small margin for error. You are expected to prove that you have an incorporated company and you have the resources to sustain yourself, your family, and your business in Canada.
3. Apply for a New Work Permit that is associated with your approved LMIA
Immediately your Owner Operator LMIA is approved by ESDC Canada and you have proven that your business started in Canada, will more or less positively influence the Canadian labour market, it is time to apply for a new Work Permit.
The Work Permit application is received and goes through Immigration Canada as opposed to ESDC which approves the Owner Operator LMIA. Immigration Canada can take up to 4 months (by current processing times) to approve your Work Permit.
However, if you need approval in a shorter time frame it may be possible to obtain your Work Permit directly at the Canadian border. This is where your American visa becomes quite handy.
A Work Permit application is also very lengthy, and a small administrative error can delay your right to work in Canada by the amount of time it takes to re-process your application (4 months at this time). For this reason, it is very advisable you seek guidance and advice from the trained professionals at CIVS (Canada Immigration and Visa Services).
Immediately you have your new Work Permit approved, you now have successfully started your business in Canada and are eligible to work in Canada as the Owner-Operator of your new business. Note that you can continue to work and live in Canada for your business as long as this new Work Permit is valid.
The maximum work permit duration Canada issue for an Owner Operator LMIA is 2 years. Before the 2 years has expired, you may be eligible to reapply to for another Owner Operator LMIA for your existing business or extend your Work Permit with a Bridging Open Work Permit depending on your circumstances.
Open work permits are highly sought after for the freedom they give their holders. While most work permits are tied to a specific employer, an open work permit allows a foreign national to work for any employer in Canada, and the freedom to move from location to location at their own discretion.
This is the only reason why an Open work permit provides this very slim chance of starting a business in Canada. However, be sure to seek legal and administrative advice before embarking on any of the processes mentioned above.