Canada is an open country when it comes to those who want to set up businesses here, no matter their nationalities. Foreign investors have several options when it comes to immigrating to Canada, among which setting up companies here as non-residents.
Those who want to open Canadian companies as non-residents have several options to match their budgets. They can set up companies and manage them from abroad or by moving to Canada. Below, our Canadian company formation specialists explain the options for starting a business as a non-resident.
| Quick Facts | |
|---|---|
| Legal entities for non-residents in Canada |
– partnership, – corporation, – cooperative, – branch |
|
Rule of law for non-resident businesses in Canada |
– Investment Canada Act, – Business Corporation Act |
|
Investment programs for foreign investors |
– Strategic Innovation Fund, – Scientific Research & Experimental Development, – Canada’s Pan-Canadian Artificial Intelligence Strategy |
| Appointing local agent (yes/no) |
Yes |
| Requirements for obtaining residence permit |
– setting up a business or invest in a business, – net worth requirements, – clean criminal records, – language requirement, – others depending on the investment program and the selected Canadian region. |
| Business address in Canada (yes/no) |
Yes |
| Applying for tax number in Canada (yes/no) |
Yes |
| Company formation – any special rules for foreign businesses (yes/no) | No |
| Documents required for company formation |
– founding documents, – certificate of incorporation, – documents of the registered address, – directors’ IDs, – the approval for the company name, – shareholders’ IDs or passports, – the application form |
| Corporate tax rate | It varies based on the region and the size of the company and it is collected at a provicial and federal levels. |
We can also assist foreign entrepreneurs who want to open companies in Canada.
What are the main options for setting up a Canadian business as a non-resident?
The Canadian Company Act is one of the most complete legal frameworks when it comes to starting a business in this country. It provides for the conditions for both residents and non-residents to open companies in Canada.
A non-resident interested in having their own business in Canada can register a company under on the following situations:
- if they own a business abroad, they can move the existing company to Canada or set up a branch or subsidiary here;
- one can register a company in any Canadian province or at a federal level and run it from their home countries;
- one can also register a company in Canada by relocating here as a sole entrepreneur or self-employed individual;
- one can apply for one of the programs enabled by the Canadian government, such as the Investor Venture Capital Scheme;
- one can apply for the Canadian Entrepreneur Startup Visa which was created for foreign investors.
No matter the choice, foreign investors seeking to open companies in Canada as non-residents can request our company registration services.
Setting up a business in Canada as a non-resident and managing it from abroad
One of the easiest ways of starting a business in Canada is by moving an existing company or creating a branch or subsidiary here and manage it from abroad. No matter the chosen business form, the non-resident investor must appoint a local agent to complete the company incorporation procedure in Canada.
The company can be set up in one province or territory in Canada or it can be registered at a federal level. The company can also operate in several provinces; however, it must be registered separately in each province or territory.
With a solid background in company registration in Canada, our local consultants can help those interested in setting up companies here as non-residents make a good decision.
Starting a company in Canada by moving here
Another option for non-residents to open companies in Canada is by moving here. They can do that by applying for a residence permit or by coming here based on a self-employment visa.
Most non-residents decide for these options when setting up companies in Canada; however, the requirements are very different when applying for a regular residence permit compared to obtaining a self-employment visa.
For example, when applying for a self-employment visa, a relevant condition is to have sufficient knowledge or expertise in the field the non-resident will operate.
How to open a company in Canada under one of the investment schemes available
It is possible for foreign investors to obtain an entrepreneur startup visa and set up a company in Canada under very advantageous conditions. It is also possible to enroll for the Investor Venture Capital Scheme, however, this will imply a significant investment in terms of capital.
Our company formation agents in Canada can offer detailed information on these programs.
Requirements for starting a Canadian company as a non-resident
No matter if the foreign citizen decides to remain abroad or immigrate to Canada, the requirements for opening a company here remain the same. These are:
- having a local address in Canada is mandatory when opening a company in any province or even at a federal level;
- preparing the incorporation documents and appointing a specialized agent to submit them with the Trade Register;
- reserving a company name number, depending on the preferences of the foreign investor opening the business;
- obtaining a Canadian tax registration number and registering for VAT here are also mandatory;
- obtaining the relevant licenses and permits for offering services or selling goods from the Canadian authorities.
Opening a company in Canada as a non-resident has many advantages among which the low business start-up costs, however, it is important to know that in some provinces only specific types of structures can be employed.
It is important to know that the Canadian legislation does not impose a minimum share capital when registering a business. However, there can be cases, such as those of setting up financial companies for which a minimum amount of money must be deposited as a reserve for business’ operations.
Below, our company formation specialists explain the share capital requirements when setting up a company in Canada. You can rely on us for tailored company registration services in Canada.
Types of Canadian companies and their share capital
There are several types of companies which can be established in Canada and for each one of them, a minimum share capital must be ensured. Even if the amount of money to be allocated as a share capital is not provided by the law, local and foreign businesspersons should pay attention to the following aspects:
- for sole proprietorships the minimum share capital must not be a very large amount of money;
- in the case of partnerships, the minimum share capital must be determined by the partners and each of them must participate with a specific amount of money;
- in the case of corporations, these can have a paid-up share capital and a stated share capital account;
- in the case of entities set up by foreign companies, the latter must decide on the amount of money necessary for the operations.
Our company registration agents in Canada can guide foreign entrepreneurs with respect to the minimum share capital requirements when starting businesses here.
Below, you can watch a short video on how to open a company in Canada as a non-resident:
The paid-up capital and the stated share capital account in Canada
The Canadian corporation, or the limited liability company as it is known in Europe, is the most employed business form across every territory of this country. Those who want to open such a company in Canada must know that it must have two types of share capitals: a paid-up capital and a stated capital account.
The paid-up share capital of a Canadian company represents the amount of money deposited by the members (shareholders) of the company, while the stated capital account is represented by the amount of money paid in exchange for the shares issued by the company. The stated capital account will hold the paid-up share capital of the company.
It should be noted that upon the incorporation of a company in Canada, the paid-up share capital is defined according to the Income Tax. An important rule about these two types of share capital is that the paid-up capital can be lower than the stated capital. Also, the paid-up share capital will also be established after the stated capital has been determined.
Our company formation advisors in Canada can explain the differences between the paid-up share capital and the stated capital account.
Shares issued by Canadian companies
The minimum share capital of companies in Canada is divided into shares. These will represent the amount of money owned by the founders of the company and can be divided into various classes.
An important aspect to consider about the share capital of a Canadian company is that there are no restrictions related to the types of shares it can issue, however, when only a single type of shares is issued, these must have the following rights attached to them:
- they must grant a voting right to those holding them;
- they must grant the right of obtaining dividend payments;
- they must grant the right to the division of assets in case the company is dissolved.
The share structure and the share capital structure of a company can be modified by amending the company’s Articles of Association.
Our company registration representatives in Canada can explain how the share capital of a company can be modified.
Altering the share capital of a company in Canada
There are two ways of modifying the share capital of a company: by increasing or by decreasing it. It should be noted that only the stated capital can be increased or decreased, however, when decreased it cannot be lower than the paid-up capital.
The paid-up capital of a company can only be distributed among the shareholders.
No matter the transactions involving the share capital of a company, these can be used as tax minimization solutions in Canada.
For detailed information on the regulations related to opening a company in Canada as a non-resident and assistance in starting one, please contact us.
When you will register a business in Canada, you will have various tax obligations – to pay the corporate income tax, the VAT, social security and other types of taxes.
Currently, Canada charges 2 types of corporate income taxes: lower rates and standard rates. The lower rates vary from 0% to 3.2%, while the standard rates 11.5% to 16% (these do not apply in Quebec and Alberta).
After the incorporation of the company is completed, you must know that you will need the services of accountants, especially if you will set up a large business.
For this, you will have to address to a CPA in Canada, who is an accountant that has an in-depth knowledge of the accounting procedures and who is specialized to assist the needs of large companies, such as multinationals.
If you want to expand your business in Canada or you want to arrive here to set up your own company and become a resident, there are many programs available in this sense.
One of them is the Owner Operator program in Canada, which can grant to eligible candidates the right to permanent residency. Foreigners can set up a business in any region of Canada, as there aren’t any restrictions in this sense.
Persons who want to relocate here for work purposes can register in the Intra Company Transfer in Canada, which is also a pathway to permanent residency.
The program is also available for foreign businessmen who want to expand their businesses in Canada. For both categories, there is a requirement of minimum 1 year of business activity/full-time employment, besides many other conditions.