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 can incorporate 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 and the procedures available in 2023.
|Legal entities for non-residents in Canada||
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)||
|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)||
|Applying for tax number in Canada (yes/no)||
|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.|
What are the main options for setting up a Canadian business as a non-resident in 2023?
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 his/her own business in Canada can register a company under the following situations:
- If he/she owns a business abroad, he/she can move the existing company to Canada or set up a branch or subsidiary of it here;
- He/ she can register a company in any Canadian province or at a federal level and run it from his/her home country;
- He/she may incorporate a company in Canada by relocating here as a sole entrepreneur or self-employed individual;
- One can apply for a program enabled by the Canadian government, such as the Investor Venture Capital Scheme;
- The foreigner can choose the Canadian Entrepreneur Startup Visa which was created for investors from abroad.
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 in 2023 is by buying an existing company or creating a branch or subsidiary of it 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 who want 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 available in 2023.
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, 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;
- Having the relevant licenses and permits for offering services or selling goods.
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 available.
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 is not 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;
- Corporations can have a paid-up share capital and a stated share capital account;
- For 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 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 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 calculated 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:
- a voting right to those holding them;
- the right of obtaining dividend payments;
- 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 corporate income tax at lower or standard rates. The lower rates vary from 0% to 3.2%, while the standard rates are between 11.5% and 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.
Programs for foreign investors
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 one year of business activity/full-time employment, besides many other conditions.
Open a start-up in Canada
In the past few years, Canada has aligned with numerous countries around the world and offers foreign investors who want to relocate here the possibility of doing that by starting a business. This option is available under the Start-Up Visa Scheme which implies, as its name says, to create a company in Canada.
If you are a foreign investor and want to open a startup in Canada, this program can be your chance to become a business owner in this country. Our company formation agents in Canada can help foreign citizens who want to have their own businesses here with the registration procedure of a Canadian startup.
The creation of a startup company in Canada implies the same steps as for any other business and these are:
- choosing a location for the incorporation of the company (federal or provincial registration);
- applying for a business number and reserving a trading name for the company;
- preparing the incorporation documents and filing them with the appropriate authorities;
- applying for a tax number, for Goods and Services Tax (GST) registration and for the necessary business licenses.
When opening a Canadian startup, there are a few additional things to consider, especially when moving to this country based on the designated program which allows for the creation of such a business.
The provisions of the Start-Up Visa Scheme in Canada
The first and most important advantage of this program is the possibility of obtaining a work permit in Canada based on the creation of a startup company. For this to happen, the following requirements must be met:
- The applicant must have a qualifying business;
- He or she must obtain the support of a designated institution under the form of a Commitment Certificate and Letter of Support;
- The applicant must have sufficient funds for the business and for self-support;
- English or French language proficiency must also be demonstrated through specific tests.
Our company registration consultants in Canada can provide more information on the qualification requirements for opening a startup. We can also help you in starting a business in Canada under the provisions of the Company Law.
Commitment requisites when opening a startup in Canada
When opening a startup in Canada, the business owner must also consider the commitment of the designated company. The support can have one of the following forms:
- of a group of designated angel investors who must confirm the investment of a minimum of 75,000 CAD into the business;
- two or more commitments from angel investors amounting the 75,000 CAD is also allowed;
- of a venture capital fund which must confirm the investment of at least 200,000 CAD into the business (more commitments are also allowed);
- of a business incubator which must confirm through a support letter the acceptance of the business into its program.
It is also possible for the Canadian startup owner to obtain permanent residence provided that the following requirements are met:
- He or she is an active participant in the management of the company;
- The entire operations of the company or a significant part of them are completed in Canada;
- The company is incorporated in Canada.
Our company formation advisors can assist foreign investors with information about the conditions of the visa scheme, as well as with the creation of a startup in Canada.
Fund requirements for relocating to Canada under the Start-Up Visa
Foreign citizens seeking to open a startup in Canada and move here must meet the following funding requirements, according to the immigration authorities:
- a minimum of 12,960 CAD for a single-family member;
- at least 16,135 CAD for two family members;
- 19,836 CAD for three family members moving to Canada under the Start-Up Visa Scheme;
- at least 24,083 CAD for four family members.
There is no maximum number of members who can immigrate to Canada under this program, however, the local authorities provide for a minimum of 34,299 CAD when moving here with seven family members.
If you want to open a startup in Canada under this program, do not hesitate to contact us. You can also rely on our local representatives for starting a company in Canada under different conditions.
Our consultants can explain any other conditions that can be applied here when opening a startup business. If you want to start a business in Canada, you will need to comply with the same conditions that are imposed for other business activities and sectors.