There are many reasons to set up a company in Canada, among them being having access to a large national market but also to foreign clients for whom goods produced here have a high quality. The best way of reaching international clients, an online shop is the best way of registering a company in Canada. For this purpose, an e-commerce company represents the most suitable option.
Foreign investors also have the right to set up e-commerce companies in Canada with the requirement of respecting the laws imposed at federal and provincial levels. Our Canadian company formation specialists are here to guide you on the procedure of opening an e-commerce business.
Requirements to register an e-commerce company in Canada
In order to operate an e-commerce platform, an investor must first register a traditional company at a federal or territorial level. This will imply respecting all the company registration steps:
- choosing a suitable business form in accordance with the size and purpose of the company;
- preparing the documents needed for registering the company with the Trade Register;
- obtaining a tax identification and a VAT number is mandatory for e-commerce companies;
- applying for the necessary licenses to operate, which depend from province to province.
As an e-commerce platform, the Canadian company will be required to have a website created and a domain name registered.
You can rely on our company registration agents in Canada for full support in incorporating the company at a federal or local level. You can discuss your options with us and based on these, you will receive targeted assistance.
Special requirements for e-commerce companies in Canada
Considering online companies complete most of their activities on the Internet, they will still be required to have a physical address where they will receive all the notifications sent by the authorities and third-parties. This address, together with a telephone number and a valid email address must appear on the company’s website.
E-commerce companies in Canada must also obtain the consent of clients for processing personal information, especially in the case of EU clients for which the provisions of the General Data Protection Regulations apply.
The websites of Canadian e-commerce companies must also contain and display the legal terms related to the use of the website.
Legislation applicable to e-commerce companies in Canada
It should be noted that as an e-commerce company, specific requirements will need to be complied with. These are comprised of several laws which provide for the security of electronic payments, electronic security and privacy and protection of personal information.
No matter the purpose of the e-commerce company, the business owner will be required to ensure the following:
- privacy related to collecting personal information and profiling those who enter the website;
- ensuring the payment of services or products are safe, by using accepted payments gateways;
- all the messages and activities related to the promotion of the company must be done with the consent of the customers;
- the company must also respect the provisions of the Canadian Contract Law.
The legislation imposed on e-commerce companies is quite extensive, which is why we invite you to reach out to our local consultants who can explain them.
Selling goods online in Canada
E-commerce companies in Canada have customers all over the world which is why they must ensure the best practices related to the sale, shipment, and warranty of the products are respected. For this purpose, the company will need to comply with the Contract Law. This means that all the conditions related to the sale of goods at a distance must be respected. These imply the sale of products via the Internet, email or phone.
The products sold online must be accompanied by invoices and other documents which attest their provenience and important information related to that specific product. The company is required to ensure the replacement and repair of a product, as long the fault does not fall on the courier company.
The sale of products through online companies must also respect a set of tax laws applicable at federal or territorial level in Canada. This is why having a VAT number is mandatory for all e-commerce companies.
Registering a company with the Canadian authorities
Even if the activities of the Canadian online store will be completed over the Internet, the company must still register as any ordinary business. This will imply:
- choosing a trade name for the company and reserving it with the Trade Register;
- preparing the same incorporation documents as for a traditional business;
- registering the company with the Companies Registrar and the tax authorities;
- reserving a domain name, having a website created and opening a merchant account.
The last steps are necessary for online businesses carrying out activities in Canada. You can rely on company formation services in Canada with our agents who can help you draft the documents needed to set up any type of business.
Registering a domain name for a Canadian online shop
One of the most important steps when starting an online store in Canada is creating a website and having a domain name registered with the Canadian Internet Registration Authority (CIRA). When choosing the domain name, the businessman will need to make sure it reflects the activity of the shop and complies with the legislation imposed on e-commerce companies.
Another important part of starting an online shop in Canada is the creation of the website which must use an e-commerce platform. The entrepreneur can create it on his own or appeal to the services of IT companies which specialize in developing such platforms.
Opening a merchant account for an online store in Canada
A mandatory requirement for being allowed to sell goods online is having a merchant account. This must not be mistaken for the corporate bank account, as it will be used to collect payments from customers. The creation of a merchant account can be completed with a bank, including the bank where the corporate account is opened, or with an online payment processor. The latter is usually employed online shops in Canada.
Our company registration advisors in Canada can offer detailed information on the steps required to set up an online store at a federal or provincial level.
Registering the domain name as a trademark in Canada
Even if this step is not mandatory, our Canadian consultants recommend online business owners to register the names of the online stores as trademarks. This step will not only protect the name of their company but also the reputation of the online store once it reaches a certain maturity and recognition.
The following steps must be completed in order to register an online store as a trademark in Canada:
- make sure the name is unique by checking it with the Intellectual Property Office;
- filing an application for registration of the trademark with the Office;
- submitting a detailed description and a sketch of the trademark;
- paying the registration fee with the Canadian Intellectual Property Office.
Once the trademark is registered, the Canadian online store will have all the rights over the name.
Other requisites for online shops in Canada
Other requirements to be considered by online shops in Canada are related to having certain elements displayed on the website. Among these, we mention the legal address of the company, an email address, and a telephone number.
Considering many online stores sell goods in Europe, we remind business owners they now need to comply with the General Data Protection Regulation which contains specific provisions related to the consent of customer of collecting personal information.
It is also useful to know that the Canadian legislation requires other regulations to be respected by e-commerce companies, among these the one related to taking anti-spam measures.
Starting an e-commerce company in Canada is simpler than opening a traditional business, however, the legislation imposed on these companies has evolved a lot in the last few years. For full information and assistance in setting up an e-commerce business in this country, please contact our Canadian company incorporation consultants.