In recent years, Canada has grown into one of the world’s largest economies and has gained attention as a viable alternative to the United States for those looking to expand into North America. The country has become recognized for its diversified business environment, stable political environment, wealth of natural resources and easy access to the world market. As such, it’s no surprise that registering a business in Canada has been amongst the most considered options to facilitate the growth of a business.
What You Will Learn:
1. The requirements to register a business in Canada
2. The importance of choosing the most suitable company type
3. What to consider when choosing a jurisdiction to register your business
4. What to note when registering a business name
1. Requirements to Register a Business in Canada
The provinces of British Columbia and Ontario are among the most popular destinations to register a business. While the requirements are similar in nature, there are some distinctions between these two provinces.
To register a business in British Columbia, a business must:
- Maintain a minimum of one director or a maximum of ten directors. The director must be a natural person with no nationality restrictions
- Maintain a minimum of one shareholder who can be a legal entity or natural person, without nationality restrictions
- Maintain at least one incorporator who should be a natural person
- Maintain a British Columbia Address – PO Box is not acceptable
To register a business in Ontario, a business must:
- Maintain a minimum of one director. The director must be a natural person with at least 25% of directors being resident Canadians. When a company has less than four directors, at least one must be a resident Canadian
- Maintain a minimum of one shareholder who can be a legal entity or natural person, without nationality restrictions
- Maintain at least one incorporator who should be a natural person
- Maintain an Ontario Address – PO Box is not acceptable
For completeness, there are no minimum capital requirements in both British Columbia and Ontario.
2. Identify a Suitable Company Type
Canada allows for the registration of different company types. As the company type will have a lasting impact on how a business is structured, run and even how it must report its income, deciding upon the most appropriate company type is among the most essential steps involved when one is registering a business in Canada.
The most common company types are sole proprietorships, partnerships and corporations. While the majority of for-profit businesses are corporations, other company types might be more appropriate for a business depending on the individual needs of the owner. Those looking to register a business in Canada should take time to understand the different legal benefits and requirements unique to each company type.
3. Provincial vs. Federal Business Registration
Those who wish to register a business in Canada can choose between going through the federal or the provincial business registration process.
Provincial business registration entails the registration in a single Canadian territory or province. Each provincial registration is a stand-alone process and a business must register with the local authority of another province / territory in order to conduct and expand their business operations past their original jurisdiction.
The territory / province chosen will determine how a business will operate and what rules will apply to it. For instance, the process to register a business in Ontario is governed by the Ontario Business Corporations Act (OBCA) while the process to register a business in British Columbia is governed by the British Columbia Business Corporations Act. The differences between these laws are noticeable. For example, companies incorporated in Ontario must have at least 25% of their directors be Canadian residents whereas this rule is not applicable in British Columbia.
Federal business registration gives a business increased business name protection and grants them wider rights to conduct their business operations throughout the entirety of Canada. However, the overall cost to register a business in Canada through the federal method is comparatively more costly in regards to the initial business registration costs and the related annual maintenance fees.
4. Provincial vs. Federal Business Registration
In order to register a business in Canada, you’ll need to decide upon a name for your business. Canadian provinces each have varying rules and standards related to business names to which applicants must conform to when one is registering a business name. While each Canadian province may have their own unique naming rules, the following are general principles that all Canadian business names must adhere to:
5. Submission of Documentation
After deciding on a company name, one needs to file their initial business registration forms with the government.
The first set of documents are the Articles of Incorporation for a business. This set of documents sets out the classes of shares that the business is authorized to issue, as well as the rights that come with those shares. These articles outline the ability to carry out business making it an important to pay careful attention during the preparation of these documents.
After, the initial declaration needs to be made. This declaration provides standard information about the business, such as its field of business and the personal particulars of the shareholders and directors.
Finally, all documentation must be submitted upon initial registration, or within 60 days. For example, in Ontario, this includes the NUANS name search report and must be submitted to the Ontario Ministry of Government Services.
7. Obtain a Certificate of Incorporation
Upon submission of a business registration application, an applicant will be assigned a unique Business Number. A Business Number is a unique, 9-digit number given by the Canada Revenue Agency to businesses and self-employed persons. The Business Number is a standard identifier for a business and is unique to a business or legal entity.
In addition, you’ll be issued a certificate of incorporation. From this point forward, your company is 100% official and nothing short of a tribunal can reverse your corporation status.
Once the declaration is received, the declared information is published in the business register.
8. Other Considerations
After incorporating, your business has an obligation to maintain certain documents and records. In exchange for the legal and tax benefits of incorporating, you are expected to keep your corporation up-to-date and in compliance with the law. There are three main things that every company is legally required to maintain.
Maintain Records
Canadian businesses are required to maintain their company documents and records in an organized manner. Such documents include their meeting minutes of their board meetings, records of their shares and so on.
Company Updates
Anytime the details of a Canadian business change, such as during the addition of a director or change in address, the business is obligated to file forms with the government and prepare corporate resolutions which officially approve the changes.
Annual Return and Resolutions
Each year, a Canadian business must file an Annual Return with the government and pay the associated fees. They also need to prepare annual shareholder and director resolutions. These are all mandatory documents in order for a business to stay compliant. Failure to file an annual return can result in the dissolvement of your buisness.
The process of registering a company in Canada is relatively simple and straightforward as the rules are clear and the requirements are easy to meet. As such, foreigners should generally have no issues completing this process. The FastLane Group has extensive experience in helping our clients incorporate their companies in countries around the world. Please contact the FastLane Group for assistance!