If you wish to start a business in Canada, here you will find essential information to lay a solid foundation for your project. Whether you're a solo entrepreneur or planning to build a team, this guide will assist you in navigating the crucial steps to launch your business and ensure its growth.
To start a business in Canada as an expatriate, you need to determine whether you are authorized to own and operate a business in the country. Also, be sure to check your immigration status with the .
You should also understand to what extent your qualifications and skills will be recognized in Canada and what the regulations for your industry are. In fact, obtaining a or certification may be necessary before you can get started.
Several organizations offer programs and support services for entrepreneurs. The (ACOA) can help you start or grow your business. You can also contact the agency at 1 (888) 576 4444.
Types of Businesses in Canada
You need to choose the you want for your business. There are three main types of businesses in Canada: sole tradership, partnership, and corporation. The structure you choose will determine how you report your income and many other aspects. Therefore, it is important to make the right choice.
A is the least complex structure as it is a non-incorporated business owned by an individual or a married couple. This option is suitable for self-employed individuals. A sole trader makes and assumes all business decisions alone. They do not have a separate legal status from the business. Thus, they keep all profits and deduct all losses, at their own risk. As a sole trader, you must pay personal income tax on all net income generated by your business. You can register your business under a trade name, operate it under your own name, or both.
A is a collaboration between at least two individuals, companies, or partnerships that unite to operate a trade or business. Each partner contributes (money, work, property, etc.) and each is entitled to a share of the profits or assumes a share of the losses of the partnership. The distribution of profits or losses depends on the agreement made between the partners. Most partnerships are governed by a written agreement outlining this distribution and other rules.
A , also known as a "company," aims to operate a business for profit. This structure is more complex and expensive. It is the required structure when a business has significant revenue.
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There are less common in Canada, such as non-profit organizations or certified B Corps. For more information on this topic, click .
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Almost all must file a T2 return for each tax year, even if they have no tax to pay. This is also the case for non-profit organizations, tax-exempt corporations, and inactive corporations. Check if your business is affected , and refer to our article Taxes in Canada.
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Promising Sectors in Canada
If you want to start your business in Canada, it is important to understand the economic reality of the country and that of the province where you wish to settle. Nationally, Canada has developed , including aerospace, bioproducts, renewable energy, information technology, and international trade (imports and exports). You should also consider the promising sectors at the provincial and territorial levels. For example, is known for its video game production. In Vancouver, the film and television industry is thriving. Finally, in the pairies, particularly Saskatchewan, the agricultural and agri-food sectors are the province's strength.
Creating a Business in Canada: What Are the Formalities?
It is relatively simple and quick to , but you will likely need to familiarize yourself with the following terms and data: business licenses, health and safety regulations, environmental and employee protection regulations, and wage and working conditions standards.
First and foremost, you will need to plan your business by writing , describing your project, goals, target sector, marketing strategy, , , and other important points. You must choose for your business, and , starting with an internet search.
Register your business with provincial and federal authorities, including the (CRA). Depending on your province of registration, you may have fees to pay. Procedures vary by region, so it is advisable to and contact the relevant authorities directly for more information on the documents required. You can also access for assistance in registering your company with the relevant province.
You may also need a business number and a corporate income tax account. When registering in British Columbia, Manitoba, Nova Scotia, Ontario, and Saskatchewan, you will automatically receive a federal government business number. If your business operates elsewhere in Canada, you will need to apply for a business number with the CRA. Note that not all new businesses require a business number (BN) and CRA program accounts. Check if this applies to you on .
To , you will need to provide your last name, your (SIN), your date of birth, your personal postal code, the name of the business, the business number (if it already has one), the business structure, the address, and the description of your activity. You can register by clicking on , by mail, by fax, or by phone.
You can then open a GST/HST or GST and QST account if you are in Quebec, an employer account if you have employees, a corporate tax account, or an import and export account. To open a , you will need to provide the company's name, certificate number, date of incorporation, and administration. For a , you will need to know the amount of your annual taxable supplies worldwide and nationally for GST/HST purposes, your fiscal year-end, the effective date of registration, and the reporting period.
There are business permits and licenses that may be required. You can use to determine which ones you might need based on your location and industry.
Here is a list of websites that will give you an overview of the overall steps to take as a new entrepreneur in your province of establishment:
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There is including funding available for businesses, as well as financing for immigrant and Indigenous entrepreneurs. Self-employed workers and small businesses can also receive free tax assistance. Visit for more information.
GST/HST for Businesses in Canada
defines GST/HST as "a sales tax imposed on most supplies of goods and services in Canada, as well as on many supplies of real property and intangible personal property." If you are starting your business in Canada, you will be responsible for collecting and remitting the GST/HST charged to customers.
The federal sales tax (GST) is a fixed tax of 5%. It applies everywhere in Canada. Some products and services are exempt, but this tax is usually due. This tax corresponds to VAT in France.
The provincial sales tax (PST) varies by province. The provincial government decides the rate of this tax as well as the products it covers.
The harmonized sales tax (HST) is simply the combination of the federal and provincial taxes. It applies in five provinces, namely Prince Edward Island, New Brunswick, Nova Scotia, Ontario, and Newfoundland and Labrador. You can check the current rates applicable to your province on .
In general, you cannot register for a GST/HST account if you only make . Determine when to register and start charging GST/HST. During , you will need to know the effective date of your registration, the fiscal year-end for GST/HST, total annual revenue, and other basic information such as your Social Insurance Number (SIN). You can file a GST/HST return electronically, by TELEFILE, or on paper. Visit to find the method suited to your business for completing and filing your return.
Business Start-Up Visas in Canada
Canada is one of the first countries in the world to have implemented that connects them with Canadian private sector organizations experienced with young entrepreneurs. Successful candidates obtain permanent residence.
To be eligible for the program, you must already have secured the commitment of a designated Canadian angel investor group or venture capital fund, ready to invest in your future business. You must also have sufficient financial resources, demonstrate that you have a good level of French or English, and prove that you have already studied for at least one year at a post-secondary educational institution.
Additionally, some Canadian provinces have a program that allows them to select immigration candidates who are entrepreneurs or, potentially, self-employed workers. For more information, visit the following sites:
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Self-Employed Immigration Programs in Canada
You may qualify for the if you wish to work independently, provided you meet these two criteria: Have relevant experience in cultural or athletic activities and wish to contribute actively to the country's cultural or athletic life. As of September 2023, fees for this process start at 2,140 CAD. You can use to see application processing times.
Your experience will be considered relevant if you have participated in cultural or athletic activities at an international level or if you have been self-employed in the cultural and sports sector for at least two years. Other criteria will also be considered, such as your age, education, language proficiency, and adaptability. If you are selected by Canada's immigration services, you will obtain permanent residence and it will be time to .
The province of Quebec manages its own business immigration program. If you want to start a business in Quebec, consult the page .
Starting as a Freelancer in Canada
Freelancing is an attractive option for those who wish to start a business in Canada while remaining independent. Unlike creating a traditional company, freelancers do not need to establish a complex legal structure. However, certain practical and legal aspects must be considered to operate as a self-employed worker.
Freelancers can choose the status of sole tradership or, in some cases, create a corporation if their business grows and requires more extensive legal protection.
If you choose to operate as a sole trader, you will need to register with provincial or federal authorities to obtain your business number (BN) from the Canada Revenue Agency (CRA). Registration is necessary if you plan to earn more than 30,000 CAD annually, as this will require you to collect and remit the Goods and Services Tax (GST/HST).
Freelancers must submit their annual tax return, including both business and personal income. Net income generated by freelance activity will be subject to personal income tax. It is important to keep a detailed record of all receipts and expenses related to your freelance activity. For example, office expenses, computer equipment purchases, marketing expenses, etc., can be deducted from your net income.
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