Company Incorporation in Canada

Company Incorporation in Canada-Overview

Company Incorporation is a big decision for an entrepreneur, and it requires a massive understanding of how a company can be established and what the requirements are. Company incorporation in Canada is a solid choice for setting up a company, as it has a stable economy, a business-friendly environment, access to global markets, and a skilled workforce.

Canada has a mixed legal system based on a combination of common law and civil law. However, common law is more widespread throughout the provinces and territories except the province of Quebec. Canada is a member of the Organisation for Economic Co-operation and Development (OECD).

According to the World Bank's Ease of Doing Business index, Canada came in 23rd place out of 197 countries in 2019. Canada is well-connected across the globe, with access to three oceans, traversing six time zones, 550 plus port facilities, and 128 airports. Company incorporation in Canada is a relatively straightforward process compared to other countries.

What is Canada Business Incorporation?

Canada's business incorporation is like any other incorporated business; it is a separate legal entity from its owners or shareholders. Thus, businesses can choose to be incorporated as federal or provincial entities, depending on their goals and objectives.

Additionally, some jurisdictions or provinces, like Alberta and Ontario, require Canadian citizenship to set up a company; hence, one should be aware of these specific conditions if seeking company incorporation in Canada.

Who Governs the Company Incorporation in Canada?

Canadian corporate law governs company incorporation in Canada, which can be established by either federal or provincial authority. It influences every aspect of business operations, ensuring regulatory compliance, protecting the rights of shareholders, and facilitating a seamless transaction.

The Canada Business Corporations Act (CBCA) oversees company incorporation in Canada, specifically for federal corporations. Meanwhile, every province or territory has its own regulatory body and legislation for territorial or provincial business incorporation.

Eligibility Criteria to Register a Company in Canada

In order to apply for company incorporation in Canada, one has to meet the criteria given below:

• Directors must be at least 18 years old.
• A minimum of one director shall be a Canadian resident.
• Directors must be of sound mind and not declared bankrupt.
• Local Registered Address.
• A unique business name.
• A registered office address in Canada.
• Obtain a business number from the concerned authority.

Canada Business Structure: Which one is right for you?

Starting a business is overwhelming for entrepreneurs seeking to start a company for the first time. Therefore, one should be careful when choosing the best business structure that aligns with one's business goals and objectives. Given below are the types of business structures in Canada:

1. Cooperative Structure

This is one of the complex structures and is used for various investment options. The owners can completely manage the business, have democratic control, and have limited liability, though it is not a preferred type of entity in Canada.

2. Partnership Firms

A partnership firm is one of Canada's most famous forms of business structure. It requires only two members to set up, and the management and responsibilities of the business are split between the partners.

3. Corporations

A corporation is a legal entity that separates a business from its owner. Personal liability is limited, and the corporation has a lower tax rate.

4. Sole Proprietorship and Partnerships

A sole proprietorship or partnership is the most common and easiest way to set up a company. It has a lower cost of business registration, and profits are indeed received directly. Additionally, sole proprietorships and partnerships solely make all business decisions.

5. Limited Liability Company

A limited liability company in Canada acts as a hybrid between a sole proprietorship and a partnership. It is an unincorporated entity with the benefits of a corporation.

6. The Canadian Extra-Provincial Corporation

In Canada, the Canadian extra-provincial corporation is a type of company that is very famous amongst foreign investors who can operate in various provinces. However, such a corporation must obtain a license in each province through a registered agent.

7. Public Company

This type of company is responsible for large projects. It can trade its shares to the general public and easily and quickly raise capital. Once it meets the requirements of the income tax law, a Canadian company can become a public company and is eligible for setting up a subsidiary in Canada.

Benefits of Incorporation of a Company in Canada

Incorporating a company has several advantages depending on which country or type of business structure one adopts. Given below are some of the benefits of incorporating a company in Canada:

• Incorporating a limited liability company shall separate personal and business liabilities unless your business is incorporated as a sole proprietorship or a partnership.
• In Canada, the tax rate on corporations is lower than the tax rate charged on individuals.
• A company incorporated in Canada attracts investors, and it is easier to raise funds for its growth overall.
• When businesses are incorporated, they show professionalism towards the clients, thus improving the company's professional image and ensuring its credibility and long-term viability.
• Incorporating a company in Canada also opens opportunities for various government grants and incentives to boost businesses established in Canada.

Documents of Incorporation of a Company in Canada

Documents are an essential requirement that the application for business registration must accompany. Given below is the list of necessary documents to be attached:

• Company Incorporation form
• Articles of Association (AoA)
• Address proof of the registered office
• Federal business number
• NUANS report (Name Search Report)
• Details on the applicant company paid up capital
• Details of Directors & Shareholder
• A visa or passport in case of a non-Canadian or non-resident applicant

Steps to Register a Company in Canada

An applicant seeking company incorporation in Canada must go through certain procedures or steps to set up a company in Canada. Below are the steps to register a company in Canada:

• Identify and choose the type of business structure, such as sole proprietorship, partnership or corporation.
• Choose a unique business name, ensuring that the name does not have a business in Canada. Search a Canadian corporate name database and database for business registries to ensure that the name chosen is not taken. Additionally, a provincial business name does not guarantee federal rights.
• Decide if you want to register the company at the Provincial or Federal level.
• Acquire a Business Number (BN) or an NEQ in the case of Quebec province.
• Acquire the business registered office address to preserve the official records and send necessary notifications to the concerned authority.
• Collect all the necessary documents and papers like the articles of association, registered addresses, etc.
• Open a business bank account. Here, the bank will ask for documents related to business registration.
• Apply for a GST or HST number. A company must obtain a registration for GST or HST if its business turnover is $30,000 or more per year.

Online Company Incorporation in Canada

With the advancement in technology, it is now very easy to obtain a company incorporation in Canada by just following the given below steps:

Step-1: The applicant must visit the official website for Canada business incorporation.

Step 2: Click on the incorporate option, which will take you to the interface of the business corporation option.

Step-3: After selecting between basic incorporation and custom incorporation or not-for-profit incorporation.

Step-4: An applicant shall now complete the contact information, such as name, phone number, and email address.

Step-5: Choose the type of a corporate name, either a word name or a numbered name. In the case of a word name, such a proposed name shall be as distinct as possible from any existing companies. An additional charge has to be paid simultaneously.

Step-6: Fill in the details that pop up in the interface and make the fees for the incorporation name accordingly. Thus, an acknowledgment receipt will be sent to the applicant's email ID or registered phone number.

Step-7: Now, the applicant will be taken to the custom incorporation, where details like article of association, details of directors, shareholders, office address, etc. shall be filled and thus make fees accordingly.

Tax Structure for Company Incorporation in Canada

Given below is the tax structure for company incorporation in Canada:

1. Corporate Income Tax

A Canadian Corporate Tax (CIT) has to be paid by Canadian residents who establish their corporation on their international income. Additionally, capital advances resulting from the sale of taxable Canadian possession and revenue from functioning as a company in Canada by the non-resident are liable to CIT.

2. Federal GST

The government of Canada imposes a 5% government tax, known as GST, on the majority of goods and services.

3. Harmonised Sales Tax (HST)

In certain provinces, a combined federal and provincial sales tax is applied, such as 13% in Ontario and 15% in Nova Scotia.

Canadian Incorporation Fees

The fees required for company incorporation in Canada range between $200 and $1000, depending on the location or jurisdiction. These include government charges, name search fees, documentation fees, and professional charges.

What is the Time frame for Company Incorporation in Canada?

The time required for company incorporation in Canada ranges from 2 to 7 days, depending on the readiness of the applicant's necessary documents.

Why Choose Enterslice?

At Enterslice, we ensure that long-term relations are built with our clients by meeting their requirements and customizing solutions according to their needs and business goals. We have 20+ years of experience in assisting entrepreneurs in their company incorporation domain along with licensing, company establishment, and other legal compliances; our journey is full of success stories that we achieved through these years by making the right decisions for a business or an incorporated company. Our service is not limited to company incorporation but also provides assistance and support to businesses facing difficulties in business operations.