What Are The Key Requirements To Start A Business In Canada?
Irrespective of the fact your business is a startup or a big conglomerate, there are immense business opportunities waiting to be exploited in Canada because of its welcoming attitude towards foreign entrepreneurs. This article briefly explains a few of the key requirements to do Business In Canada, especially for the foreign entrepreneurs who wish to expand their business horizons in the North American market.
Options Available To the Foreigners for Starting a Business in Canada
Following are the four prominent ways foreigners can adopt in order to start their business in Canada:
- Intra Company Transfer (ICT): This program is meant for established business owners from foreign countries who wish to expand their business in Canada. Foreign entrepreneurs who are coming on ICT work permits have the option of permanent residency after showcasing one year of employment in Canada.
- Entrepreneur Work Permit: this program is available for those foreigners who wish to establish their business in Canada and relocate to Canada. The eligibility of this program requires the foreign entrepreneur to own 50% of shares in a Canadian business and demonstrate how his business will be able to contribute to the Canadian economy. After successfully establishing his company in Canada for at least one year, foreign entrepreneurs become eligible for permanent residence under immigration programs in Canada.
- Owner-Operator LMIA Program: this program became popular among foreign investors until it got closed in April 2021. Now foreign business owners resort to the regular LMIA pathway.
- Provincial Nominee Programs (PNP): every province of Canada offers immigration opportunities to foreign nationals to invest, work and relocate in Canada. This is the reason why most foreign entrepreneurs resort to Ontario PNP and British Columbia PNP.
Key Requirements to Start a Business in Canada
Following are the five types of Corporations in Canada.
- Draft a commercially viable business plan: the primary step in opening a business in Canada requires a well-researched, content-specific and commercially viable economic plan which suits the market conditions in Canada. An ideal business plan shall comprise as many details as possible. An ideal business plan contains information under the following heads:
- Descriptive analysis of business model
- Market research
- Advantage over competitors
- Challenges and risks associated with the business
- Long term vision
- Short term execution plan
- Raising of team members.
- Important business partners
- Cash flows in the business.
- Advertising strategy
- Profit and Loss analysis
It must be remembered that the business plan should not be such that it generates profits for the owners and partners alone. Rather the business should have a long term vision of expansion which generates employment and contribute to the Canadian economy. It should involve the day-to-day involvement of the promoters. The business idea should not be of a nature of “passive investment” such as investment in Real Estate.
- Relevant experience: The promoters need to demonstrate that they have relevant experience in the same industry or similar industry and also possess the managerial skills necessary to execute the said business plan. The promoters should be able to convince others to be able to successfully execute the business plan. This makes it necessary for the promoters to include evidence of their educational background and employment or business history, and relevant experience in order to show and convince the relevant authorities that they possess the relevant skills and knowledge to undertake the business in Canada.
- Financial standing of the promoters to start the business in Canada: it is expected from the promoters that they possess the necessary funds to establish and start their business in Canada. The promoters also need to demonstrate the benefits that will accrue to the Canadian economy because of their business plan in the coming times. It is beneficial if the promoters are able to secure financing for their project. A reasonable estimate of financing should be an amount which is able to take care of the operational expenses of the business for the next 1-2 years.
It is advised that the promoters should refrain from investing their entire savings in their business since every business is fraught with substantial risks, especially when it enters a foreign jurisdiction. Having sufficient funds helps to keep the business in challenging times.
- Sense of ownership, commitment and execution from promoters’ end: Once the promoters get their plan ready, they should start taking steps to execute the plan before entering the Canadian market or submitting an immigration application. The promoters need to demonstrate their commitment to the business vision. This can be gauged from the fact whether the promoters have undergone federal or provincial incorporation, registration with the Canada Revenue Agency for provincial sales tax account, ordering equipment for the business, renting premises, hiring of local staff etc. The more the steps are taken by the promoters in the execution of their business plan, the better are their chances of getting a positive result.
- No criminal history and clean travel history: the promoters should have a clean track record. There should not have been any instance of breaching the immigration laws of Canada or any other country on the part of the promoters. There is a possibility that Canadian authorities might find the promoters inadmissible depending on their track record of breaching immigration laws in the past. Further, there should be absence of criminal history in order to be admitted into any of the start-up immigration programmes in Canada.
From the above discussion, it can be concluded that any foreign national can start a business in Canada and subsequently relocate in Canada. Primarily, the foreign entrepreneur who wishes to do business in Canada needs to have a robust, economically feasible and commercially viable business plan along with the entrepreneur’s prowess to successfully execute the business plan. This increases their possibility to do business and relocate in Canada.
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