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A Guide on How Foreign Companies Can Register a Business in Canada

kase
Nov 3 2022

Are you a foreign company wanting to start a new venture in a new country? Do you want to know how to register a business in Canada? There are a few types of business structures you can choose from:

  • Sole proprietorships;
  • Partnerships;
  • Corporations;
  • Joint ventures;
  • Franchises; and
  • Cooperatives

This post will focus on corporations, mainly because the types of international businesses that want to establish operations in Canada are often corporations. So, if you’re curious about how to get a business license in Canada, you’ve stumbled across the right blog. Let’s dive right into it!

1. Obtain a Business Number

A Business Number is a nine-digit number that the Canada Revenue Agency (CRA) and other government federal and provincial agencies use to identify your business.

2. Federal vs Provincial Incorporation

A business that incorporates at the provincial level can only operate within that province. It’s important to remember that each province has a different set of rules that businesses must follow to operate within its borders. 

But if you incorporate your business on a federal level, you can operate in any province. Federal incorporation is a wise move if you're planning to expand your reach later on. There are, however, some rules you must follow. One rule is that 25% of your board of directors must be Canadian residents. 

3. How to Get a Business License and Permit

If you own an international business and want to set up shop here, we can tell you that most don’t require a federal or provincial license. However, you may need to get a municipal business license and permit. Whether you need a license or not depends on your type of business and the province you’re in.

If you’re curious on how to start a small business in Canada, you’ll most likely need to get a local business license first. This is what you need to apply for if you’re looking to operate a cafe, restaurant or driving school, or if you want to conduct activities that could disturb your neighbours. Most municipalities will issue a business license that allows you to generate revenue while adhering to zoning regulations.

4. Learn How to Navigate Taxes

You can’t operate a business without abiding by provincial and federal-level regulations. The best way to find out which tax credits are appropriate for your business in your particular territory is to consult the CRA.

  • Application for GST/HST

If your business earns less than $30,000 a year, you may be eligible for the small supplier exemption. Otherwise, you’ll have to register for GST (Goods and Service Tax) and HST (Harmonized Sales Tax).

There’s no GST in the USA. However, it applies to most goods and services bought and sold in Canada. 

  • Registration for Provincial Tax

There are some provinces that have not harmonized their sales tax with the federal GST, which means you may need to register for provincial sales tax.

5. Familiarize Yourself with Canadian Business Laws

To operate a business in Canada, you should be familiar with all the information relevant to running it—including Canadian Business Laws. Following the rules that are specific to your business will ensure your Canadian operation is successful.

A businessman examines insurance policy

6. Application of Business Insurance

Insurance for your employees is legally required, but it isn’t mandatory for your business. Still, it would be a smart idea to protect your business in these areas:

7. Take Care of Administrative Tasks

  • Hiring Employees

Decide if you want to hire contractors, freelancers, or employees. You can choose to hire them directly, establish a Canadian subsidiary, or use an EOR (Employer of Record) service.

  • Open a Business Account

You must first open a bank account in Canada from the U.S. before starting business transactions or collecting payments. To open a Canadian bank account, you will need:

  • Business number and business license
  • Articles of incorporation
  • Two forms of ID (from corporation authorities)
  • Corporate annual government filing
  • Corporate profile report
  • Certificates of compliance, existence, and status
  • Notice of assessment for income tax

 Toronto skyline as seen form interstate

Thrive in Canada and Shield Your Investment From Risks

Canada offers corporations a great opportunity to thrive. One of the most crucial steps in achieving success is for international business owners to be compliant with Canadian laws and shield your business from risks through insurance.

If you plan to start a business in Canada, KASE Insurance is here for you every step of the way. We are a trusted insurance brokerage firm based in Toronto. You can count on our team of specialists to assess the unique risks of your business and develop an insurance plan that’s tailored to your needs.

So if you’re ready to register a business in Canada and insure its future, contact us today!

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