Canada is a great place to start a business for a number of reasons. It has a skilled workforce, access to generous government grants and tax credits, a reasonable cost of living, and opportunities to obtain venture capital and seed money for your business. It’s not just Canadian citizens who can reap the benefits of running a business in Canada, either: there are plenty of options for foreign entrepreneurs to do business here, too. While the process may require a little extra effort, if you’re truly passionate and committed to starting your own business in Canada as a foreigner, Ownr can help you get off the ground.
What you need to know about business in Canada
Before you get too far into the process, it’s important to note each Canadian province and territory has its own rules and business registration fees. So the process for starting your business in Canada will vary depending on where you plan to operate.
In addition to registering your business provincially, you can also register on a federal level. Businesses that are registered federally can operate all across Canada with increased name protection and a different set of annual filing rules.
However, even if you are registered federally, your business may still need to be registered as an extra-provincial corporation with each of the different provinces in which you intend to operate.
Three ways to start a business in Canada
Here are three different approaches that you can take if you want to start a business in Canada as a non-resident. Some of them may not even require you to be physically present in Canada to run your business, but may require the participation of a Canadian citizen or permanent resident.
1. Expand your existing business into Canada
If you already run an established business in a different location and you simply want to expand your operations into Canada, opening an office or subsidiary of your existing business is a fairly straightforward process for non-residents.
Although you do not have to have Canadian citizenship or permanent resident status, you will likely need the involvement of someone who does in order to proceed.
If you intend to operate in more than one province or territory, you will need to register as an extra-provincial corporation with each according to their individual rules. Some provinces, like Ontario, require non-residents to use an Agent for Service in order to register as an extra-provincial corporation.
This can be a Canadian citizen or permanent resident who is over 18 years old, or a corporation with a registered office in the province.
2. Start a business from outside of Canada
Even if you want to start a brand new business in Canada but you live abroad, you don’t necessarily need to immigrate. In fact, the Investment Canada Act was created specifically to govern non-Canadians who choose to establish a new Canadian business or who acquire control of an existing Canadian business.
It is possible to start and run a business in Canada without moving here, but this will most likely mean that you need the participation of a company director who is Canadian. Likewise, you’ll need a local agent to help with the incorporation process.
Since each province and territory has their own set of rules, regulations, and fees, the process of registering your business will vary. However, most jurisdictions require a Canadian citizen or landed permanent resident to have at least partial ownership of the company.
The notable exception is British Columbia, which does allow for 100 per cent foreign national ownership in some cases.
3. Immigrate to Canada and start a business
The final way that you can start a business in Canada as a non-resident is to immigrate to Canada. When it comes to immigrating for the purpose of business, there are two visa programs that are designed for immigrants who want to run a business in Canada.
Start-Up Visa Program
The Start-Up Visa program exists to help immigrant entrepreneurs move to Canada and start a business. The program has specific requirements in terms of what types of businesses qualify.
Interested applicants will need to apply with a business idea that:
- Is innovative
- Can create employment opportunities for Canadians, and
- Can compete on a global level.
In addition to having a business that qualifies, as a non-resident, you will need to meet the Canadian language requirements and prove that you have enough money to settle in Canada. Those hoping to move to Quebec to start a business will be subject to their specific requirements for immigrating entrepreneurs.
You’ll also need support from one of these designated organizations in order to apply for the program.
Self-employed Persons Program
Another option for immigrating to Canada and starting a business is the Self-employed Persons Program, which focuses on businesses related to the arts, entertainment, and sporting industries.
In order to qualify, you must:
- Have relevant experience in cultural activities or athletics, and
- Intend to make a significant contribution to cultural or athletic life in Canada.
Examples of self-employed people who could make use of this visa include actors, musicians, and athletes. Applications are evaluated based on experience, education, age, language abilities, and adaptability, and are also subject to medical and security checks.
Four steps to start a business and move to Canada as a foreign national
If you’ve made the decision to move to Canada and start a business but you don’t qualify for the above immigration visa programs, here are the steps you’ll need to follow.
1. Obtain a multi-entry visa
If you’re still in the planning stages of deciding what area of Canada would be the best choice for your future business, you may want to start by obtaining a multi-entry visa.
This type of visa can allow you to enter and exit Canada freely for up to 10 years, making it a great option if you want to visit multiple times to perform research and find the perfect location before you make a commitment. In addition, you may want to look into other visa programs that you are eligible for, as well as familiarize yourself with the citizenship requirements.
2. Register your business
You don’t necessarily have to be physically present in Canada in order to register your business—Ownr can help you register your business from anywhere in the world.
In some jurisdictions, you will be required to have a company director who is either a Canadian citizen or a permanent resident in order to register your business. Keep in mind that your Canadian director does not necessarily have to own equity in your business, although the rules will vary depending on a number of factors.
In some cases, the Canadian director will be required to assume liability for your business. For example, registering a federally incorporated business in Ontario requires that 25% of your directors.
Ontario, Alberta, and British Columbia don’t require a resident director for provincial incorporation, but you will require an address within the provinces you’re trying to incorporate in.
If you don’t live there, Alberta and British Columbia will require you to hire an incorporator or agent of incorporation, and that person will need to be residing in the province.
If you want to avoid having to hire a Canadian director when registering your business, your best bet is to look into starting a business in British Columbia, which is the only province or territory that allows corporations with 100 per cent foreign national ownership. You may also want to check out the tax rates in BC when making your decision.
On that note, finding the perfect province or territory to start your business isn’t just about location. Business taxes for corporations are different in each province, and your business will be subject to the specific provincial tax laws and federal taxes in your location, which is why it’s so important to do your research.
3. Apply for an LMIA
While registering your business is a necessary step, that alone does not give you the right to immediately start operating. First, you’ll need to apply for a Labour Market Impact Assessment (LMIA) of your business.
An LMIA’s purpose is to ensure that as a foreigner operating a business, you will not be negatively impacting Canada’s labour market. In other words, allowing your business to operate will not reduce jobs for Canadian citizens or permanent residents.
In order to apply, you’ll be required to provide a detailed business plan that indicates your intention to hire at least one Canadian citizen or permanent resident by the time your business launches. You will also have to prove to LMIA that you are able to afford to sustain yourself, your family, and your business.
4. Apply for a permit to work in Canada
Once you’ve received a positive LMIA, you can apply for a work permit. A work permit is separate from a visa, and in most cases will be required in order for you to conduct business in Canada.
The process for obtaining a work permit may take several months. However, if you have a Temporary Resident Visa or a Visitor Visa to the United States, you may be able to apply for a work permit at the Canadian border.
Since applying for a visa and work permit can be confusing and lengthy, you may opt to hire an immigration representative. While hiring a professional for assistance with your applications does not improve the likelihood of you being accepted, it may help you to avoid administrative errors that can cause additional delays in the approval process.
Tips for starting a business in Canada
Now that you understand what it takes to start a business in Canada as a foreigner, here are a few helpful tips to keep in mind as you navigate the process.
Embrace the culture
When starting a business in a new country, learning about the culture is an absolute must. In order to be able to successfully market your business, you’ll need to get to know your potential customers and learn about their purchasing behaviour.
You can do this by getting involved in local groups, volunteering, or joining a business organization where you can network with fellow business owners.
Build your credit score
If you are new to Canada, you may not yet have a credit score. A good credit score is important for businesses operating in Canada, since banks will check your score when deciding whether or not to approve a loan.
One of the easiest ways to get a credit score is by signing up for a Canadian credit card and using it to make purchases. Make sure to pay off your balance every month, and within six months you should have a usable credit score.
Find a mentor
A good mentor or business coach can be an asset for any entrepreneur, but especially so for a foreign business owner who is looking for advice and guidance from someone with local experience. There are many organizations and groups in Canada that can offer help or assistance in finding a mentor.
Get financially prepared
In addition to getting all of your visas and permits approved, you may be required to prove that you are financially prepared to run a business in Canada.
This means having enough money to cover your personal expenses while you wait for your business to start making a profit, which can take awhile. It’s a good idea to have at least enough money to cover your expenses for the first six months.
Setting yourself up for success
If you’re trying to start a business in Canada as a foreigner, the process may seem lengthy and intimidating. However, if you put the effort into doing your research, setting achievable goals, and making use of the resources available to you, you’ll be ready to hit the ground running.
This article offers general information only, is current as of the date of publication, and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Ventures Inc. or its affiliates.