Registration of a company in Canada

Canada attracts entrepreneurs by flexible conditions for the registration of companies and the lack of restrictions on the collaboration with representatives of other jurisdictions. Companies in Canada are very popular in the field of online business. Here you may establish an IT cluster or web studio, organize the sale of virtual start-ups as well conduct operations with virtual assets. Prifinance specialists are versed in the organization of activities abroad and can arrange quickly your business presence in this country.

Advantages of the Jurisdiction

Canada is a prestigious jurisdiction. And if you decide to incorporate a company in Canada, you may potentially benefit from the advantages the jurisdiction offers to local and foreign entrepreneurs.

• advanced economy and stable legislation that protects entrepreneurs and creates conditions for effective business development;
• good international reputation;
• flexible terms of formation and payment of the authorized capital (at the discretion of the owners);
• preferential tax regime for non-residents carrying out activities outside of Canada;
• variety of governmental, provincial, and municipal programs;
• lack of commitments on keeping accounting records, submission of tax returns, organization of auditing;
• the lack of foreign exchange control;
• a possibility to obtain a residence permit easily;
• lack of residency requirements for shareholders;
• high level of confidentiality for beneficial owners;
• owners of a business may use the nominee services.

Major Forms of Legal and Business Presence

If you intend to establish your business presence in Canada, we suggest you look through these basic options:

• Business Corporation – a corporate entity that may be established by one or more persons (either natural or legal) by signing the respective articles of incorporation and registering this body corporate. This business option is very flexible in terms of establishing and operation. There are no requirements as to the amount of the statutory capital of the corporation. The liability of members is limited to the amounts of contributions made.
• General Partnership – a business option that can be established by two or more partners who bear unlimited liability for all undertakings of such business arrangements. Even their personal property may be called to cover potential losses. The operation of this partnership is carried out based on a partnership agreement.
• Limited Partnership – a business option that also can be established by two persons at least for the joint carrying out of business provided that it should have (i) one or more general partners whose liability is not limited and who manage this joint business, and (ii) one or more limited partners whose liability is limited to the amount of the contributions made. This option can be beneficial in view of the 0% tax rate on its income (only participants pay taxes). If a partnership conducts business outside the territory of Canada, it is exempted from taxes.
• Branch – an option suitable for an overseas company that intends to conduct in Canada the same business activities as abroad. Registration is required in this case.

Registration Requirements and Steps

Incorporating a company in Canada, a corporation for instance, preliminary may require passing these steps:

1. Identifying business goals you are going to realize through your enterprise in Canada.
2. Selecting and verifying a business name for a future corporation.
3. Collecting data about founders, beneficiary owners, and future managers of an enterprise.
4. Arranging the registered address for a future enterprise.
5. Drafting and formalizing statutory documents for this corporate entity.
6. Forming and submitting the set of registration documents to the registrar.
7. Arranging a corporate seal, minutes book, and other records.
8. Registration for tax and social security purposes.
9. Opening a bank account.
10. Obtaining licenses and special permits (required for certain types of regulated activities).

Legal and Regulatory Framework

Canada has a legal system based on English common law, except for Quebec (its legal system is based on the French Civil Code). The country has created advantageous conditions for doing business. The process of its establishing and operating is fast and straightforward, without any burdensome bureaucratic formalities. For non-residents, who register a company and do not carry on business within the state, the business zone of Canada creates a preferential tax regime.

The major legal act in the business area is the Canada Business Corporations Act. Each province has its own business-related legal acts. The major regulatory authorities in terms of doing business at a federal level are the Canada Revenue Agency and the Bank of Canada. Authorities regulating financial activities are established in each separate province.

Tax System of Canada

Opening a company in Canada may be favourable taking into account these basic tax highlights attributed to this jurisdiction:

• Corporate income tax (CIT) rate – (i) federal – 15%, (ii) provincial and territorial – may vary from 8% to 16%
• Personal income tax (PIT) rate – (i) federal – 33% (ii) provincial and territorial – 11.5-21%
• Combined federal and provincial/territorial sales tax rate (instead of value-added tax rate) – 5-15%
• Withholding tax rates (for non-residents) – (i) dividends – 25% , (ii) interests – 25%, (iii) royalties – 25%
• Capital gains tax rates – (i) corporate – 50% of a capital gain is a taxable capital gain that included in the entity’s income and taxed at ordinary CIT rates, (ii) individual – 50% of a capital gain is a taxable capital gain that included in the personal income and taxed at ordinary PIT rates

How Prifinance Specialists May Help You

If you intend to open a company in Canada, Prifinance specialists may consult you more precisely whether this option ideally suits your business objectives as well as suggest alternatives if this is necessary. Our lawyers are ready to guide you throughout the registration process: collect all necessary information for establishing a company in Canada, draft all required documents, and complete the registration itself.

We offer prompt company registration and bank account opening services in Canada and worldwide. New registration and ready-made options. Provide extensive details for more precise consultations and suggestions that can be effective for your future project.