Register a Business in Canada
A comprehensive guide on how to register a business in Canada, focusing on Vancouver, BC. It covers the process step-by-step.
Among all immigration programs, one is applicable to applicants who have a business in a country other than Canada. Through registering a subsidiary in Canada, one can transfer executives and senior managers, functional managers and specialized knowledge workers to the subsidiary company.
Other than British Columbia and Atlantic Provinces, while registering a business in Canada, at least one Canadian citizen or permanent resident is required to fill the role of director in the company. If there is not a permanent resident or citizen’s participation, you can register the business in British Columbia or the Atlantic Provinces first and then apply for an Extra-provincial registration in other relevant Canadian Provinces. This will enable the company to operate in other provinces of Canada.
Let us take the example of Vancouver, BC to explain in details the process of registering a company in Canada.
1. Decide on the name of the company
-The company name must end with "Limited", "Ltd.", "Inc.", "Incorporated", "Corp." or "Corporation" or other words with the same meaning.
-The name of the company cannot be the same or similar to the names of other companies in the BC Corporate Register.
-The company name does not necessarily need to be the same as that of the parent company； or you can incoprate with a “Number” name, e.g. 12345 Co. Ltd.
2. Apply to reserve the company name from Registry Services
If your company name is approved by the Registry Services of BC, you can reserve the company name for 56 days.
3. Determine the position of the ICT applicant
ICT applicants are usually appointed as senior managers of the subsidiary, such as president or secretary. Senior managers are usually responsible for the daily operations of the company.
4. Requirements for directors
A private company must have at least one director. According to the Business Corporations Act of British Columbia, directors do not need to live in British Columbia or Canada, but they must agree in writing to serve as directors. The director must also provide the Registry Services with an address where the company can receive documents during normal office hours. If there is no such office, the registry will ask for the director’s home address.
5. Decide on the company’s "Legal Share Structure"
The amount of shares your company has the right to issue to shareholders is called the legal share structure. The parent company can also be the main investment entity and own 100% of the shares of the Canadian subsidiary. This amount can be limited or unlimited. There are two main types of shares: shares with par value and shares without par value. Shares with par value are set at the minimum price necessary for sale, while shares without par value are not set at the minimum price. You can also own different classes of shares, such as ordinary shares and preference shares, or you can own different series of shares in the same class.
6. Required documents to register a subsidiary
Business license of the parent company
Legal person’s ID of the parent company
Incorporation Agreement of the Canadian Subsidiary
Incorporation Application of the Canadian Subsidiary
Articles of of the Canadian Subsidiary
Notice of Articles of Canadian Subsidiary
What is the Incorporation Agreement?
This is an agreement between the founder of the company and the company. The agreement states the amount, nature and type of the shares that each founder agrees to subscribe once the company is established. The founder must agree to subscribe for at least one share of the company, thus becoming the first shareholder of the company. The founder must sign the Incorporation Agreement before submitting the Incorporation Application to the Registry Services. You do not need to submit the Incorporation Agreement to the Registry Services, but you must save a signed original in the company minute book.
The articles of incorporation are the rules and regulations concerning the operation of the company. You can use the examples provided in the "Business Corporations Act" of B.C. Province or draw up separately according to your needs. The founder must sign on the Articles. The Articles do not need to be submitted to the Registry Services, but a copy must be kept in the company minute book.
What is the Notice of Articles?
The Notice of Articles contains the following documents and information:
Legal share structure
Whether the shares have additional specific rights and restrictions
Addresses of registered office and archives office
Director’s names and residential address or business address
7. Submit company registration documents to the Registry Services
You must submit the Incorporation Application with the Notice of Articles and the application fee to the Registry Services via the online application or via an agent. A password must be set for your company so that the form can be submitted online in the future. The notarized copy or certified copy of the Incorporation Application and the Notice of Articles will be sent to you by Registry Services after the submission.
8. Companies registered in British Columbia can also operate in other provinces in Canada
Simply follow the steps to register your company's name in the relevant provinces of Canada (Extra-Provincial Registration), and your company established in British Columbia can operate in other provinces in Canada. But this is different from companies under the federal jurisdiction of Canada. For example, when a company established in British Columbia applies for its company name from another province, it might have the risk of being rejected by the registry of that province.
9. Company Maintenance
Your company must submit an Annual Report to the Corporate Registry within two months of the company's anniversary date each year. Failure to submit an annual report for two consecutive years will result in the dissolution of the company. In addition, if the company’s registered office or archives office changes, or if a director resigns or relocates, the company must submit relevant information to the Corporate Registry. In most cases, a fee is required to submit these applications.
10. Business Tax
Except for charitable organizations, all limited companies settled in Canada, including non-profit organizations, tax-exempt companies, and companies that do not have any business activities, must report on a regular basis every year even if they do not need to pay taxes.
For non-Canadian resident companies, if they have carried out business in Canada, have had capital benefits, or sold Canadian assets during the year, they are required to pay taxes (Part I Tax, Part XIV Branch Tax).Even if they can be exempted according to tax treaties, they still need to declare T2.
Income tax deduction for Limited Companies
If the company has had losses in the past and has already reported to the tax bureau, the past losses can be used to offset income. A loss like this is valid for up to 10 years. In the first three years, it not only can offset the tax income of the coming year, but also can offset the tax income of the three years before the year the loss occurred. If the company has dividend income, and the dividend comes from a Canadian company and the income tax has been paid, then these dividends can be deducted from the tax income.
Sales Tax (GST/HST) declaration is required even though you do not have income
According to tax regulations, if a company sells taxable (GST/HST) goods and services, and its annual sales income exceeds CAD$ 30,000, it must register a GST/HST number, and must also collect the GST/ HST. If the annual sales income is less than CAD$ 30,000, registration is not required.
The GST/HST reporting principle is to Subtract the GST/HST paid in the usual purchases and expenses from the GST/HST part of the goods or services sold . If the result is a positive number, then it will be handed over to the tax bureau; If the number is negative, it can be refunded from the tax bureau.
The tax law stipulates that companies with no income also need to declare GST/HST. If they rarely receive or pay HST at a certain time, they can apply to the IRS not to declare during this period.