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Company Formation in Canada

Overview :

Canada leads all G7 countries in ease of doing business. Canada has the eleventh-largest economy in the world, is one of the world’s wealthiest nations, and is a member of the Organization for Economic Co-operation and Development (OECD) and Group of Eight. Canada also has a sizable manufacturing sectorwith the automobile industry and aircraft industry especially important. With a long coastal line, Canada has the 8th largest commercial fishing and seafood industry in the world. The foundation of the Canadian economy is foreign trade and the United States is by far the nation’s largest trade partner. Foreign trade is responsible for about 45 percent of the nation’s gross domestic product (GDP). Marine industries—including fishing, telecommunications, and energy production—are the main components of the economy.

Advantages of Incorporating Business in Canada :
  • Lower production and business costs due to lowest phone and internet access charges Canadian construction costs are 15 percent lower, electricity costs 24 percent less, and transporting costs are 13 percent lower.
  • Canada has a skilled labour force due to our level of educational achievement and great amount of first-class business schools within our country.
  • A positive business climate is one that encourages success of business, fair competition and welcomes foreign investment, and proper business ethics
  • The US and Canada are the world’s largest trading partners.
  • Canada offers businesses low tax rates.
  • Last year, Forbes magazine ranked Canada the best country in the world to do business, citing its dropping tax rate, sound banks, investor protection and relative lack of red tape.

Tax Regime

Canada’s current tax laws have attractive tax regimes, which impact all companies — in particularly small-medium sized domestic companies.”Canada has moved up three places to eighth in a global comparison of the most advantageous place to pay corporate taxes, placing the country in the top 10 for the first time.Income taxes throughout Canada areprogressive with the high income residents paying a higher percentage than the low income residents.Companies and corporations pay tax on profit income and on capital. Tax is paid on corporate income at the corporate level before it is distributed to individual shareholders as dividends.

Types of Entities

Canadian law recognizes several different business entities

Sole Proprietorships :

A sole proprietorship is the simplest form of business enterprise in Canada. The business is directly owned by one person who is responsible for the business, including all liabilities. If however a business name is going to be used other than the name of the owner, registration is required in each province where the business operates

Partnerships :

Partnerships are businesses operated by two or more individuals or corporations together pursuant to an agreement between them. Partnerships must be registered.

Canadian Corporations :

In Canada, a corporation is in law a person with independent legal status. A corporation is owned by its shareholders. Because of the legal status of the corporation however, the shareholders are not responsible for the liabilities of the corporation. Corporations must be incorporated pursuant to the applicable statute in its jurisdiction, either provincial or federally.

Branches of Foreign Corporations :

In order to conduct business in Canada a foreign business can operate as a branch operation. The branch must be registered in Canada.

Unlimited Liability Company :

In Nova Scotia a “hybrid” exists called an Unlimited Liability Company. This vehicle is frequently employed by foreign businesses to operate in Canada because of the flow through nature of any losses incurred by the Unlimited Liability Company which may be used by the foreign business.

Joint Ventures :

Joint ventures are simply associations of two or more businesses with a view to undertaking a specific enterprise or goal. This association can be achieved by way of partnership or separate incorporation of the joint venture. Joint ventures can be any combination of individuals and corporations.

Franchises :

A franchise is a business form wherein the franchisor allows the franchisee to sell its products and/or services using the franchisor’s business name, logo etc. by way of license. The franchisee is charged a fee and royalties for the use of the business name etc.

Time Period

Usually, Incorporating a Company takes about 5-7 days to in Canada.