International entrepreneurs are looking at Canada as an untapped market that can provide them tremendous opportunities for growth and business immigration. With a small and less intimidating business environment and an ideal market base, Canada is the best place to start your business operations for the North American market.
As an entrepreneur, if you are fluent in English or French, conducting business in the Canadian market will not be a problem for you. Canada offers a large English-speaking market, with the predominantly French-speaking market situated in the province of Quebec.
From a legal perspective, the province of Quebec is subjected to Civil Law while the rest of Canada follows Common Law. In addition to that, each of the 10 provinces has their Provincial Law encompassed with Federal legislation that also applies at the provincial level. Despite the similarity of language, Canada offers a diverse market and foreign entrepreneurs need to be prepared with the specificity of the local market to succeed here.
What Do You Need to Know Before Establishing Your Business In Canada?
There are many ways to establish your business in Canada, some require you to be physically present in Canada, others do not. Therefore, it is best to understand your options to select the best way to enter the Canadian market.
Option 1: Entering the Canadian market Without a Physical Presence
Many foreign entrepreneurs make the mistake of assuming that you need a physical presence in Canada to enter the Canadian market. However, the truth is that everything happens digitally nowadays. New businesses need not establish a physical presence in Canada to operate their business in the market.
This usually leads to unnecessary operational difficulties and financial setbacks for new organizations. Therefore, businesses can simply enter the Canadian market by having their website appropriated to the Canadian audience. By offering their website in English and French, the official language of Canada, businesses can easily attract Canadian customers to their site.
Option 2: Entry Through a Local Representative Without a Local Presence
Foreign entrepreneurs can also choose to augment Option 1 by hiring a local representative with or without a local premise. This representative can be a local contractor. They will generally be responsible for meeting potential clients and promoting the company’s products and services in Canada. Foreign entrepreneurs can hire a local representative with knowledge of your industry and experience in the local market on a commission basis.
Option 3: Entry Through Physical Premises In Canada
This option is the best for foreign entrepreneurs who have already checked how their products and services perform in the Canadian market and want to expand their operations by having a physical premise in Canada. This involves finding a location, hiring Canadian workers, and finding local financing from Canadian angel investors or venture capitals. This is also a great option for well-settled businesses who wish to open their subsidiary or branch in Canada.
What Do You Need to Know Before Establishing a Physical Premises in Canada?
Corporate Law: The most common form of a legal entity for business is a Corporation. Therefore, setting up your business in Canada would involve incorporating it according to the Provincial or Federal legislation, also known as the Canada Business Corporations Act.
Large scale businesses such as those involved in transportation or telecom mainly go for Federal incorporation. While the cost of incorporation at provincial and federal levels is the same, there will be certain additional expenses for federal incorporation. Federal companies are also required to be extra-provincially registered, meaning they have to be registered with every province they intend to have a corporate presence in.
Provincial incorporation is better suited to medium and small-scale businesses that intend to base their business primarily in one province. If you want to establish your business in the province of Quebec, there will be a few unique requirements. The business will be obligated to ensure that the corporate name meets the requirements of the Charter of the French Language.
Federally or Provincially, all corporations must adhere to the strict requirements regarding the number of Canadian residents qualifying as directors or shareholders of the business. This is for Income Tax purposes and also to classify the business as a Canadian corporation.
Currently, at least 25% of the board of directors are required to be Canadian residents with a majority of shares to be owned by Canadian shareholders for a business to be considered a Canadian corporation. Not meeting the requirements usually means that your business will be taxed at a higher rate than foreign business.
Once the incorporation is completed, the business will be required to file a corporate Annual Report with the concerned corporate registry every year. Failing to file may result in removal from the registry.
What Canadian Visas Are Available to Establish Your Business in Canada?
The first step after deciding to open physical premises in Canada is to apply for a Canadian work permit. Generally, business immigration to Canada will require you to actively establish and operate a business in Canada. After meeting the terms and conditions set in the Business Performance Agreement (BPA), you will be eligible to apply for Canadian permanent residence.
Most often, international entrepreneurs prefer applying for the Start-Up Visa program as it targets foreign entrepreneurs with the skills and experience to establish a business in Canada that can create employment in the Canadian and international markets. There is no minimum investment required for this program. Instead, applicants will be required to get a letter of support from one of the designated organizations in Canada.
Another successful program for foreign entrepreneurs is offered by the British Columbia Provincial Nominee Program (BC PNP) known as the BC PNP Entrepreneur Immigration. This program is for applicants who want to establish or acquire an existing business in British Columbia. The main requirements for this program are a minimum net worth of at least $600,000 and a minimum required investment level of at least $200,000. The established business must also create at least 1 employment opportunity for a Canadian worker. There are many immigration programs offered by other provinces and territories called the provincial business programs.
To establish a business in Quebec, foreign entrepreneurs can consider the Quebec Entrepreneur Program. This program requires the applicants to have a minimum net worth of at least $300,000 and a minimum investment level of at least $100,000. The applicant must also have at least 2 years of business management and ownership experience.
What Do You Need to Know About Employment Law in Canada?
The first and foremost challenge faced by most newly established businesses in Canada is securing a talented workforce to operate your business. Most businesses require local workers to effectively sell their products to Canadian customers. Only a local worker will be capable of understanding the sales and marketing expectations from the Canadian market to execute your sales strategy, even if most of your operations are located in your home country.
To hire local workers, you must know the Employment Law in Canada. The Canadian Employment Law is generally regulated at the Provincial level. The Canada Labour Code regulates employment relations between federal employers and employees and is not applied to small businesses and private companies. The Common Law of Employment is applied consistently throughout Canada, except in Quebec, where the Civil Law is applicable.