Everything You Need to Register a Company in Canada

It’s not hard to register a company in Canada, but it is often confusing and requires a lot of reading. Our guide explains everything you need to know about how to register a company in Canada, how much its going to cost you, and key decisions you’ll need to make.

1. Develop a Business Plan

Writing a business plan is a crucial step in launching and running a successful business. Here’s a guide on how to write one and why it’s essential:

How to Write a Business Plan

1. Executive Summary:
   • Provide a concise overview of your business, including your mission, vision, and goals.
   • Summarize your products or services and highlight what sets your business apart.
2. Business Description:
   • Provide detailed information about your business, its structure, and the industry it operates in.
   • Define your target market and audience.
3. Market Analysis:
   • Conduct thorough research on your industry, competitors, and target market.
   • Analyze trends, opportunities, and potential challenges.
4. Organization and Management:
   • Outline your business structure (sole proprietorship, corporation, etc.) and key team members.
   • Detail the roles and responsibilities of each team member.
5. Products or Services:
   • Clearly describe what you’re offering and how it meets the needs of your target market.
   • Highlight any unique selling points or competitive advantages.
6. Marketing and Sales Strategy:
   • Outline your plan for reaching and acquiring customers.
   • Include details about your pricing strategy, sales tactics, and promotional activities.
7. Funding Request (if applicable):
   • If you’re seeking funding, specify the amount you need and how you intend to use it.
   • Provide financial projections and a repayment plan.
8. Financial Projections:
   • Include detailed financial forecasts, including income statements, balance sheets, and cash flow statements.
   • Project your financial performance over the next 3-5 years.
9. Appendix:
   • Include any additional information, such as resumes of key team members, market research data, or relevant documents.

Why You Should Write a Business Plan

1. Clarity and Direction:
   • A business plan helps you clarify your business idea and define your goals, providing a roadmap for your venture.
2. Communication:
   • It serves as a communication tool, conveying your business concept, strategies, and potential to stakeholders, including investors, partners, and employees.
3. Decision-Making:
   • A well-thought-out business plan aids in informed decision-making by offering a comprehensive understanding of your market, competition, and financial projections.
4. Funding:
   • If you’re seeking funding from investors or lenders, a solid business plan is essential. It demonstrates your commitment, understanding of the market, and the potential for return on investment.
5. Benchmarking:
   • It provides a benchmark against which you can measure your actual performance, allowing you to make adjustments and improvements as needed.
6. Risk Management:
   • By conducting a thorough analysis, a business plan helps identify potential risks and challenges, allowing you to develop strategies for mitigating them.
7. Long-Term Planning:
   • A business plan encourages long-term thinking, helping you set realistic goals and plan for the sustainable growth of your business.

In summary, a well-crafted business plan is a valuable tool for entrepreneurs, offering a structured framework for strategic planning, communication, and decision-making. Whether you’re just starting or seeking to grow your business, a business plan is an indispensable roadmap for success.

2. Identify a Business Structure

Once you have your business plan prepared, you have a solid idea of who’s involved in the business, and how it’s going to be controlled. Additionally, if you have developed a comprehensive financial plan, you might be able to predict how much income you’ll be making, and deciding whether it would be a good idea to separate yourself as an entity from the business so that you can avoid slipping into a higher tax bracket becomes a lot easier.

In Canada, there are several types of business structures, each with its own legal and tax implications. The common business structures include:

1. Sole Proprietorship:
   • A business owned and operated by one individual.
   • The simplest and most straightforward structure.
   • The owner is personally responsible for the business’s debts and liabilities.
2. Partnership:
   • A business owned and operated by two or more individuals or entities.
   • Partnerships can be general (equal sharing of profits and liabilities) or limited (one partner has limited liability).
   • Income and losses are typically shared among partners.
3. Corporation:
   • A separate legal entity owned by shareholders.
   • Provides limited liability to shareholders, meaning their personal assets are generally protected from business debts.
   • Corporations are taxed separately from their owners.

When choosing a business structure in Canada, entrepreneurs should consider factors such as the nature of the business, liability concerns, taxation implications, and the level of control desired.

For Non Residents, or those without a work permit, the only business structure in Canada available to you is a corporation. Also, only Alberta, British Columbia and Ontario allow non-resident directors.

This guide is going to focus on the corporation business structure. If you would like to learn about other business structures, please subscribe so that we can keep you updated when new content is released.

3. Decide on the Ownership Structure

A common phrase you will come across when you register a company is “Authorized Share Structure”. In simple terms, this means how many shares the company is allowed to issue to shareholders.

The company may have shareholders who are in charge of making decisions and running the company, and some who are silent partners and do not have the right to cast a vote in decision making. For this reason, you may also decide to create separate classes of shares such as voting and non-voting classes of shares.

Additionally, you may want to grant some shareholders priority in being paid back in case the company is dissolved. For this purpose you can create preferred shares, that have extra rights over common shares.

Although it is highly recommended to have a professional assist you with this, such as ownr.co, if your plan is to hire a lawyer later when the business grows, it’s better to keep your share structure simple, so it’s easier to change it when necessary.

Once you have your business plan ready, and you have decided on your ownership structure, you are now ready to register a company.

4. Reserve a Name for your Company

Registering a company name is a crucial step in the process of establishing a legal and recognizable business entity. This involves selecting a unique and distinct name for your company, ensuring it aligns with your brand identity and market positioning.

Before officially registering, it’s essential to conduct a thorough name search to verify its availability and uniqueness within the jurisdiction where you plan to operate. Once you’ve confirmed the name’s availability, you can proceed with the registration process, typically through the appropriate government agency or registry.

Registering a company name provides several benefits, including legal protection, exclusivity in using the name, and the ability to build a consistent brand identity. It also enhances your business’s credibility and professionalism, instilling confidence in customers, clients, and partners.

Some important considerations when registering your company name include is there a short and simple domain name available that matches the name you would like to register? Or, how would the name do in terms of search engine optimization to help you in getting leads from your website?

For those who do not need a name, a numbered name will be provided free of cost for most jurisdictions. Applying for the name reservation will be part of the incorporation process in most jurisdictions.

Additionally, some lines of business may require that you get permission from a professional body before you are able to reserve a name that implies you are in that specific industry.

5. File your Incorporation Application

Although Canada is extremely friendly when it comes to accessing the various business registries, some provinces require that you use a registered agent to register a company. A table with the various fees associated with incorporating in Canada under the various jurisdictions is provided below.

Filing your incorporation application requires providing information about the registered address and details about the owners. You also are allowed to use your home address, and don’t require a separate business address, in most jurisdictions, as long as the address is located in the jurisdiction you are incorporating in.

For Non Residents, you might need to purchase a business address that is located in the jurisdiction you are registering in. Additionally you may need to hire a nominee director who is resident in Canada in order to assist you with opening the company bank account.

Should you Register a Company Federally or Provincially?

There are three main considerations when deciding to register a company federally or provincially:

1. If you do not care about protecting your brand or business name nationally, then a provincial corporation might be better suited to you. Examples of businesses include a local plumbing business or a landscaping business.
2. If you plan on establishing a place of business in another province or territory, it might be better to incorporate federally. This is because you would need to register in any province or territory where you hire employees or have a place of business.
3. A provincial corporation is normally less costly and time consuming than a federal corporation. However, a federal corporation still needs to register in its main province or territory.

A provincial corporation is able to sell its services throughout the country, so you do not need to register a company in a province or territory in order to sell services there.

6. Set Up Your Business Bank Account

Once you have received your company documents, it’s time to set up your business bank account. It’s important to set up a separate bank account under the company’s name to separate your finances since the company is a separate legal entity.

If you decide to incorporate with ownr.co, you may even be entitled to a rebate of up to $300 on your incorporation fees when you open a bank account with RBC.

You do not need to be a Canadian citizen or resident to open the bank account, but you do need to be present in person so that the bank can verify your identity. If you are unable to visit a branch in person where your company is registered, it might be a good idea to hire a nominee director to assist you in opening the company bank account.

It may be possible to visit a branch of the bank in your country of residence if a branch is present in Canada, but this often proves to be difficult as staff may be unaware of the processes in place to verify your identity when opening a Canadian corporate banking account.

7. Sign Up for Federal and Provincial Tax Accounts

Once your company is incorporated, you will be given a 9 digit Business Number from the CRA. You can use this to set up your CRA My Business Account. This is where you will apply for GST/HST account numbers, or Payroll Tax account numbers if you require them.

Additionally, you will need to apply for PST account numbers in the provinces you are doing business in. Some products and services may be exempt from GST/HST/PST, so getting an exemption early on can really save you from headache down the road.

You are mostly exempt from collecting sales taxes until you cross approximately $30,000 in sales, but it’s good practice to register for these early while your business is still in its early stages and you have the time to build systems for these.

8. Apply for Licenses and Permits, and liability insurance if needed

Depending on your jurisdiction and industry, you may need to obtain the relevant licenses and permits before you are legally allowed to start your operations.

It’s a good idea to find professional associations that govern your industry and apply for the relevant licenses if you don’t already have them. You should also check with your city to see which licenses you’ll require, if any, to start your business operations.

Finally, liability insurance might also be important depending on your industry. It’s a good idea to speak with a professional to make sure you are safe from litigation resulting from malpractice.

9. Set Up Your Accounting System

Once tax season comes around, most new businesses struggle with getting their books in order for their accountants. This is why you need to start right with a solid accounting system, where you upload all your receipts, and track whatever miles your using in your car for business purposes.

Wave Accounting and QuickBooks Online are two wonderful resources that can be used for accounting. You can also generate your invoices from these platforms, so your accountant can have a much easier time, and therefore offer you a better price, when filing your taxes.

Consider setting up a folder on your cloud drive that you can share with your accountant or bookkeeper where you’ll store all your receipts and invoices, organized by year, month and category (bank statement, expense, invoice, loan etc.) so you don’t have stress when it’s time to file your taxes.

10. Set Up Your Record Keeping System

Finally, you will need to make sure your record keeping system is developed and kept up to date. This will be in a document called your Minute Book.

You will need to log all your shareholder meetings, and the “minutes of the meetings” where you summarize what was discussed. You will also need to log all filings, changes to the corporation, or any significant discussions.

Registering a company in Canada is a relatively straightforward process, and is a great way to better organize your business as a separate legal entity. It may require a bit of upkeep, but ownr.co‘s services can streamline the entire process and help you spend more time on your actual business rather than the administrative tasks that are required when you register a company.

If you want ideas on what businesses you can start with little or no investment right now, please check out our guide on 13 side hustles you can start from home right now with step by step instructions!

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