Can I Start a Small Business in Canada as a Non-Resident?

How to Start a Business in Canada When You Don't Live Here

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Question: Can I Start a Small Business in Canada When I'm Not Living in Canada?

Answer:

If You're a Canadian Citizen:

Yes, starting a  non-resident business in Canada is possible - but certain requirements have to be met.

First, are you Canadian (either a Canadian citizen or a landed immigrant)? If you are, then all you need is a Canadian address (not a Post Office box, but a real Canadian address). If you personally have or establish a Canadian address and are a Canadian citizen or a landed immigrant, you can register your business as a sole proprietorship (or as any of the other permitted forms of business in Canada).

You can then register your new business in the province that it's located in. Because business registration is governed by the province where the business is located, the details of the procedure to register a business name will differ from place to place.

For example, see:

If you intend to incorporate your business and plan to operate Canada-wide you may wish to incorporate federally rather than provincially - federal incorporation gives you the right to do business across Canada using the same name. (See Incorporation in Canada - Provincial versus Federal.)

If You're Not a Canadian Citizen:

If you're not a Canadian citizen or landed immigrant, you can still form a business in Canada but your options are more limited.

One of your options is to form a partnership with a Canadian living in Canada; then you can use his/her address for starting your business in Canada.

Another approach is to start an incorporated business. You would still need a Canadian address to enjoy the tax benefits of having a Canadian Controlled Private Corporation (see Types of Corporations in Canada and Corporate Tax), as well as have the correct number of Canadians on your Board of Directors and meet all the other requirements for such a corporation.

The correct number of resident Canadians depends on the jurisdiction you incorporate in. In Canada, you may incorporate federally or provincially for starters. How to Incorporate Your Business in Canada explains the advantages and disadvantages of each of these forms of incorporation and the basic procedure.

"Foreign investors need to be aware of the residency requirements imposed on the directors of companies incorporated in Canada. The federal statute requires that 25 per cent of the directors be resident in Canada. In case there are fewer than four directors, then the CBCA (Canada Business Corporations Act) requires that one director be resident in Canada. Each province has different residency requirements and an investor wishing to incorporate in Canada should consider this issue. For example, some provinces do not impose residency requirements for directors (e.g.: New Brunswick, Quebec, Nova Scotia and Yukon)." (Frequently Asked Questions: Corporations Canada)

These residency requirements for the directors of companies incorporated in Canada apply to all types of Canadian corporations, not just Canadian Controlled Private Corporations.

See Forms of Business Ownership in Canada for more on the differences between sole proprietorships, partnerships, and corporations.

Foreign Corporations Wishing to Operate in Canada

Existing foreign corporations can register to operate in Canada by either:

  • Opening a branch office - To do this the foreign corporation must make an application for registration as an Extra-Provincial or Foreign Corporation in each province where the business intends to operate.
  • Incorporating a Subsidiary - a subsidiary is a Canadian corporation whose shares are held by the foreign parent company. A subsidiary can be incorporated federally or provincially. Compared with a branch office, incorporating a subsidiary gives the parent company limited liability from the actions of the subsidiary.

The above-described director residency requirements apply in either case.

Operating a Business Doesn't Mean You Can Live in Canada

Everything written above assumes that you are going to continue to be a nonresident.

If you are not a Canadian citizen you cannot just come to Canada and start a business.

If you actually want to live in Canada, you will have to apply to immigrate to Canada through Canada's Immigration Program. Or, as you see above, you can stay where you are but team up with one or more Canadian citizens or landed immigrants to start a business in Canada; see As a Non-Canadian, How Can I Open a Business in Canada? for more details.

You may also wish to read The Important Steps to Starting a Business in Canada.