Thinking of Doing Business in Canada? Read This Before You Make a Final Decision

January 15, 2021

Go about your business. But figure out a good place to go to. 

The World Bank Group concluded in 2020 that Canada is the third-best country in the world to start a business in. On average, it takes less than two days to get your business up and running in Canada. 

But doing business in Canada requires some background knowledge. If you want to get a construction permit and financing, you need to know the strategies for doing business in the Great White North. 


Here is a quick guide.

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Incorporating in Canada

If you are a non-Canadian doing business in Canada, you can turn to a few services. The Canadian Trade Commissioner Service offers connections to business leaders all over the country. It has a network of trade officials in more than 160 cities, allowing you to tap into transnational businesses. 

Before you establish your business, you should decide what type of business ownership you want. Most foreign companies that operate in Canada form a private corporation. A corporation provides credibility, reduced liability, and separate taxes from individuals.

Residents of Canada must control the corporation. A public corporation cannot control it. If you want to offer stocks, you must make the corporation public. 

You can also start a partnership, cooperative, or franchise. If you want to conduct business across Canada, you need to federally incorporate your company. Sites like opstart.ca provide guides to register your corporation on a provincial level. 

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The Investment Canada Act

Non-Canadians must cooperate with the Investment Canada Act. The Act requires the government to review investments that non-Canadians make. 

Most new businesses in Canada do not receive extensive reviews. You will need to file documents with the Investment Canada Agency. You describe what investments you are making in a two-page form. 

If you have a business related to Canada’s cultural heritage, your investments will be reviewed. If you have investments over $5 million, you can also expect a review.

As long as you offer a “net benefit,” the government will allow you to invest in Canada. If the government determines you do not provide benefits, you can take your investments elsewhere. 

Operating Your Business

Americans like to do business in Canada for several reasons. The United States and Canada share many aspects of business culture. Greetings are identical and business language is very similar.

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Canada offers lower corporate tax rates than the United States. It also offers a large trade network, connecting businesses to the European Union and Trans-Pacific Partnership.

But you should keep in mind a few things. You will need to file intellectual property protections in Canada. American IP rights do not extend across the border.

Each province has its own business regulations. Be diligent when looking at provincial laws, especially when you want to operate across the country. 

The United States and Canada are not interchangeable. Some parts of Canada like Quebec have a high French-speaking population.

Doing Business in Canada

If you want lower taxes and strong transnational connections, consider doing business in Canada. But there are some things you need to know. 

You can incorporate as a private corporation or another entity. You will need to register under the Investment Canada Act. Describe your investments in detail, especially if they relate to Canadian cultural heritage. 

Don’t confuse the United States with Canada. Though similar, provincial laws and traditions vary. Familiarize yourself with the differences between the two nations. 

Stay smart about business and finance. Follow our coverage for important guides. 

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