Canada offshore company incorporation is an attractive option in that it assures a good brand image compared to offshore companies located in other countries. Registering an offshore company in Canada allows you to carry out all legal activities without restrictions, except some for which you need to obtain a license (Forex and Trading, Banking, Financial, Insurance, etc.). Moreover, setting up a business in Canada allows you to benefit from a very attractive tax system, with taxation at 0% in some provinces.
There are some basic requirements regarding registration of an LLC in Canada as a non-resident or Pakistani citizen.
There are some basic requirements about how to register an LLC in Canada as a non-resident or Pakistani citizen and why do you want to start a company in Canada?
Canada is one of the respected jurisdictions for foreign entrepreneurs to start a company and Canada is not only an optional country where you want to form a company for the sake of doing business nor it’s a jurisdiction just to host your company. So some people may register with offshore jurisdictions like the U.S, U.K, Estonia, China or Singapore etc.
Canada is different because of high taxes and normally people enter or register companies in Canada with a specific purpose and that purpose is they want to enter the Canadian market or they want to enter the NAFTA countries (NAFTA is basically an agreement between the United States, Canada and Mexico called the North American Free Trade Agreement).
So if you want to enter those (NAFTA) countries, Canada might be a good place to register your company. NAFTA countries are approximately valued at 21 Billion United States Dollars. That represents approximately 480 million people (which is a huge market). It’s actually the second biggest market in the world after the European Union.
If you want to register a Canadian Limited Liability Company as a non-resident or a foreign investor, then you need to fulfil the following basic requirements.
● Federal business number and corporation income tax account
● Business insurance.
You need one shareholder and director who must be a Canadian national. A foreigner can be a director but that depends on the specific region or territory where you want to register your company. For example, in British Columbia, New Brunswick, Nova Scotia, Prince Edward Island and Quebec, it’s allowed to have full ownership and foreign foreign control meaning thereby if you are a non-resident or a foreigner, you can be a shareholder or you can appoint a foreign director in British Columbia. This way you can retain full control and full ownership as a foreign entrepreneur. But in Ontario or Alberta, it’s not allowed to have full foreign ownership or control, so you need to have at least 25% Canadian shareholder(s).
Also note that Canadian directorship is based on residence rather than citizenship, for example if you have a business partner who is a foreigner citizen but living in Canada then he is qualify for becoming a Canadian director and also you can appoint them as Canadian director but what is the difference between having a Canadian director and a foreign director is just having access to a small business deduction that is from tax point of view.
Also it offers a huge benefit tax wise so therefore if you can find the Canadian director then it’d be better to appoint one so that you can have access to a small business deduction when calculating your taxes.
Next thing is minimum Paid-Up Share Capital. This is the minimum basic requirements to form an LLC in Canada and it takes four weeks to finish your Canadian registration process unlike other countries like China, Hong Kong or Singapore.
Further, Canadian companies do not guarantee you any visa as compared to China because if you form a company in China then you are automatically qualified to have a work visa.
The other thing is the difference of forming a company in Canada is there is no physical office requirement but just having a registered office address which can be virtual.
Another difference is the appointment of company secretary but in some countries like the EU, the appointment of company secretary is important where you need to have a local secretary.
The formation documents of an LLC according to the laws of Canada and the other internal documents of the company that govern the rights of its shareholders and the management and operation of the entity. Those documents are operating agreements, certificate of incorporation and articles of incorporation etc.
First option is to register your company on the Federal level. Federal incorporation of your business means that you will be able to do business all across Canada under the same business name, even if some other company is already using a similar name in some province or territory. But the federal incorporation is a bit of a complex procedure as it may take more time and money than the state level registration. Also, federal incorporation will involve more paperwork every year and you will need to comply with the corporate filings required by the Federal Director of Corporations Branch.
On the other hand, you can incorporate your business in a single Canadian territory or province. Canada is separated into the following states (province) which include Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Quebec, Saskatchewan, Northwest Territories, Nunavut, and Yukon. So, once incorporated in one of the states, you may secure your company’s name and conduct business in that specific territory but to do business in another province, you will need to register with that state as well.
Every company, registered either federally or provincially, requires a Business Number to file the tax return. Canada Revenue Agency will issue the Business Number for a corporation immediately upon incorporation and send notification to the registered office address of the corporation.
Five steps that every business owner must make in order to make their business as efficient as protected and future-proof as possible.
Registering your business in order to operate under the proper compliance with Canadian laws is choosing the form of the business or proprietorship or a corporation and register it with the CRA and HST (if required). This makes any necessary licenses certificates registration with organizations that control operations in your field of business operations.
● Form of Business – Sole Proprietorship or Corporation
● CRA Registration
● Licenses, Certificates
Feel free to contact us to get those documents done for your business.
While building your team of partners, employees or contractors that you work with, make sure that your relations with those people are properly defined and structured so you have proper documents or at least written in terms of your relations with those people. Also make sure that you avoid future conflicts and if what you have to pay and your employees, subcontractors or partners know what to expect that will just make your business operations easier and will save you a lot of time in the future.
Your sources of financing for the business and what it means is that they’re huge variety of financing sources for businesses in Canada from grants that the government offers provincial and federal through subsidies, tax credits and to the loans. Subsidized loans or government supported loans will help you grow your business and some of that money you were supposed to return that is given to you without the requirements for return with the expectation of your future growth and creation of workplaces.
Think about the worst-case scenarios that you might see from any possible prospective product liability working with your clients and employees injuries claims and create proper structure of combination of insurance products that will help to mitigate your damages and internal management documents that will structure relations that will give you an opportunity in the case of a legal claim or administrative. That is how you should work and that is what your business expects from employees and clients and if something happens that’s not because we didn’t do that’s because they were either negligent or intentionally misbehaving.
So these are five steps: registration, building your team, daily documents, financing and protecting your future growth will help you to create a stable and reputable that people will want to work for and with and will help you to grow without spending too much time in the future’s unnecessary conflicts.
Procedure for Company Registration in Canada
Procedure for company registration in Canada for non-residents:
1. Company Name Reservation
2. Virtual Registered Address
3. Preparing Articles of Incorporation
4. Company Registration Application Submission
5. Obtaining Certificate of Incorporation
6. Business Number Registration
7. Company’s Bank Account Opening
Level of Company Registration in Canada
The company registration in Canada can be completed at 3 levels:
● First one is the federal level and implies the creation of a business which can operate at federal level
● Second is the territorial or provincial level and implies the registration of a company in single or more territories or provinces;
● Third one implies company incorporation at a federal level followed by registration in another province or territory.
What is an extra provincial registration?
There are laws in every single province in Canada that require corporations operating active business in that province to register there and to obtain a local provincial registration. What it means is that every single province where our business has business active business operations we will have to register so we can end up operating a corporation with multiple provincial registrations and what is important to understand and extra provincial registration does not create a new corporation rather it registers your existing corporate entity to operate in each of those provinces.
How does it work?
The corporation must be registered in at least one province where it operates its business. The taxation system in Canada is based on the combination of federal and provincial portions and essentially when we file our corporate income tax return we declare in which province we generated the income for which we declare the tax and pay the tax rate applicable to that province. So essentially the corporate just like a personal income tax consists of the federal and provincial portions and provincial portions which could be very different from one province to another so that’s why we have to register extra provincially and especially when we have multiple provinces where we operate our business.
When we do the initial federal incorporation we’re being offered to register our company in three provinces in Ontario, Nova Scotia and Newfoundland and Labrador. These provide for a straightforward and smooth process of registration as a part of initial federal incorporation, Ontario is even for free. Each of the other provinces require their own fees but that’s what you do together with your incorporation and you move on to other provinces and will require you to register your corporation with them separately.
So you first complete the federal incorporation, get your articles of incorporation then get your documents and then get your business number and then you go and you register it in the province where you had offices located.
Now provinces like British Columbia will allow you to do it online. The process is a little bit more streamlined while Alberta will require you to go and physically attend and file the registration documents there and that should be done promptly. After we complete the incorporation and even before we start our business operations in that province.
The second situation when we have to register extra provinces is when we operate an already existing business and the business grows and we have active business operations in the province other than the initial jurisdiction of incorporation. As soon as we do that we have to go and register our business in that province to get the extra provincial registration to get the corporation number issued by that province. It should be definitely done before the end of the fiscal year and of your corporation because that will affect the taxation that you will be reporting on your annual tax returns.
Active business operations will have having an office in that province so physical locations where your people or your employees work, operating production or manufacturing facility in that province even when you had offices located in another province warehouse rented by your corporation and operated in another province to distribute your products there having employees offering products and services on a constant permanent basis in that province. This will constitute active business operations that will mean that you generate income or you create various tax liabilities in that province that you will have to comply with.