Canada offers foreign entrepreneurs a stable economy, access to North American markets, and strong government support for business growth. If you want to start a business in Canada, you need to understand legal requirements, tax obligations, and ongoing compliance across federal and provincial jurisdictions.​

This guide explains how to start a business in Canada as a foreign founder, from choosing the right structure to managing cross-border tax and compliance obligations.

Key Highlights

  • Canada attracted a record $85.5 billion in foreign direct investment in 2024, the highest in a decade​.
  • Foreign investors can own 100% of most Canadian businesses, with few sectoral restrictions​.
  • The federal GST rate is 5%, with combined provincial rates ranging from 13% to 15% in harmonized provinces​.
  • You can register federally for nationwide operations or provincially for single-province activities​.

Why Foreign Entrepreneurs Choose Canada

Canada’s GDP grew 1.7% in Q1, supported by household spending and business investment. The country ranks 23rd globally for ease of doing business, with streamlined incorporation processes and access to North American markets through CUSMA trade agreements.​

Foreign direct investment inflows reached $85.5 billion in 2024, 36% higher than in 2023, driven by manufacturing, clean energy, and technology sectors. Over 825 global investors chose Canada in 2024, creating 44,440 forecasted jobs.​

However, compliance can be complex. You must manage federal corporate income tax, provincial taxes, GST/HST registration, payroll obligations, and annual filings across multiple jurisdictions. Commenda simplifies this by centralizing incorporation, tax registration, and compliance tracking in one platform designed for cross-border businesses.​

Understanding Market Entry Strategy in Canada

Before you start a business in Canada, research your target market thoroughly. Canada’s economy is diverse, with strong sectors in technology, clean energy, advanced manufacturing, and natural resources.​

You need to identify which sectors are open to foreign investment and assess competition levels. Technology startups benefit from accelerators like Creative Destruction Lab and DMZ Tech Incubator, while clean technology companies can access federal tax credits of up to 30% on eligible investments.​

Consider these factors when planning market entry:

  • Language requirements vary by province, with French mandatory in Quebec for business operations​.
  • Customer preferences differ across regions, requiring localized marketing and product adaptation.
  • Provincial regulations may impose additional licensing or permitting requirements beyond federal rules​.

Cultural understanding matters when entering the Canadian market. Business practices emphasize transparency, punctuality, and formal communication in the early stages of relationships.

Minimum Capital and Investment Options for Foreigners

Canada does not require minimum share capital for federal or provincial corporations, making it accessible for startups at all funding stages.​

However, investor visa programs have specific thresholds. The Start-Up Visa Program requires securing at least $200,000 from a designated venture capital fund or $75,000 from a designated angel investor group. Provincial nominee programs have varying requirements, with British Columbia requiring $200,000 and Alberta requiring $100,000.

Funding options for foreign entrepreneurs include:

  • Venture capital funding from Canadian investors and accelerators.
  • Angel investor networks through designated organizations under the Start-Up Visa Program​.
  • Government grants and tax credits for clean technology, research and development, and innovation​.
  • Provincial funding programs are exclusive to businesses incorporated in specific provinces​.

The Quebec Immigrant Investor Program requires a net worth of CAD $2 million and an investment of CAD $1.2 million for five years. You must demonstrate managerial experience and intent to settle in Quebec.​​

Choosing the Right Business Structure

When you start a business in Canada, you can choose between federal and provincial incorporation. Federal corporations operate nationwide under the Canada Business Corporations Act, offering name protection across all provinces.​

Provincial corporations register under provincial legislation like the Ontario Business Corporations Act or the British Columbia Business Corporations Act. They can still operate extra-provincially but must register separately in each province where they conduct business.​

Key business structures include:

  • Federal Corporation: Nationwide operations, 25% of directors must be Canadian residents, annual filing fee of $12​
  • Provincial Corporation: Single-province focus, residency requirements vary by province, and lower initial costs​.
  • Branch Office: Extension of foreign parent company, must register extra-provincially, with limited liability protection​.
  • Sole Proprietorship or Partnership: Simpler structure for small operations, unlimited personal liability​.

For detailed incorporation steps and documentation requirements, refer to our comprehensive guide on how to register a business in Canada.

Legal, Residency, and Immigration Requirements

Foreign nationals can own 100% of Canadian corporations in most sectors, with no citizenship requirement for shareholders. However, federal corporations must have at least 25% of directors who are Canadian residents.​

Provincial director residency requirements vary significantly:

  • British Columbia, Alberta, Ontario, Quebec, Nova Scotia, Prince Edward Island, and New Brunswick have no director residency requirements​.
  • Other provinces may impose specific residency rules for corporate directors​.

Immigration options for business owners include:

  • Start-Up Visa Program: Requires support from designated organizations, minimum 10% ownership, and a processing time of 41 months​.
  • Provincial Nominee Programs: Vary by province, processing time takes a few months, tied to specific provincial operations​.
  • Intra-Company Transfer Work Permit: Available for multinational corporations expanding to Canada, requires executive or specialist roles​.
  • C11 Entrepreneur Work Permit: LMIA-exempt permit for self-employed entrepreneurs and business owners​.

You need a valid work permit to manage your business while physically present in Canada. Most work permits are employer-specific and require a Labour Market Impact Assessment unless exempted under specific programs.​

Foreign Investment Restrictions and Business Incentives

Canada welcomes foreign investment but restricts ownership in certain strategic sectors. The Investment Canada Act requires a net benefit review for acquisitions exceeding CAD $1.386 billion for WTO investors.​

Restricted sectors include:

  • Telecommunications: Foreign ownership capped at 20% of voting shares in common carriers.​
  • Banking and Insurance: Ownership limits of 10% for Canadian-owned life insurers​.
  • Broadcasting and Media: Subject to cultural business restrictions under the Investment Canada Act​.
  • Critical Minerals and Defense: State-owned enterprises face enhanced scrutiny, and reviewable transactions are approved only on an exceptional basis​.

Business incentives for foreign investors include:

  • Clean Technology Investment Tax Credit: Up to 30% refundable credit on capital costs for eligible clean technology property​.
  • Clean Technology Manufacturing Credit: 30% credit on eligible manufacturing equipment and machinery​.
  • Carbon Capture and Storage Credit: Refundable credits ranging from 37.5% to 60% depending on equipment type​.
  • Scientific Research and Experimental Development Program: Enhanced tax credits for R&D activities​.

Provincial governments offer additional grants, tax credits, and incentives for businesses operating within their jurisdictions..​

Opening a Bank Account and Managing Cross-Border Payments

Business bank accounts for nonresidents require comprehensive documentation and patience with KYC requirements.​

Required documents typically include:

  • Valid passports and government-issued IDs for all directors, shareholders, and Ultimate Beneficial Owners​
  • Certificate of Incorporation or extra-provincial registration documents​
  • Articles of Incorporation and corporate bylaws​
  • Business Number from the Canada Revenue Agency​
  • Proof of residential address for all signing authorities​

Canadian banks conduct detailed verification for non-residents, especially when business structures involve multiple jurisdictions. Some banks require the business to be registered in Canada before opening an account.​

Consider multi-currency accounts for businesses handling cross-border transactions. Digital banking alternatives may offer faster account opening for non-residents, though traditional banks provide more comprehensive services.​

Commenda facilitates a compliant banking setup by ensuring your corporate documentation meets Canadian regulatory standards and KYC requirements before you approach financial institutions.

Taxation and Compliance for Foreign-Owned Businesses

Understanding Canadian tax obligations is essential when you start a business in Canada. The federal corporate tax rate in Canada is 15%, with provincial rates varying by jurisdiction and reaching as high as 16%.

Key tax obligations include:

  • Corporate Income Tax (T2): Annual filing within six months of fiscal year-end, applies to worldwide income for Canadian corporations​.
  • GST/HST: 5% federal rate, mandatory registration for businesses earning over $30,000 annually​.
  • Payroll Taxes: Canada Pension Plan contributions of 5.95%, Employment Insurance premiums of 0.692% employer rate​.

Tax residency rules determine worldwide taxation obligations. Canadian corporations are taxed on global income, while non-residents are taxed only on Canadian-source income. Double-taxation treaties with 84 countries help prevent dual taxation.​ Small Canadian-controlled private Corporations benefit from reduced federal rates of 9% on the first $500,000 of active business income.​

Manage your U.S. Sales Tax, EU VAT, and global tax registrations in one dashboard, powered by Commenda.

Hiring Employees and Payroll Compliance

Canadian employment law operates at both federal and provincial levels, with most employees governed by provincial standards.​

The federal minimum wage is $17.75 per hour as of April 2025, applying to federally regulated industries. Provincial rates vary, with British Columbia at $17.85 per hour and Saskatchewan at $15.35 per hour.​

Employer obligations include:

  • Payroll Deductions: Source deductions for income tax, Canada Pension Plan, and Employment Insurance​.
  • Employer Contributions: Match employee CPP contributions, pay 1.4 times employee EI premiums​.
  • Employment Contracts: Written agreements specifying terms, compensation, and termination provisions​.
  • Workplace Safety: Compliance with provincial occupational health and safety regulations​.

Provincial labour standards determine when overtime applies in Canada. Across most provinces, weekly overtime generally begins once an employee works more than forty to forty-four hours, and overtime is usually paid at one-and-a-half times the regular hourly wage. You can hire remote employees or contractors, but employment classification affects tax and benefit obligations.​

Setting Up Operations and Staying Compliant

After incorporation, you must establish operational foundations. Register for a Business Number with the Canada Revenue Agency, which serves as your identifier for all federal tax accounts.​

Essential operational requirements include a registered office address in Canada, which cannot be a post office box. Federal corporations must register extra-provincially in provinces where they conduct business, including their head office province.​

Maintain proper accounting systems to track income, expenses, and tax obligations across multiple jurisdictions. You need separate accounting for GST/HST, payroll, and corporate income tax. Commenda automates ongoing filings and sends alerts to maintain good standing across all required jurisdictions.​

Maintaining Your Business in Good Standing

Ongoing compliance requirements vary by jurisdiction and business structure. Federal corporations must file annual returns within 60 days of their incorporation anniversary date.​

Annual obligations include:

  • Federal Annual Return: Due within 60 days of anniversary date, filing fee of $12, includes Individuals with Significant Control information​.
  • Corporate Tax Returns (T2): Due six months after the fiscal year-end, must be filed even with no tax owing​.
  • GST/HST Returns: Filing frequency depends on annual revenue, ranging from monthly to annually​.

Non-compliance consequences include administrative dissolution, fines, penalties, and loss of good standing status. Directors may face personal liability for unpaid source deductions and GST/HST.​

Maintain minute books with records of director and shareholder resolutions, share certificates, and corporate bylaws. Update registered office addresses and director information within 15 days of changes.​

Finding Local Partners, Accelerators, and Support Networks

Canada hosts over 100 startup accelerators and incubators supporting foreign entrepreneurs. Top programs include Creative Destruction Lab, DMZ Tech Incubator, Communitech, and MaRS Discovery District.​

Resources for networking and support:

  • Canadian Technology Accelerators: Government program connecting startups to 12 global hubs, no equity taken​.
  • Chambers of Commerce: Local chambers provide networking, advocacy, and business development support​.
  • Industry Associations: Sector-specific organizations offer market insights and regulatory guidance​.
  • Trade Commissioner Service: Government support for international market entry and compliance​.

Launch Academy has incubated over 6,000 entrepreneurs from 100+ countries and is a designated entity for the Start-Up Visa Program. Many accelerators provide support for obtaining startup visas and accessing government funding.​

How to Close or Sell Your Business in Canada

Closing a business in Canada requires systematic dissolution procedures. You must first obtain board and shareholder approval for dissolution.​

The dissolution process involves filing a Statement of Intent to Dissolve with Corporations Canada, liquidating all assets, paying outstanding debts, and distributing remaining proceeds to shareholders. You cannot dissolve a corporation while it still has property or liabilities.​

Tax obligations upon closure include filing final tax returns within 30 days of dissolution, closing your Business Number and all CRA program accounts, and obtaining tax clearance certificates. You must also close GST/HST accounts and payroll accounts.​

Provincial dissolution requirements vary. Ontario corporations need a letter consenting to dissolution from the Ministry of Revenue, submitted within 60 days of issuance. The provincial filing fee is $25.​

Commenda can support entity closure or M&A transitions while maintaining compliance records throughout the dissolution process.

Challenges Foreigners Commonly Face

Starting a business in Canada presents specific challenges for foreign entrepreneurs. Banking delays are common, with non-residents facing extensive KYC verification that can take weeks or months.​

Common pain points include:

  • Multi-Jurisdiction Complexity: Managing federal, provincial, and municipal requirements simultaneously creates an administrative burden​.
  • Tax Registration Delays: GST/HST and payroll registration can take a few weeks, delaying business operations.​
  • Director Residency Requirements: Finding qualified Canadian resident directors for federal corporations​.
  • Immigration Status Uncertainty: Work permit processing times of 12-16 months delay business management activities​.

Pro Tips: Register for your Business Number immediately after incorporation to expedite tax account setup. Use professional registered agent services to meet registered office requirements. Consider provincial incorporation in British Columbia, Alberta, or Ontario, where director residency requirements do not apply.​

Engage cross-border tax advisors early to structure ownership and operations tax-efficiently. Commenda provides dedicated support for these challenges through its unified platform for cross-border entities.

Why Choose a Cross-Border Platform Instead of Local Agents

Traditional approaches to starting a business in Canada rely on fragmented local service providers. You might hire one firm for incorporation, another for tax registration, a third for ongoing compliance, and separate advisors in each province where you operate.

This fragmentation creates inefficiencies. Information doesn’t flow between providers, deadlines get missed across jurisdictions, and you lack centralized visibility into your compliance status. Costs accumulate as each provider bills separately, often with overlapping services.

Commenda offers a different approach. The platform centralizes incorporation, tax registration, and compliance management across 30+ countries in one system. You get unified workflows, automated deadline tracking, and consolidated reporting across all jurisdictions where you operate.

When you start a business in Canada and plan expansion to the United States or Europe, Commenda manages entity formation, VAT registration, and compliance requirements globally from a single dashboard. This reduces administrative overhead, minimizes compliance risk, and provides real-time visibility into your global operations.

How Commenda Helps You Start and Scale Globally

Commenda is the comprehensive platform for cross-border business operations. Whether you want to start a business in Canada or expand from Canada to international markets, Commenda handles the complexity of multi-jurisdiction compliance.

The platform provides one-click incorporation in multiple jurisdictions, with automated document preparation and filing with government authorities. Once incorporated, Commenda manages global VAT and U.S. Sales Tax registration, tracking obligation dates and filing deadlines across all jurisdictions.

Automated compliance tracking monitors annual returns, tax filings, and regulatory requirements across federal, provincial, and municipal levels. You receive proactive alerts before deadlines, ensuring continuous good standing. Dedicated support teams assist with cross-border entity structuring, tax optimization, and regulatory changes that affect your business.

Start your business in Canada and scale globally with Commenda, your single platform for incorporation, tax, and compliance. Book a free demo today to see how Commenda simplifies international business operations.

FAQs

Q. Can foreigners own 100% of a company in Canada?

Yes, foreigners can own 100% of Canadian corporations in most sectors, with restrictions only in telecommunications, banking, broadcasting, and critical minerals.​

Q. What are the visa or residency requirements to start a business?

You need a valid work permit to manage your business in Canada, available through the Start-Up Visa Program, Provincial Nominee Programs, or Intra-Company Transfer permits.​

Q. What’s the minimum capital needed to start a business in Canada?

Canada has no minimum share capital requirement for corporations, though investor visa programs require $75,000 to $200,000 in designated investments.​

Q. How are foreign-owned companies taxed in Canada?

Canadian corporations pay a combined federal-provincial corporate tax on worldwide income, while qualifying small businesses receive a reduced federal rate on their first $500,000 of active business income, set at 9% under the small business deduction program.

Q. What incentives are available for foreign investors?

Canada offers refundable tax credits of up to 30% for clean technology investments, clean technology manufacturing, and carbon capture projects.​

Q. How can I open a bank account as a non-resident?

Non-residents need a valid passport, Certificate of Incorporation, Articles of Incorporation, Business Number, and proof of address for all signing authorities.​

Q. What are the ongoing compliance obligations for foreign businesses?

You must file annual returns within 60 days of your incorporation anniversary, corporate tax returns within six months of your fiscal year-end, and GST/HST returns based on your filing frequency.​

Q. How does Commenda simplify cross-border incorporation and global tax compliance?

Commenda provides one unified platform for incorporation, tax registration, and compliance management across 30+ countries, with automated tracking and dedicated cross-border support.