You cannot form a Limited Liability Company (LLC) in Canada, because the LLC entity does not exist under Canadian law. If you searched “how to start an LLC in Canada,” you almost certainly want a corporation, which delivers the same limited liability. This guide routes you to that path and corrects the terminology traps along the way.
Can You Start an LLC in Canada?
No. Canada has no LLC structure at the federal or provincial level. The functional equivalent is a corporation, shown by the legal element Inc., Ltd., Corp., or Ltée in Quebec. A corporation is a separate legal entity with limited liability, which is what most “LLC” searchers actually need. You incorporate under a provincial statute or under the federal Canada Business Corporations Act (CBCA).
The term “LLC” comes from United States law. Canada never adopted it. Copying the U.S. label onto a Canadian filing causes real tax and structuring errors, so the first job is to pick the correct vehicle. For a broader companion overview, see Commenda’s guide to business setup in Canada.
What Is the LLC Equivalent in Canada?
A corporation is the LLC equivalent for roughly 95% of searchers. A Limited Liability Partnership (LLP) is restricted to licensed professions like law and accounting in most provinces, so it is never a co-equal option for a typical business. A sole proprietorship or general partnership offers no liability protection at all. The table below shows the trade-off.
| Structure | Liability | Taxation | Who it fits |
|---|---|---|---|
| Corporation | Limited; separate legal entity | Corporate tax, then personal tax on dividends | Almost anyone wanting LLC-style protection |
| LLP | Limited at the partner level | Flows through to partners | Licensed professions only (law, accounting) |
| Sole proprietorship / general partnership | Unlimited personal liability | Personal income tax rates | Low-risk solo work, no protection needed |
For a foreign parent expanding into Canada, a Canadian corporation is often set up as a subsidiary company of the parent.
How Does the CRA Treat a U.S. LLC?
The Canada Revenue Agency (CRA) treats a U.S. LLC as a corporation, not as a flow-through entity. This mismatch creates double taxation and foreign tax credit problems for Canadians who own U.S. LLCs and for Americans operating in Canada through one. The income is taxed as corporate profit in Canada even when the United States taxes it in the owner’s hands.
A Canadian corporation is also not pass-through. It pays corporate tax on its profits, and shareholders then pay personal tax on dividends. That two-layer treatment, per the CRA, is the core reason “there is no LLC in Canada” matters for your tax bill.
Should You Incorporate Federally or Provincially?
Incorporate provincially if you operate in one province, and incorporate federally under the CBCA through Corporations Canada if you want name protection across all of Canada. Federal incorporation does not remove provincial paperwork. You must still register extra-provincially in every province where you carry on business, so federal filing adds a layer rather than replacing one.
Provincial incorporation is cheaper and simpler for a single-province business, and the corporate name is protected only inside that province. Federal incorporation protects the name Canada-wide through a name-search report. Each province has its own statute, such as the Ontario Business Corporations Act (OBCA) and the Alberta Business Corporations Act (ABCA).
Do You Need a Canadian Resident Director?
It depends on the jurisdiction, and the federal rule surprises most people. Federal CBCA corporations still require at least 25% of directors to be resident Canadians, per Corporations Canada’s directors guidance. British Columbia, Ontario, Alberta, and Quebec impose no director residency requirement. Canada has no U.S.-style registered agent; you need a registered office, which is a physical address.
| Jurisdiction | Resident director rule | Change date | Source |
|---|---|---|---|
| Federal (CBCA) | At least 25% of directors resident Canadians; at least one if fewer than four directors | Still in force (s.105(3)) | Corporations Canada |
| British Columbia | No residency requirement | Never required (s.124(2)) | BC Business Corporations Act |
| Ontario | No residency requirement | Repealed July 5, 2021 | Government of Ontario |
| Alberta | No residency requirement; resident agent for service required instead | Repealed March 29, 2021 | Government of Alberta |
| Quebec | No residency requirement | Never required | Quebec Business Corporations Act |
The registered office must sit in the province named in the articles. A P.O. box is not allowed, per CBCA section 19(1). Non-residents commonly use a service provider to supply this address.
How Much Does It Cost to Incorporate in Canada?
Federal online incorporation costs CAD 200 and is processed in one business day, per Corporations Canada’s fees schedule. An optional CAD 100 add-on gives 4-hour express service for CAD 300 total. Provincial government filing fees run roughly CAD 200 to CAD 450, set by each provincial registry. Third-party name-search and legal fees are separate.
| Route | Government filing fee | Processing | Source |
|---|---|---|---|
| Federal online (CBCA) | CAD 200 | 1 business day | Corporations Canada |
| Federal express | CAD 300 (CAD 100 add-on) | 4 hours | Corporations Canada |
| Provincial | Roughly CAD 200 to CAD 450 | Varies by registry | Provincial registries |
What Is the Best Province to Incorporate In?
There is no universal winner. Incorporate where you operate. British Columbia suits non-residents because it has no director residency requirement, per the BC Business Corporations Act. Alberta suits low-tax planning, with a general provincial corporate rate of 8% and a small business rate of 2%, per the Government of Alberta. Ontario and Quebec suit companies chasing market size and tech ecosystems.
Federal incorporation is the choice when nationwide name protection matters more than saving a filing. Remember that a federal corporation still registers extra-provincially wherever it does business.
How Do You Incorporate in Canada Step by Step?
Incorporating in Canada takes eight steps: choose your structure, name the corporation or take a numbered company, choose federal or provincial, appoint directors and a registered office, file articles of incorporation, get a Business Number and CRA accounts, open a corporate bank account, then register extra-provincially and get licenses. Each step is below.
Step 1: Choose Your Business Structure
Pick a corporation as the default. It gives limited liability and separate legal status, which is what “LLC-style” protection means in Canada. Choose an LLP only if you run an eligible licensed profession such as law or accounting. A sole proprietorship stays personal and offers no liability shield, so it is a contrast option, not a real equivalent.
Step 2: Name Your Corporation or Register a Numbered Company
A named corporation needs a unique name, a NUANS (Newly Upgraded Automated Name Search) report, and a legal element like Inc., Ltd., or Corp. A numbered company, such as 1234567 Canada Inc., skips the name search and approval, so it is faster and cheaper for holding companies or when speed matters and you handle branding separately. You can still operate under a registered trade name. Check availability first with Commenda’s company name checker.
Step 3: Choose Federal or Provincial Incorporation
Decide the scope before you file. Incorporate provincially for a single-province business, and incorporate federally under the CBCA for Canada-wide name protection. Federal filing still requires extra-provincial registration wherever you carry on business, so weigh the extra layer against the broader name rights it buys.
Step 4: Appoint Directors and a Registered Office
Appoint directors according to the residency table above: federal corporations need at least 25% resident Canadian directors, while BC, Ontario, Alberta, and Quebec have no residency rule. Provide a registered office that is a physical street address in the province of incorporation. P.O. boxes are not permitted under CBCA section 19(1).
Step 5: File Articles of Incorporation
File articles of incorporation with Corporations Canada or your provincial registry. The articles set out share classes, the number and details of directors, and any restrictions on the business. This is the document that legally creates the corporation. The federal online filing fee is CAD 200, per Corporations Canada, and you receive a certificate of incorporation on approval.
Step 6: Get a Business Number and CRA Tax Accounts
Register for a Business Number (BN) with the CRA, then open the program accounts you need: a corporate income tax account, a GST/HST (Goods and Services Tax / Harmonized Sales Tax) account if required, and a payroll account if you hire. Some provinces streamline BN issuance directly into the incorporation filing, so confirm what your registry bundles.
Step 7: Open a Corporate Bank Account
Open a corporate account once incorporated. Banks typically require the certificate and articles of incorporation, the BN, and director identification such as a passport and proof of address. Non-resident owners should expect heavier know-your-customer checks and sometimes an in-person visit. See Commenda’s guide to opening a business bank account as a foreigner.
Step 8: Register Extra-Provincially and Get Licenses
Register extra-provincially in every province where you carry on business, including all provinces if you incorporated federally. Then obtain industry licenses. Finance, healthcare, and construction commonly need sector permits through provincial registries. Commenda’s overview of business licensing in Canada covers what applies to your activity.
What Documents Do You Need to Register a Corporation in Canada?
You need six core items: an approved name with a NUANS report (or a numbered-company designation), articles of incorporation, a physical registered office address, director and shareholder identification, and a Business Number from the CRA obtained after incorporation.
- Approved name and NUANS report, or a numbered-company designation
- Articles of incorporation with share structure and director details
- Registered office address (physical, no P.O. box)
- Director and shareholder identification
- Business Number (BN) from the CRA post-incorporation
When Do You Have to Register for GST/HST?
GST/HST registration becomes mandatory once your taxable revenue exceeds CAD 30,000 over four consecutive calendar quarters, or in a single quarter, per the CRA small-supplier rule. This is not a simple annual test. It is separate from the CAD 500,000 small business deduction limit, which governs a reduced tax rate, not sales tax.
Rates range from 5% to 15% depending on the province. Non-residents face different registration rules, covered in Commenda’s guide to GST/HST registration for foreign companies.
| Region | Sales tax | Rate | Source |
|---|---|---|---|
| Alberta and the territories | GST only | 5% | CRA |
| BC, Saskatchewan, Manitoba | GST plus provincial PST (provincial sales tax) | 5% GST plus PST | CRA |
| Quebec | GST plus QST (Quebec sales tax) | 5% GST plus QST | CRA |
| Ontario | HST | 13% | CRA |
| New Brunswick, Newfoundland and Labrador, PEI | HST | 15% | CRA |
What Are the Tax Implications of Incorporating in Canada?
The small business deduction (SBD) cuts the federal corporate rate to 9% on the first CAD 500,000 of active business income, per the CRA. General active income is taxed at a 15% federal rate, and provincial rates stack on top. The 9% rate applies only to a Canadian-Controlled Private Corporation (CCPC), so a corporation controlled by non-residents does not qualify.
| Rate | Applies to | Rate | Source |
|---|---|---|---|
| Federal small business (SBD) | First CAD 500,000 active income of a CCPC | 9% | CRA |
| Federal general | Active business income above the SBD limit | 15% | CRA |
| Alberta general | Provincial corporate income | 8% | Government of Alberta |
| Alberta small business | Small business income | 2% | Government of Alberta |
Dividends face two layers of tax: corporate tax on profits, then personal tax when dividends are paid. Canada offsets this for residents with the dividend tax credit (DTC). Employers also remit Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and income tax withholding through a CRA payroll account.
What Are the Ongoing Compliance Requirements After Incorporation?
Federal corporations must file an annual return with Corporations Canada, which is separate from the T2 corporate income tax return filed with the CRA. Provincial corporations file annual reports with their own registry. Extra-provincial registrations need renewal, corporate records and minute books need upkeep, and the registered office address must stay current.
Even a dormant Canadian corporation with no revenue must file a nil T2 return. Track federal and provincial deadlines with Commenda’s compliance calendar so a low-activity entity stays in good standing.
Can a Non-Resident Register a Corporation in Canada?
Yes. Non-residents can incorporate in British Columbia, Ontario, Alberta, or Quebec, none of which require a resident director. Federal CBCA incorporation is harder for non-residents because it still requires at least 25% resident Canadian directors. You always need a Canadian registered office address, which is a physical location, not a U.S.-style registered agent.
Route most foreign founders to the BC path for its clean no-residency rule. Expect extra bank documentation, and consider a Canadian subsidiary of your foreign parent. Commenda’s Canada business setup guide walks through the non-resident route.
How Commenda Helps You Incorporate in Canada
Commenda’s incorporation platform sets up your Canadian corporation end to end: federal or provincial filing, a registered office address, NUANS name search, CRA tax registration for your Business Number and GST/HST accounts, and ongoing entity compliance. Commenda handles nil T2 returns and provincial annual reports even while a new entity ramps up, and its entity management keeps every filing on schedule.
Book a demo to get a jurisdiction recommendation and a fixed-fee incorporation quote for Canada. Start at commenda.io/book-a-demo.
