Establishing a business in Canada

Canada has two layers of rules: the federal government (incorporation under the Canada Business Corporations Act, the Canada Revenue Agency for tax) and the province or territory where you actually operate (business names, provincial incorporation, sales tax, licences, employment law). Decide where you will operate first; most of the paperwork follows from that. 1. Choose the legal form. Sole proprietorship. You and the business are the same. Register a business name with your province unless you trade under your own legal name, get the tax accounts you need, and report profit on your personal return (form T2125 with the T1). Cheapest to start; you are personally liable. Partnership. Two or more owners sharing profit and, in a general partnership, liability. Register the name provincially and put the partnership agreement in writing. Corporation. A separate legal person. Shareholders own it, directors run it, and liability is limited to what you invest. It files its own tax return (T2) and pays corporate tax, and you take money out as salary or dividends. The standard choice once there is real revenue, staff, a lease or investors, because active business income benefits from the small business deduction: a federal rate of 9 percent on the first 500,000 dollars, plus the provincial small business rate (combined roughly 11 to 13 percent depending on the province). 2. Federal or provincial incorporation. Federal (Corporations Canada, online). Fee about 200 dollars, usually processed within a day. Your name is protected across Canada and you can move provinces without reincorporating, but you must still register extra-provincially in every province where you carry on business, and file a federal annual return (about 12 dollars online) on top of provincial filings. Provincial (for example Ontario, British Columbia, Alberta, Quebec). Fees vary by province, roughly 275 to 400 dollars. Simpler if you will only ever operate in one province. A numbered company (for example 1234567 Ontario Inc.) skips the name search; a named company needs a NUANS or provincial name report first. Either way you need: at least one director (residency rules differ: federal corporations need at least 25 percent of directors resident in Canada, while Ontario, BC, Alberta and several others have dropped residency requirements), a registered office in the province, articles of incorporation, and an initial return within the first weeks. 3. Get your CRA business number and program accounts. The nine-digit business number (BN) from the Canada Revenue Agency identifies the business; you add program accounts as you need them: RC for corporate income tax (issued automatically when you incorporate federally or in most provinces), RT for GST/HST, RP for payroll, RM for import/export. Registration is free and online through CRA's Business Registration Online. 4. Sales tax. GST/HST: registration becomes compulsory once worldwide taxable revenue exceeds 30,000 dollars in a single calendar quarter or over four consecutive quarters (the small supplier threshold). Below that, registering voluntarily lets you claim input tax credits on your costs. The federal GST is 5 percent; in Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island it is combined with the provincial part into HST (13 to 15 percent). British Columbia, Saskatchewan and Manitoba charge a separate provincial sales tax with their own registration; Quebec runs its own QST through Revenu Quebec; Alberta and the territories have no provincial sales tax. 5. Province-specific steps. Business name registration (Ontario: online, about 60 dollars, valid five years). Municipal business licence for shops, restaurants, contractors, home businesses in many cities. Workers' compensation registration (WSIB in Ontario, WorkSafeBC and so on) as soon as you have employees, and in construction often for the owner too. Quebec: register with the Registraire des entreprises, and the Charter of the French Language sets rules on signage, contracts and the language of work. Regulated activities (food, alcohol, childcare, transport, health, financial services) need provincial or federal permits before you open. 6. Bank account, bookkeeping and payroll. A corporation needs its own account; bring the articles, the business number and directors' identification. Set up bookkeeping software that handles GST/HST from the start. Register for a payroll account (RP) before the first pay run; you withhold income tax, Canada Pension Plan contributions and Employment Insurance premiums and remit them to CRA on a schedule. 7. Filings after the first year. Corporation: a T2 corporate return within six months of the fiscal year end, tax due within two or three months of year end depending on the small business deduction, a GST/HST return on your assigned schedule, and an annual corporate return to the federal or provincial registry to keep the corporation in good standing. Sole proprietor: T1 with T2125 by 15 June (tax owed still due 30 April), plus GST/HST returns if registered. 8. Non-residents. You can own a Canadian corporation from abroad; the director residency rule depends on the jurisdiction (see step 2), and banks will want to meet directors in person or through their compliance process. Running the business from inside Canada is an immigration question separate from incorporation; the Start-up Visa and provincial entrepreneur streams exist for that. What it costs to start, roughly: a sole proprietorship, the provincial name registration and your accountant; a corporation, 200 to 400 dollars in government fees, a name report if you want a name, and an accountant or lawyer for the articles and minute book (a few hundred to a couple of thousand dollars depending on how much you do yourself). Where to get help: the advisers listed under this guide work with Canadian start-ups; the federal government's business portal (Canada.ca/business), the provincial small business centres, and the Business Development Bank of Canada (BDC) offer free guidance and start-up financing. Figures checked September 2026. Fees and thresholds change; confirm them with the registry and a licensed professional in your province before you rely on them.