How can I register my business in Canada?

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    06 May 2024

    How can I register my business in Canada?

    Have you been thinking about setting up your business for quite some time, but are a bit daunted with the business registration process in Canada?  Finding how many types of business structures are there in Canada can certainly help you with choosing the right accounting services in a cost-saving manner.  The process and documentation for every structure you’ve heard is quite different – sole proprietorship, partnership, and corporation. Many entrepreneurs can struggle with making a decision. To help you get started, we decided to explain business registration and legalese of every structure – so you can focus on your core operations! Check out the blog below to make your next big business decision with ease!

    Different business structures in Canada

    In Canada, you can own a sole proprietorship, open the business in partnership, or become a corporation. Are you unable to make a decision – whether to opt for a corporation or stay lowkey as a sole proprietorship? Check out our previous blog on choosing between sole proprietorship vs partnership.

    What is a sole proprietorship in Canada? How can I register one?

    Establishing a sole proprietorship is one of the simplest company structures. Here, one person owns and operates the company. This implies that although you have total authority over the company, you are also personally responsible for all of its liabilities. Pros: Easy and inexpensive to set up, all profits belong to you, and you make all the decisions. Disadvantages: You are personally responsible for all the debts of your business. Besides, the income earned from this business will be taxed as per the personal tax bracket (which can be costly).

     

    Getting a sole proprietorship registered

    In Canada, registering a sole proprietorship is a relatively simple procedure, while each province or territory may have different requirements. Here's what is usually needed:
    1. Business Name: You may select a business name or use your own legal name for business purposes. If you choose a different name, you should register it with your provincial or territorial business registry.
    2. Federal Business Number (BN): Apply for a BN with the Canada Revenue Agency (CRA). This is a unique identifier for your business for tax purposes.
    3. Permits and Licenses: Finally, you’ll need various other licenses and permits from different authorities (federal, provincial, or municipal), depending upon your type of operations.
    You can register your business in Canada directly or seek assistance from a CPA. Note: Every business has unique needs and challenges. Consult with a chartered professional accountant BC for your province, and also check out provincial and territorial government guidelines for specific requirements in your area.

     

    Partnership: What is it and how do I register it in Canada? 

    It’s what exactly the name suggests: two people coming together to run a business. In Canada, you have two ways to run a business under a partnership: General, and Limited.  Here’s an overview:- 
    • General Partnership: The simplest form, with all partners sharing responsibility for management, profits, losses, and unlimited liability for business debts.
    • Limited Partnership: More complex, involving general partners with full liability and limited partners with limited liability based on their investment. Limited partners cannot participate in daily management.
    Registration Process: There's no mandatory federal registration for partnerships in Canada. However, registration requirements can differ by province or territory. Here's a general breakdown:
    1. Partnership Agreement: Highly recommended, even for a general partnership. This legal document outlines partner roles, responsibilities, profit sharing, and dispute resolution mechanisms.
    2. Business Name Registration: In case your business name is not the legal name combined of all the partners, then you’ll need to register this name with the territorial or provincial business registry. 
    3. Federal Business Number (BN): Apply for a BN with the Canada Revenue Agency (CRA) for tax purposes. This unique identifier simplifies tax filing for the partnership.
    4. Permits and Licenses: As per the operations of your business, you may need additional permits, licenses or both from provincial, municipal or federal authorities.
    For specific requirements, we suggest you visit the official website of the CRA for partnership registration in a province and get in touch with a chartered professional accountant for more information. Note: While a formal agreement isn't mandatory, a clear agreement upfront helps avoid future conflicts between partners. A general partnership is easy to register, but at the same time, comes with unlimited liability for the partner. On the other side, one can protect themselves from unlimited liability, but the registration process is relatively complex.

     

    Corporation: What is it and how do I register it in Canada? 

    A corporation is a separate legal entity from its owners (shareholders). It offers limited liability protection for the owners and a more formal structure compared to sole proprietorships and partnerships.  Registration Options:  There are two main options for incorporating your business in Canada:
    1. Federal Corporation: Registered with Innovation, Science, and Economic Development Canada (ISED). This allows you to operate anywhere in Canada.
    2. Provincial Corporation: Registered with your provincial or territorial government. This limits your operation to that specific province or territory, but it might have slightly lower fees.
    Here’s how an incorporation is registered:
    1. Firstly, choosing a name. Once you are content with a name for the business, get it checked with NUANS (a computerized system) from ISED to confirm the uniqueness of your name.
    2. Next, prepare the Articles of Incorporation, a document that mentions the purpose of the corporation, the structure of shares, and all the initial directions and shareholders.
    Further:
    1. File Incorporation Documents: Submit the articles of incorporation and pay the required filing fee to the chosen federal or provincial authority.
    2. Obtain a Corporate Records Book: Maintain a record book with key corporate documents like articles of incorporation, bylaws, and shareholder meeting minutes.
    3. Federal Business Number (BN): Apply for a BN with the CRA for tax purposes.
    Application Links for Corporation Registration:
    1. Innovation, Science, and Economic Development Canada (ISED): https://ised-isde.canada.ca/site/ised/en
    2. Registering a corporation: https://www.canada.ca/en/services/business/start/register-with-gov/register-corp.html
      Note: Incorporating a business involves more complexity and cost compared to simpler structures. This is why you must consult Corporate Planning & Compliance Canada firms for guidance and compliance with CRA.

     

    Wrapping Up!

    Confused about choosing a business structure in Canada? This blog post simplifies the process for you. Whether you plan to fly solo, join forces with a partner, or incorporate, this guide clarifies your options. To navigate the legalities and choose the right structure for your Canadian business, don't hesitate to consult the Business Planning Solution Canada firm.  You can also reach out to experts at CJCPA who have handled incorporation, tax planning, and filing for businesses across various industries. Book your free consultation with corporate tax filing Canada firm CJCPA, and make incorporation easier for you.  
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