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Setting Up a Business in Canada


Setting up a business in Canada can be a great way to settle into your new move to Canada and help you to navigate the visa process. Typically people will move to Canada on one of the major skilled worker visa types – they’ll either get a valid job offer from a Canadian employer or go on a points-assessed independent skilled worker program which doesn’t require a job offer to go through immigration.

There is a third option, however. You can move to Canada under a start-up visa.

The Canadian Start Up Visa

Canada is very proud of its start-up visa, the first of its kind in the world and designed to increase Canadian participation in the rapidly growing tech economy. It does this by linking immigrant entrepreneurs who have business ideas with private sector organizations that have experience of working with start-ups.

Much like the employer-sponsored skilled worker visa requires the backing of a Canadian employer, the start-up visa requires you to show that you have the backing of Canadian finance. Your application for one of these visas will be assessed on the basis of four criteria:

- Do you have a Letter of Support from financial backers – they must be a designated organization such as an angel investor group, a venture capital fund or a business incubator?
– Can you communicate in either English or French to the required standard?
– Have you completed at least one year of study at a post-secondary institution – higher education or further education?
– Do you have enough money to settle and support yourself while you build your business? In the early days, many businesses don’t earn an income, or what they do earn must be put directly back into the business. If you’re an individual, you’ll need a ‘cushion’ of about CAN$6,000, which goes up on a sliding scale to about CAN$29,000 for a family of seven or more.

The first criterion is satisfied by reaching an agreement with an organization that agrees to fund your business while you get it up and running.

If you get your financial support from a Canadian venture capital fund, you need to get a minimum of CAN$200, 000 investment. If your support comes from an angel investor group the sum is much lower, at CAN$75,000. If you find a place with a Canadian business incubator you don’t need a specific amount of financial backing.

You need to send a copy of the Letter of Support to Citizenship and Immigration Canada (CIC) when you make your visa application, and they will send a Commitment Certificate directly to CIC too. Both will be used to assess your visa application.

One reason why the levels of financial support from the Canadian private sector are relatively high is that, if your business fails, you won’t lose your permanent resident status. Obviously that might make the scheme open to abuse if the financial commitment involved were low. You will have to pay fees for the visa, including processing fees and a Right of Permanent Residence fee.

Setting Up Your Own Business

Another option is to move to Canada and then set up your own business, becoming self-employed rather than looking for a job.

This is actually quite restrictive in visa terms – there is a self-employed persons visa but eligibility is restricted. To qualify, you have to meet one of the following criteria:

- Have been engaged in cultural or sporting activities at a world class level
– Have been self-employed in cultural or sporting activities
– Have experience in managing a farm

The visa is only open to people who have relevant athletic or cultural experience, or who plan to move to Canada to buy and manage a farm.

Some people might consider moving to Canada on a points-based skilled worker visa and then setting up a business in their field. Others might be already-established business people who want to open a branch in Canada, or want to set up a business in Canada from outside the country. Both are possible.

If you don’t have residency, you’ll be treated as a foreign investor, meaning you can’t start a business on your own, only with a Canadian partner. You can’t use your own business to apply for permanent residency under the provincial nominee rules and you can’t use any work experience you gain toward your residency points either.

Business Types

If you want to start a small business in Canada, you’ll face many of the same strictures and requirements as you would anywhere else. You’ll need a business plan, financial backing, a business name and address, and so on. You’ll need to select a form of business ownership, or company structure: in Canada these are sole proprietorship, partnership, corporations and co-operatives. Sole proprietors are individuals operating as themselves. There’s no complex company structure and very little governance or other paperwork, but there’s no legal protection either and your personal assets are liable in the event the business fails or falls into debt. Partnership is sole proprietorship with more than one proprietor – the same risks and advantages, shared between more then one person.

By contrast the corporation offers legal protection but requires considerable financial outlay to set up and there’s a lot of paperwork involved, though it is often easier to raise capital for a corporation. A cooperative is owned and controlled by its members and offers them limited liability.

If you’re an already-established business person who wants to open a branch in Canada you can open one by registering as an extraprovincial corporation; Ontario’s EPC rules are pretty standard but every province has its own.

If you want to set up a company from outside Canada you can, but you’ll need someone inside Canada who’s over 18, a resident or citizen and lives in the same place you’re registering the business to as a partner. At least 25% of partners in a corporation must be residents; that obviously leaves the way open to have a company controlled by its remaining 75% board members who aren’t Canadians.

Setting up a business in Canada incurs some fees and there will be some hoops to jump through, whichever route you choose to go down. Canada’s BizPal site helps to guide you to the relevant legislation. If you’re a resident in Toronto and you want to set up as an electrical contractor, hire some people and install some equipment, you’ll need to get Canadian licensing for your work, register your business, get a permit to hire people, and apply for an electrical installation permit – you’ll find yourself filling in at least 5 sets of forms!

Despite the difficulties that can stand between you and business ownership in Canada, it’s a very business-friendly culture that sees its future in small businesses and tech.