Here's a primer on forming a company in Canada, including some specifics on incorporating in Canada.
Doing business in Canada is very similar to doing business in the U.S.
Rich with natural resources, Canada's market economy is a ripe environment for entrepreneurial ventures, especially in high growth sectors like manufacturing, high tech, mining, and service industries.
But although its business environment is familiar territory for Americans, Canadian business law presents some unique challenges and opportunities, especially during a company's formative period. Once you open your doors, you will undoubtedly discover additional nuances of Canadian business. However, before you get there, you'll need to incorporate – and several features of the Canadian incorporation process require special attention.
Where to Incorporate
In the U.S., the incorporation process is determined by state. If a company chooses to incorporate in Delaware, then it must adhere to the incorporation procedures of Delaware. Canada is similar in that companies can elect to incorporate in one of the nation's ten provinces or three territories.
But Canada also gives companies the option of a federal incorporation. Federal corporations have an advantage over provincial corporations because every province must allow them to do business under the company's federally-incorporated name. Federal corporations are also considered more prestigious when it comes to international trade.
Canada requires all companies that are doing business in a particular province to register with that province. If companies want to do business in jurisdictions outside the one in which they were incorporated, Canadian law treats them as a foreign corporation and classifies them as Extra-Territorial or Extra-Provincial companies.
To qualify to do business in another territory or province, you will need to file an Application for Extra-Provincial license. Fortunately, the form and supporting documents are usually straightforward, but process details may vary by province. Although foreign corporations are not required to maintain officers or directors in the province (or even in Canada), they are required to enlist the services of a registered agent.
The selection of a corporate name is an important consideration during the incorporation process. Your corporate name is a valuable trademark that must be protected against theft and unauthorized usage. In Canada, business names are registered via a Business Registration form in the province or territory in which you do business.
But before the name can registered it must be searched through NUANS (Newly Upgraded Automated Name Search). This name search is a requirement for incorporation, so you should plan to have it conducted less than 90 days before making application. Unless the company is federally incorporated, foreign corporations may also be required to perform a name search before an Extra-Provincial license will be granted. If you need help, most registered agents in Canada are capable of either conducting the name search or connecting you with the appropriate contacts and resources.