Company formation in Canada
Setting up your business company in British Columbia
Setting up a business in British Columbia (BC), Canada, involves several steps and considerations, especially for international trade and investment. Below is a detailed guide addressing your queries:
Types of Corporations for International Trade and Investment in British Columbia
There are different types of corporations you can choose from, depending on the nature of your business and your objectives.
Private Corporation
Most common type for small to medium businesses.
Limited number of shareholders (max. 50).
Shares are not publicly traded.
Common for local and international businesses.
Public Corporation
Suitable for larger corporations with the intention to offer shares to the public.
More regulation and compliance requirements.
Non-Profit Corporation
For organizations that will not distribute profits to members or shareholders, such as charities or social enterprises.
Extra-Provincial Corporation
If your company is incorporated outside BC (e.g., another province or country) but wishes to do business in BC, you will need to register as an extra-provincial corporation.
Joint Venture / Partnership
Can be structured as a joint venture or partnership for international trade agreements.
Considerations for International Trade & Investment
International businesses should ensure compliance with trade laws (such as NAFTA/USMCA, WTO rules) and should consider the possibility of establishing branches, joint ventures, or subsidiaries to facilitate trade.
BC is a hub for trade with Asia-Pacific, so aligning your business model with global trade routes can be strategic.
Procedures and Steps to Incorporate in BC
Incorporating a company in BC follows a structured process:
Name Approval and Restrictions on Trading
Corporate Name: Must be unique and not misleading. The name must comply with federal and provincial regulations.
Language of Name: A corporation may have its name in English or French, or a combination of both. It cannot be in another language unless that language is specifically mentioned in the company’s purpose.
Suffixes for Limited Liability: Common suffixes for limited liability corporations are: “Limited” (Ltd.), “Incorporated” (Inc.), “Corporation” (Corp.)
Power of the Company
Once incorporated, the company has the legal authority to conduct business within the scope defined by its articles of incorporation and bylaws. The company can enter contracts, acquire assets, and trade internationally, subject to any specific regulatory limitations (e.g., trade restrictions, export controls).
Time to Incorporate
Incorporation usually takes between 1-2 weeks. If expedited, it can be done in as little as 1-2 business days.
Registered Office and Shareholders
A registered office must be established in BC. This is the official address for the corporation and where government documents will be sent.
Shareholders: A minimum of one shareholder is required. Shareholders can be individuals or other entities, and they do not need to reside in BC or Canada.
Number of Shares: You can issue one share or multiple shares. The number of shares does not affect the corporation’s ability to function, but it will be important for corporate governance.
Directors and Officers
Directors: At least one director must be a Canadian resident (at least 25% of directors must be Canadian residents for federal corporations). However, BC allows non-residents to be directors as long as the corporation maintains a BC-based registered office.
Officers: Officers, such as the CEO, CFO, etc., may or may not be the same as the directors. Officers do not need to be Canadian residents.
Fiscal Year-End and Accountants
The fiscal year-end must be selected during incorporation. Most businesses choose a fiscal year that aligns with the calendar year (December 31), but it can be set for any month-end.
You will need a chartered accountant or other professional accounting services to comply with tax filings and financial statements.
Fiscal Year-End and Accountants
If you are a non-resident wishing to incorporate a business in BC, you can engage a professional incorporation service provider to manage the process. These packages typically include:
Inclusions in Incorporation Package:
- Corporate Name Search and Registration
- Preparation and Filing of Incorporation Documents (Articles of Incorporation, Notice of Registered Office, Notice of Directors, etc.)
- Registered Office Address for the first year (usually a forwarding service).
- Director/Shareholder Resolutions for corporate governance.
- Canadian Business Number (BN) registration for tax purposes.
- Tax Account Setup (GST, corporate tax, payroll, etc.).
- Certified Incorporation Documents (Articles, Share Certificates, etc.).
Non-residents may face additional steps such as providing identity verification (e.g., a passport copy) and designating a Canadian resident as a director for specific corporate types.
Taxation
Corporate Income Tax & Provincial Corporate Taxation:
Federal Corporate Income Tax:
Canada has a federal corporate tax rate of 15% for businesses with taxable income up to $500,000 (small business deduction).
Above this threshold, the rate increases to approximately 28% (after provincial tax).
Provincial Corporate Income Tax (British Columbia):
BC has a small business tax rate of 2% on the first $500,000 of active business income.
The general corporate income tax rate in BC is 12% on income exceeding $500,000.
GST (Goods and Services Tax):
A 5% GST is applied to most goods and services in BC, and businesses must register for GST if their taxable revenues exceed $30,000 annually.
Other Taxes:
Payroll Tax: BC has a payroll tax that applies if total remuneration exceeds $1.5 million.
Provincial Sales Tax (PST): BC imposes a provincial sales tax on goods and services, with rates varying by product type.
Tax Considerations for International Businesses
Canada has tax treaties with numerous countries to avoid double taxation on international trade.
Non-residents are also subject to withholding taxes on certain payments (e.g., dividends, royalties).
BC offers several tax credits and incentives for businesses engaged in research and development, film production, and other areas of economic growth.
Incorporating a business in British Columbia as a non-resident or international entrepreneur is straightforward but requires navigating local regulations. The steps involve choosing the right type of business entity, ensuring compliance with corporate name restrictions, establishing governance structures, and adhering to both federal and provincial taxation laws.
By leveraging professional incorporation services and tax advisors, non-residents can smoothly establish their businesses and benefit from BC’s strategic location for international trade.
Register your Business Entity today!
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Packages and Prices!
Inclusions
Year 1 Incorporation and service fees.
Optional Services (Bank Account opening, Nominee services, Certification of documents, amongst others).
Annual Renewal service fees for year 2 and subsequent years, to keep your company in good standing and full Compliant at all times.
