This is apart of our weekly series associated with the The Global Subsidiary Index. The series is designed to help businesses identify the best countries for establishing a subsidiary based on key operational factors. GEOS provides a data-driven ranking of jurisdictions worldwide, assessing across 40+ criteria to bring you insights into global expansion opportunities.
Each country on the index is scored on an overall score out of 100, with each individual criterion out of 5 or 10. Higher scores indicate a more favorable environment for businesses. By leveraging these insights, companies can make informed decisions on where to establish a legal presence.
Canada quietly leads in global business appeal. With a stable economy, low corporate taxes, and strong global trade ties, it offers the right conditions for international companies to grow.
It ranks #4 in the world for both economic stability and international investment, and #5 for quality of life. Businesses also benefit from a skilled, diverse workforce and a clear regulatory environment.
Trade agreements like USMCA, CETA, and CPTPP give you access to key global markets—without the usual barriers. And with one of the lowest corporate tax rates in the G7, Canada keeps more money in your business.
This guide breaks down what it takes to get started. From incorporation and compliance to payroll and immigration, GEOS helps you navigate each step with confidence.
Why Should You Expand to Canada?
Canada makes it easy for a new business to grow. With a GEOS Global Subsidiary Index Score of 73.2, it ranks among the best countries for foreign companies. The economy is steady, and the rules are clear.
The banking system is one of the strongest in the world. It earned a 5/5 GEOS Financial Infrastructure Score. Canadian banks are well-managed, safe, and backed by strong investor protections.
You also get access to major markets:
USMCA means tariff-free trade with the U.S. and Mexico for compliant goods. The White House recently confirmed this will continue.
CETA opens the door to the European Union. It’s already in provisional use, giving Canadian businesses a head start.
CPTPP connects Canada with fast-growing economies in the Indo-Pacific, including Japan, Singapore, and Australia.
These trade agreements cut costs and remove barriers. They also give Canadian businesses an edge in global markets.
No surprise, then, that Canada topped the OECD’s 2023 list as the most attractive destination for immigrant startup founders. It’s a strong economy with room to grow.
Additionally, there are legal requirements for having Canadian citizens or permanent residents as company directors. Involving Canadian citizens in your business can also help demonstrate a positive impact on the local job market. Foreign investors can also consider acquiring or establishing an existing Canadian business, facilitated by the regulations set by the Investment Canada Act.
Competitive Tax System & Government Incentives
You won’t be buried in taxes when you set up in Canada. The federal corporate tax rate is 15%, with provincial rates from 0% to 16%. Most businesses pay around 26% total, which is competitive on a global scale.
Understanding different business structures, such as corporations, partnerships, and sole proprietorships, is crucial for compliance and taxation purposes.
Small businesses get even more relief. Canadian-controlled private corporations (CCPCs) pay just 9% federal tax on the first CAD 500,000 of active income. That helps keep cash in the business where it matters most.
Once annual taxable supplies pass CAD 30,000, businesses must register for GST/HST. Employers also contribute to CPP, EI, and Workers’ Compensation—but Canada still earns a solid 4/5 on payroll cost efficiency.
The incentives go even further:
The SR&ED Program gives generous R&D tax credits. It’s especially helpful for software, biotech, and advanced manufacturing.
Foreign tax credits cut down on double taxation for companies with overseas income.
Regional programs offer tax breaks, investment credits, and refunds—particularly in places like Atlantic Canada and Quebec.
Clean energy incentives support carbon capture, hydrogen, solar, and EV supply chain investments. Some cover up to 60% of eligible costs.
Between the low rates and strong incentives, Canada gives businesses the financial room to grow, innovate, and invest for the long haul.
The first platform dedicated to streamlining entity setup and management.
Skilled Workforce & Favorable Labor Market
Canada has the talent businesses need. The workforce is skilled, diverse, and often bilingual. Key strengths include tech, finance, healthcare, and engineering.
It’s also the most educated country in the world. OECD data from 2022 shows that 63% of Canadian adults meet its education criteria. That’s higher than any other OECD country, including Japan.
However, immigrant entrepreneurs face unique challenges in Canada. Having a supportive team and professional guidance is crucial for their success, especially when navigating programs like the Start-Up Visa.
Canada works especially well for Go-to-Market (GTM) strategies. Many sales and marketing pros here know how to sell into the U.S. They speak the language, understand the market, and often have direct experience.
You also save money.
Salaries are lower than in the U.S., but talent quality stays high.
Canada makes a great launchpad for U.S. expansion.
Labor laws are clear and not too heavy. Canada scores 4/10 on Employment Law Complexity. Each province has its own rules, but most are easy to follow. Hiring and firing are straightforward in many sectors.
Unions are around but vary by industry. Canada scores 5/5 on Union Complexity, though most sectors still offer flexible hiring options.
With smart people, affordable labor, and simple rules, Canada gives companies a strong place to grow.
Developing Your Business Idea
Developing a business idea is the cornerstone of starting a successful business in Canada. Your business idea should address a specific problem or meet a particular need in the market. It’s essential to ensure that your idea is not only innovative but also has the potential to be profitable.
Conducting thorough research will help you identify potential challenges and opportunities, setting a strong foundation for your business in Canada.
Leveraging generative AI tools like ChatGPT or CoPilot can be beneficial in supplementing your research. These tools can provide insights and generate ideas, but it’s crucial to apply critical thinking and review the AI output carefully. Remember, personal information should never be entered into AI tools.
A successful business idea, whether for an existing business or a new venture, should be unique and well-developed, tailored to the Canadian market conditions. Understanding your target audience and conducting comprehensive market research are vital steps in this process.
Whether your idea is entirely new or based on an existing successful business, it should be specific, viable, and capable of standing out in the competitive landscape of Canadian business.
For foreign entrepreneurs looking to establish a new Canadian business, it is important to understand the legal framework set by the Investment Canada Act. This includes the need for local involvement in the business setup process and demonstrating commitment before finalizing immigration applications.
How to Set Up a Business in Canada
Understanding Extra-Provincial Registrations & Agent for Service
If you want to register your business and do business in Canada, you need to set up your company properly. You can choose federal or provincial incorporation. A federal corporation lets you operate nationwide.
But it requires at least 25% of directors to be Canadian residents. That doesn’t work for every foreign business. Additionally, federal incorporation mandates that at least one director must be a Canadian citizen or permanent resident.
Many go with provincial incorporation instead. It’s simpler. Provinces like Ontario and British Columbia don’t require a local director.
If you register in one province but do business in another, you’ll need an Extra-Provincial Registration (EPR). It’s mandatory in every additional province where you operate. In Ontario:
Foreign corporations need a license under the Extra-Provincial Corporations Act (EPCA).
They must also file an Initial Return within 60 days under the Corporations Information Act (CIA).
You also need an Agent for Service in each province. This person or business receives legal and compliance documents for you. No agent means you’re not compliant—and that can cause delays or penalties. Getting these steps right keeps your business legal and ready to grow across Canada.
Business Structures, Incorporation & Compliance Essentials
Starting a business in Canada means deciding where and how to incorporate. You can choose federal or provincial incorporation, depending on your needs.
Understanding different business structures, such as corporations, partnerships, and sole proprietorships, is crucial for successful business growth and compliance with local regulations.
Federal incorporation lets you operate under the same name across the country. It’s a good option if you plan to expand nationwide. But it comes with more requirements. At least 25% of your directors must be Canadian residents, which can be a challenge for foreign businesses.
That’s why many international companies prefer provincial incorporation. It’s simpler, more flexible, and better suited for 100% foreign-owned businesses. Provinces like Ontario and British Columbia don’t require a local director, which speeds things up.
Processing usually takes 2 to 4 weeks. But Quebec is an exception.
You must register with Revenu Québec, not the CRA.
Quebec has its own tax system, labor laws, and filing requirements.
Businesses must follow French-language rules for contracts, marketing, and day-to-day operations.
If you go the federal route, the process involves five steps:
Name your corporation – Choose a word name or get a numbered one.
Create your articles of incorporation – Use a basic template or customize it.
Set your office address and list your first directors – This is your legal contact point.
Disclose individuals with significant control – You need to report who owns and controls the business.
Submit your application and pay the fee – The easiest way is through the online portal.
Each province has its own rules, so it’s important to plan ahead. Choosing the right structure from the start helps you stay compliant and avoid delays as your business grows.
Registering Your Business
Registering your business in Canada is a crucial step in establishing a legitimate and compliant business entity. The registration process involves several steps, including choosing a business name, selecting a business structure, and obtaining necessary licenses and permits.
To register your business, you can use the Canada Business Network website, which provides a comprehensive guide to the registration process. You can also use the BizPal tool to search for the necessary permits and licenses required for your business.
Here are the steps to register your business in Canada:
Choose a Business Name: Ensure that your business name is unique and not already taken by searching the Canadian trademark database.
Select a Business Structure: Choose from sole proprietorship, partnership, corporation, or cooperative, depending on your business needs and goals.
Obtain Necessary Licenses and Permits: Use the BizPal tool to search for the necessary licenses and permits required for your business.
Register with the Canada Revenue Agency (CRA): Register for a business number, GST/HST account, and other tax accounts as required.
Register with the Province or Territory: Register your business with the province or territory where you will operate.
Financial & Banking Considerations
Canada has one of the world’s most stable banking systems. It earned a Financial Infrastructure Score of 5/5. That makes it easy for businesses to access reliable financial services.
The country’s Big Five banks – RBC, TD, BMO, Scotiabank, and CIBC – dominate the market. They offer strong global connections, secure systems, and a full range of services, including assistance with obtaining your business number . Opening accounts, sending international payments, and managing corporate finances is simple. Applying for a business credit card is a necessary step when starting a business, as it supports financial organization and the establishment of a credit history for the company.
Canada doesn’t have currency controls, making it easier for non residents to move money in and out of the country without restriction . You can move money in and out of the country without restrictions. Foreign exchange is allowed, but large or high-risk transactions may face compliance checks.
Payroll is another key area to manage. Canada scores 4/5 for employer payroll contributions. Employers must contribute to:
CPP (Canada Pension Plan)
EI (Employment Insurance)
Provincial payroll taxes, like Ontario’s Employer Health Tax (EHT)
To make payroll easier, the government provides tools like the Payroll Deductions Online Calculator (PDOC). It helps calculate deductions by province and pay period.
Each year, CPP, EI, and tax brackets are adjusted for inflation. New rules, like CPP2 contributions, may apply based on employee income. Provinces also update their rates, so it’s important to stay current.
Canada’s banking and payroll systems are stable, transparent, and easy to work with. Businesses can manage their finances with confidence—at home and across borders.
Intellectual Property Protection
Protecting your intellectual property (IP) is crucial for safeguarding your unique ideas or inventions. The Canadian Intellectual Property Office (CIPO) provides comprehensive information on how to protect your IP. Securing IP protection can prevent others from copying or stealing your ideas, giving you a competitive edge.
You can obtain IP protection through patents, trademarks, or copyrights, depending on the nature of your business. Patents protect new inventions, trademarks safeguard brand names and logos, and copyrights protect original works of authorship. IP protection can be a valuable asset, enhancing the value of your business and providing legal recourse in case of infringement.
Starting Your Business in Canada
Starting a business in Canada can be a complex process, but with the right guidance, you can navigate the process successfully. Here are some key steps to consider:
Develop a Business Plan: Create a comprehensive business plan that outlines your business goals, target market, financial projections, and marketing strategy.
Conduct Market Research: Conduct market research to understand your target audience, industry trends, and competitors.
Choose a Business Structure: Select a business structure that suits your business needs and goals.
Register Your Business: Register your business with the Canada Revenue Agency and the province or territory where you will operate.
Obtain Necessary Licenses and Permits: Obtain the necessary licenses and permits required for your business.
Setting Up Operations
Setting up operations for your business in Canada involves several steps, including:
Opening a Business Bank Account: Open a business bank account to separate your personal and business finances.
Obtaining a Business Credit Card: Obtain a business credit card to manage your business expenses and build credit.
Setting Up Accounting and Bookkeeping Systems: Set up accounting and bookkeeping systems to manage your business finances and track expenses.
Hiring Employees: Hire employees as needed to support your business operations.
Establishing a Business Location: Establish a business location, whether it’s a physical storefront or a virtual office.
Things To Consider When Expanding into Canada
Canada makes it easy to bring in global talent. It scores 2/5 for immigration complexity, thanks to fast and flexible programs.
The Global Talent Stream (GTS) is the main option for high-skilled hires. It’s quick, with work permits often processed in as little as two weeks.
There are two GTS tracks:
Category A is for employers referred by a GTS partner. It’s used to hire for rare or specialized roles.
Category B covers high-demand jobs listed on the Global Talent Occupations List. No referral needed.
To apply, employers must:
Pay a CAD $1,000 fee per position
Create a Labour Market Benefits Plan (LMBP) showing how they’ll support Canadian workers
Pay at least the prevailing wage for the role
Foreign workers brought in through GTS can later apply for Permanent Residency (PR) through Express Entry. That gives companies a way to keep talent long-term.
You must also:
Provide health insurance until provincial coverage begins
Cover workplace safety insurance
Offer the same wages and benefits as you do for Canadian employees
Understanding different business structures, such as corporations, partnerships, and sole proprietorships, is crucial for successful business growth and compliance with local regulations.
If you’re planning to expand in Canada and need international talent, including those on a temporary resident visa the system is built to support you – fast, clear, and business-friendly. Additionally, there are legal requirements for having Canadian citizens or permanent residents as company directors.
Cost of Living & Office Space
Canada offers a range of cities for businesses looking to expand. Each one balances cost, talent, and industry focus a little differently.
Toronto: Canada’s largest business hub, home to 24,000+ companies and nearly 290,000 tech workers. Office rent and living costs are high, but access to talent and capital is strong.
Vancouver: Known for tech prototyping, digital media, and creative industries. It attracts global firms and startups alike. Office space is expensive, but the city offers strong innovation networks.
Montreal: A global gaming centre since Ubisoft set up shop in 1997. Today, 70% of Quebec’s gaming activity happens here. The city also leads in AI and aerospace, with lower costs than Toronto or Vancouver.
Calgary: Offers more affordable office space and cost of living. The city’s tech scene is growing fast, especially in cleantech and energy-focused innovation.
Ottawa: Canada’s most educated city and home to its largest tech park. It has top talent in software, AI, and cybersecurity. Costs are lower, and companies like Shopify and Nokia are already here.
Halifax: A smart pick for startups. It offers lower overhead, skilled talent, and easier access to Atlantic markets. The tech and creative sectors are expanding quickly.
Each city gives you something different. Whether you want to grow fast or keep costs down, there’s a Canadian location that fits.
Regulatory & Compliance Risks
What works in one province might not pass in another. That’s because Canada’s rules change depending on where you do business, so it’s important to know what to expect.
Data privacy: Canada’s PIPEDA law requires businesses to handle personal information with care. You must get consent, protect data, and explain how it’s used. New cross-border privacy certifications are also coming to support global data flows.
Anti-spam: Canada’s CASL law limits how you send emails and texts. You need clear consent and an easy opt-out option in all electronic marketing.
French in Quebec: Quebec’s language laws require French in employee contracts, marketing, product packaging, and more. Businesses must offer services and materials in French to stay compliant.
Provincial tax rules: Corporate and payroll taxes vary by province. Quebec has its own tax agency – Revenu Québec – and separate filing rules from the rest of Canada.
Regulations aren’t overly complicated in Canada, but they aren’t uniform either. Knowing the local rules helps you avoid surprises and stay focused on growth.
How GEOS Simplifies Your Expansion into Canada
From Nunavut to Nova Scotia, business rules aren’t all the same. GEOS helps you make sense of the differences and gets your setup done right.
End-to-End Entity Setup & Compliance Management
We handle everything from registration to compliance. Need a local Agent for Service? We’ll appoint one in any province where it’s required.
Canada Revenue Agency Registration & Ongoing Compliance Support
The Canada Revenue Agency (CRA) can be tough, especially for foreign-owned companies. GEOS takes care of registration and helps manage corporate tax, GST/HST, and payroll accounts. We also track rule changes and keep your filings up to date.
AI-Powered Global Expansion Support
Say hello to Geovanna, your smart AI guide. She helps with questions, tracks what needs doing, and keeps you compliant.
Launching and Growing Your Business
Launching a business in Canada requires a solid business plan and a strong commitment to execution. Demonstrating your dedication to executing your business plan is essential, especially if you are applying for immigration programs like the Start-Up Visa Program. Taking proactive steps to launch your business before submitting an immigration application can significantly strengthen your case.
Growing your business in Canada involves continuous evaluation and reflection. Regularly analyzing your business achievements and failures will help you identify areas for improvement and stay ahead of the competition. A passion for learning and problem-solving is essential for any successful entrepreneur. Reflecting on your business operations and making necessary adjustments will ensure sustained growth and success in the Canadian market.
By following these steps and leveraging the resources available, you can successfully set up and grow your business in Canada, tapping into the vast opportunities this country offers for foreign entrepreneurs.
Is Canada the Right Fit for Your Business? Conducting Market Research
Canada earns a 73.2 on the GEOS Global Subsidiary Index – proof of its strong economy, investor protections, and global trade links.
Let’s talk. GEOS will help shape a plan that works for your goals.
This article does not constitute legal advice.
About the Author
Shane George
Based in Toronto, Shane has spent his career scaling international revenue teams. As a Co-Founder of GEOS, he’s now focused on helping clients set up their own fully owned foreign subsidiaries along with the appropriate employment infrastructure.
