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Corporate Structure Explained

Canada Limited Liability Company (Private Corporation)

  • A private corporation in Canada can be registered with a minimum requirement of 1 or 2 shareholders, varying by province. It requires a minimum of USD 1 (CAD1). A resident director is required in all provinces except in British Columbia, Quebec, Yukon, New Brunswick, Nova Scotia

  • Following the incorporation, the company is required to file annual tax return and financial statements. The requirement of audit does vary among provinces and there are legal exemptions available for SMEs.
  • Limited liability companies in Canada can conduct almost all types of business activities within Canada. It’s one of the best options for most of our clients looking to start a business in Canada.

Canadian Limited Liability Partnership

  • Only Ontario and British Columbia currently provide incorporation of limited liability partnerships.
  • A general partner is required to be appointed. Limited partners who benefit from a limited liability must also be nominated. There is no requirement to appoint a resident partner or manager;
  • Other provinces of Canada have either no provision for incorporation of limited liability partnership or strictly restrict their use to legal advisors, doctors, accountants and other controlled professions.
  • Limited and limited liability partnerships are tax transparent entities. The profits of the company are directly shared with the partners and their shares in profits will be accounted in their personal or corporate tax returns. A statement of income is required to be filed with the local tax authority.
  • LLPs are a popular options for foreign investors to register their company. We suggest weighting the benefits (being tax transparent) and risks (liability of general partner) prior to incorporation of these businesses.

Canada Public Limited Company (Public Corporation)

  • Public corporations in Canada are similar to those discussed earlier, i.e. private corporations, with the major difference being that their M&AAs may be traded publicly. The required up-front capital for the registration of the company is the same (CAD 1) and the company may be setup by foreigners if 1 resident director is appointed in provinces with this requirement.
  • Canadian Public Corporations are mainly used when owners plan to raise capital for their business through the Toronto Stock Exchange, Canada Securities Exchange or through issuance of shares to third party investors.

Canada Branch Office

  • Canada permits foreign companies to incorporate branch offices but may be subject to local regulations including parent companies. We typically suggest our customers to incorporate a subsidiary company in Canada or Register a special purpose vehicle abroad (mostly an LLC) if they are not confident with the first option. This way they can incorporate the Canadian branch office.
  • A foreign company representatives must be appointed which must be a Canadian resident. When incorporating a branch, it is important to bear in mind that this registration creates an unlimited liability for losses and debts on the parent company.

Canada Representative Office

  • Canadian laws do not recognize the presence of a representative office. These offices are given the status of a branch and the formalities regarding tax returns and financial statements shall be treated similarly. A representative office is not subject to pay Canadian corporate tax provided it is only involved in marketing and promoting the business of its parent company.

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