Start a Business in Canada as a Foreigner: The Ultimate Guide

This was Ahmed’s opening question during our consultation. Like many established business owners from developing countries, he had proven business expertise and capital but was confused about Canada’s investment immigration process.

Ahmed had been running his family’s sustainable packaging operation in Dhaka for twelve years. He wanted to establish Canadian manufacturing operations while building a pathway to permanent residence for his family’s future.

There are multiple pathways for business owners to come to Canada, each designed for different investment levels, business types, and immigration goals. In this detailed guide we will discuss how to start a business in Canada as a foreigner to obtain permanent residency.

Can a Foreigner Start a Business in Canada?

Most entrepreneurs confuse business ownership with work authorization. These are fundamentally different concepts under Canadian law.

Business Ownership Rights

Foreigners can own businesses in Canada without restrictions. You can incorporate federally or provincially, and most provinces allow 100% foreign ownership. Federal incorporation carries additional director-residency requirements and disclosure rules.

You can register a business and obtain a Canada Revenue Agency (CRA) Business Number for tax purposes (GST/HST, payroll, import/export accounts). Getting a Business Number is routine once you incorporate.

Work Authorization Requirements

If you want to actively manage operations, make strategic decisions, sign contracts, or hire employees from within Canada, you need proper work authorization. This distinction trips up many entrepreneurs.

You can own shares without PR or citizenship, but to live and work actively in Canada (manage daily operations, be on payroll, sign contracts in person), you need the appropriate work permit or permanent residence.

Gray Areas to Understand

Attending board or shareholder meetings (usually acceptable for short visits)
Reviewing financial reports remotely (typically permitted)
Making strategic decisions from abroad (generally allowed)
Day-to-day management or operations (requires work authorization)

Step-by-Step: How to Start a Business in Canada as a Foreigner

Step 1: Choose Your Business Structure

Most foreign entrepreneurs benefit from incorporation rather than sole proprietorship.

• Federal incorporation: Allows operations across Canada, ideal for multi-provincial businesses. Provides stronger name protection and legal recognition nationwide.
• Provincial incorporation: Limited to one province but simpler and less expensive. Best for region-focused businesses.

Step 2: Understand Director Residency Rules

Director residency requirements may vary by jurisdiction:

• Federal: At least 25% of directors must be Canadian residents. If the board has fewer than four directors, at least one must reside in Canada.
• Ontario: No Canadian-resident director requirement
• British Columbia: No Canadian-resident director requirement
• Alberta: No Canadian-resident director requirement

Note: Corporations in regulated sectors (air transportation, telecommunications) need majority Canadian-resident directors. Rules change frequently, so verify current requirements.

Step 3: Complete Incorporation Process

• Name Search and Reservation: Conduct NUANS name search and reserve your business name. Ensure naming compliance (no prohibited words or confusing similarities)
• Articles of Incorporation: Define business purposes and share structure. Identify directors and shareholders. Specify registered office address.

Federal incorporation typically takes 1-5 business days; provincial timelines vary.

Step 4: Obtain Business Registration Numbers

Every incorporated business needs a Business Number (BN) from CRA for:

• Corporate income tax account
• GST/HST account (if applicable)
• Payroll account (when hiring employees)
• Import/export accounts (if needed)

Step 5: Open Canadian Business Bank Account

This often challenges foreign entrepreneurs without Canadian residency. requirements include:

• Incorporation documents
• Business registration numbers
• Director/signing authority identification
• Business plan and financial projections
• Proof of business address

Some banks allow remote account opening; others require in-person visits.

Step 6: Obtain Required Licenses and Permits

Licensing varies by industry, province, and municipality. Use the BizPaL portal to identify requirements:

• Professional services need provincial licensing
• Food businesses require health permits
• Construction needs safety certifications
• Import/export requires customs registrations
• Operating without proper licenses can result in fines or closure.

Step 7: Set Up Payroll and Compliance Systems

When hiring employees:

• Register for payroll deductions account with CRA
• Set up workers’ compensation coverage
• Follow provincial employment standards
• Implement proper record-keeping for taxes and payroll

Step 8: Plan Business Immigration Strategy

Choose your work permit pathway based on your business situation and long-term goals.

Step 9: Ongoing Compliance

• Maintain compliance through:
• Corporate records (minutes, resolutions, share transfers)
• Annual corporate tax returns
• Current financial statements and employee records
• Updated licenses and permits

This ensures legal operations and positions you for potential permanent residency applications.

Take Professional from Licensed Consultants

Setting up a business in Canada offers no shortage of benefits for foreigners. If you want to set up or purchase a business in Canada and eventually move to this country, please get in touch with Elaar Immigration.

Keshav Sharma, a professional with extensive business management experience, leads our team of Regulated Canadian Immigration Consultants. Together, we can help you chart a winning business strategy that will allow you to successfully set up and operate a business in Canada.

FAQ: Start a Business in Canada as a Foreigner

What kinds of business formations are accessible in Canada to foreigners?

In Canada, foreigners are able to form corporations, partnerships, sole proprietorships, and franchises, among other business structures.

Can a foreigner own a business in Canada without being a resident?

Yes, foreign ownership of Canadian businesses is permitted. You can own shares and receive dividends without Canadian residency. However, actively managing the business from within Canada typically requires proper work authorization.

Do I need a Canadian partner or resident director?

Not necessarily. Director residency requirements vary by jurisdiction. We recommend the optimal incorporation structure based on your specific needs and long-term goals.

What’s the minimum investment required to start a business in Canada as a foreigner?

There’s no one-size-fits-all minimum for example, under the Start-Up Visa it could be CAD 75,000-200,000+; provincial entrepreneur streams often require CAD 100,000–600,000+ depending on province and business type.

Can I pay myself a salary from my Canadian business?

Yes, as a foreign entrepreneur in Canada, you can pay yourself a salary from your incorporated business, provided the company is legally registered, has payroll set up, and follows all tax and immigration compliance rules.

Can my family come with me?

Spouses and dependent children can accompany you. Spouses typically qualify for open work permits, and children can attend Canadian public schools at no additional cost.

How long does the entire process take?

Business incorporation is quick (1-5 days), but work permit processing varies:

• C11: 8-14 weeks typically
• Start-Up Visa: -40 months
• PNP entrepreneur: 18-36 months

We provide realistic timelines after reviewing your specific profile and business plan.

Can I operate the business remotely from abroad?

You can incorporate and set up business infrastructure remotely. However, active management from within Canada generally requires proper work authorization. Remote oversight from your home country is typically acceptable for ownership activities.