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Establishing a Business in Toronto


All levels of government recognize the importance of making Toronto, Ontario and Canada welcoming to new business investments. According to the World Bank, establishing a business in Canada requires only 1 procedure (Doing Business, 2012).

Establishing a business in Toronto is an efficient and inexpensive process that is regulated by either the federal or provincial government. When establishing a business in Toronto, businesses determine whether to incorporate provincially or federally, and which licences, permits and insurance to obtain.

Important Considerations: Federal versus Provincial Incorporation

There are two ways to incorporate a business in Toronto, federally or provincially. Businesses must decide whether operations will occur solely within the province of Ontario or throughout Canada. If operations will be conducted throughout the country, the corporation must register both federally and within the individual provinces that business is conducted in. Legal information about provincial and federal incorporation can be found below:

Please note it is highly recommended that a lawyer evaluate the considerations.

Federal Incorporation

  • 25% of a federal corporation's board of directors are required to be Canadian residents (or a minimum of 1, if there are fewer than 4 directors).
  • A federal corporation is permitted to use the same name in each province and territory, provided it is not conflicting with a previously established corporate name or trademark.
  • Federal corporations can headquarter in any Canadian province.
  • A federal corporation requires greater disclosure and filing requirements. Filling must be sent to:
    • Federal Director of Corporations, The Canada Business Corporations Act; and
    • The Business Corporations Act of each province the corporation is active.
For more information on federal incorporation, please visit Industry Canada's website.

Ontario Incorporation

  • Ontario corporations that are not registered federally may only operate in the province.
  • Professional corporations are only available at the provincial level. Typically, professional corporations include: Accountants, Architects, Attorneys, Physicians, Dentists, Veterinarians, Engineers and others.
  • Ontario corporations require 25% of the directors to be Canadian residents.

Branch Offices: An Alternative to Incorporation:

An alternative to provincial or federal incorporation is opening a branch office. A branch is an extension of its non-Canadian parent corporation, whereas a subsidiary, a federally or provincially incorporated business, is a separate legal entity from its parent. The key distinction between a branch and a subsidiary is that a branch is not a separate legal entity; the non-Canadian corporation is subject to liabilities incurred by the branch in Canada. Additionally, the benefits of incorporating federally or provincially do not apply to a branch office.

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Registration with Canada Revenue Agency (CRA)

All businesses operating in Ontario and Canada are required to register with the Canada Revenue Agency to receive a business number. This number will allow the business to pay and claim sales tax, income taxes, and payroll taxes such as the Canadian Pension Plan.

To acquire an Ontario business number, visit the Canada Revenue Agency.

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Workplace Safety Insurance Board (WSIB)

Under the Workplace Safety and Insurance Act  most businesses in Ontario that employ workers (including family members and sub-contractors) must register with the WSIB within 10 days of hiring their first full- or part-time worker.

Registering with the WSIB provides workplace insurance coverage for all workers and access to experts in health and safety guidelines for your business activities. To register please visit the Workers Safety Insurance Board.

There are specific industries that do not have to register. These include:

  • Banks, trusts and insurance companies
  • Private health care practices (such as those of doctors and chiropractors)
  • Trade unions
  • Travel agencies
  • Clubs (such as health clubs)
  • Funeral directing and embalming

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Permits and Licenses

Businesses in Ontario are required to obtain the correct permits and licensing for specific business activities.

  • BizPal provides a useful tool that generates a list of permits and licenses applicable to specific business activities.

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Immigration

Start-Up Visa Program

*New as of April 1, 2013

Program Overview
The Start-Up Visa Program enables immigrant entrepreneurs to launch innovative businesses that will create jobs in Canada and, eventually, compete globally. The Start-Up Visa Program links immigrant entrepreneurs with private sector groups in Canada that have experience working with start-ups and can provide essential resources. By providing sought-after entrepreneurs with permanent residency and access to a wide range of business partners, Canada hopes to become a destination of choice for start-up innovators.

Beginning April 1, 2013, the Start-Up Visa Program is a pilot program that will run for five years. It is expected that due to the narrow focus of the program, initially, the number of applications will be limited. However, the focus of the program will be on the quality of the applicants and on establishing a track record of success.

To be eligible to receive a start-up visa for a business venture, you must:

  • Secure a minimum investment of $200,000 if the investment comes from a designated Canadian venture capital fund, or a minimum investment of $75,000 if the investment comes from a designated Canadian angel investor group;
  • Meet the language and education requirements;
  • Have sufficient settlement funds.

For further information on the Star-Up Visa Program, please visit: http://www.cic.gc.ca/english/immigrate/business/start-up/index.asp

Business Immigration Program

There are 3 categories of Canadian business immigration. These are:

  • Investors
Investors must have a personal net worth of C$800,000, accumulated through the successful management or ownership of a business.   Additionally, Investor category applicants must invest a minimum of C$400,000 for a period of five years, into a Canadian government fund.  The investment is completely guaranteed by the Canadian government and will be returned to the Investor interest-free after the five year period.  A financing option is available to meet this requirement. 

NOTE: As of July 1, 2012, Citizenship and Immigration Canada (CIC) has temporarily stopped accepting applications for the federal Investor program to focus on processing the applications already received. This pause on new applications will continue until further notice. Please check their website for further information: http://www.cic.gc.ca/english/immigrate/business/investors/index.asp.

  •   Entrepreneurs

Entrepreneurs must have a minimum net worth of C$300,000 and possess business experience which demonstrates the successful starting and management of a qualifying business as measured by number of employees, sales, net income and equity share.   The Entrepreneur will then have to demonstrate that he/she can similarly establish, invest in, or acquire a Canadian business according to the same criteria.

NOTE: Citizenship and Immigration Canada has temporarily stopped accepting applications for the federal entrepreneur program. Only applications received before July 1, 2011, will be processed. This temporary pause will continue until further notice. Please check their website for further information:
http://www.cic.gc.ca/english/immigrate/business/entrepreneurs/index.asp

  •  Self-Employed

A Self-Employed applicant must be in a line of work that significantly benefits Canada culturally; specifically, artisans, athletes and farmers.  The Self-Employed applicant must demonstrate relevant experience – a demanding threshold – and the funds necessary to support their own employment in Canada. For a complete overview of the Self Employed immigration category, please see:
http://www.cic.gc.ca/english/immigrate/business/self-employed/index.asp

All business immigrants must apply at 1 of 9 Business Immigration Centres located outside Canada at the Canadian Embassy, Canadian High Commission, or Canadian Consulate in Beijing, Berlin, Buffalo, Damascus, Hong Kong, London, Paris, Seoul and Singapore.

Each application can be made for only one class and cannot be changed once the application is submitted. The criteria regarding the various qualifications for each class can be found here.

Provincial Nominee Program (PNP)

The Opportunities Ontario: Provincial Nominee Program is an immigration program through which Ontario nominates individuals and their families for permanent resident status based on a pre-approved job offer in the province. The Government of Canada makes the final selection decision and completes processing of applications on a priority basis subject to health, safety, and security requirements. Opportunities Ontario exceeded its nomination target of 1,000 for 2012.

Employers
Ontario has a labour pool of highly skilled workers, but sometimes the talent employers need for professional, managerial and skilled trades positions may not be readily available in the province. The Opportunities Ontario: Provincial Nominee Program may be the answer. The program facilitates the immigration process so that employers can recruit the highly-skilled workers they need.

Investors
The investment component of the program helps companies making an investment in Ontario to recruit or relocate key employees to ensure the long-term success of the investment. Endorsed and approved investments will receive nominee application packages for key positions for individuals recruited or relocated by companies making the investment in Ontario. These prospective nominees will need to meet the same eligibility criteria for foreign workers in the General Category.

Foreign Workers
If you are a foreign worker, you may be eligible to apply to Opportunities Ontario for nomination as a permanent resident. Employers start the application process. Individuals do not apply directly to Opportunities Ontario.

International Students
The international student with a job offer stream can be used by employers when they want to recruit international students. Students must have completed at least half of their studies in Canada, and have graduated or will soon be graduating from an eligible publicly-funded Canadian college or university.

For further information on the Provincial Nominee Program, please visit: http://www.ontarioimmigration.ca/en/pnp/index.htm

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Useful Resources

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