Canada is home to more than 37 million people. With its close economic ties and similar culture, many American entrepreneurs see the Great White North as a great opportunity.
It’s one reason many set their sights on Canada as their next market of entry. As with any international marketplace, though, starting a business in Canada comes with challenges.
If you’re thinking of crossing the border and setting up shop in Canada, this guide is for you. In it, we’ll go over some tips that will make setting up your business easier. It will also help you avoid some of the common mistakes, and prepare you for success north of the 49th parallel.
Do Your Market Research
Before you decide you’re opening a business in Canada, you should take a thorough survey of the market. Some questions you’ll want to ask yourself include:
- Is there any competition in the market and if so, who?
- If there is no competition, why not?
- How much do Canadians know about your product or service?
- Is there unmet demand for your product or service?
- Are there rules or restrictions about the types of products or services you offer?
The answers are very important. If the Canadian market is already crowded with competition, you need to ask if it’s a good idea to enter the market. What does your business have to offer that sets it apart from competitors?
It’s also important to ask about demand, particularly if there’s little competition on the market. It may be that Canadians aren’t interested in the product or service you offer. It may also be that there are laws that make it difficult to serve this market, even if the demand is there.
Think about Structure when Starting a Business in Canada
The next thing you’ll want to look at is your business structure. In Canada, there are a few different types of businesses you can set up. Each option has different implications for how you’ll be taxed.
There are essentially four forms of ownership:
- A sole proprietorship
- Incorporation
- Co-operative
Keep in mind that your options may be a bit different depending on which provinces you choose to operate in. In general, sole proprietorships are easy to set up, but they have fewer tax advantages. Corporations offer you more incentives, but they also face stiffer regulations.
You’ll also be expected to register your business in the province where you operate.
Research the Legal Framework
Canada has three levels of government. The provincial and federal governments play a key role in regulating business.
Do a bit of comparison shopping before you decide where to start your new business. What advantages do you have if you locate your offices in Toronto? What laws will apply to you if you decide to open up in Saskatoon instead?
Federal law governs the entire country. Health and safety laws are often federal, as are rules about national holidays.
The provinces generally have more say in things like labor law. They also have their own business tax. They may provide support programs and incentives for certain kinds of businesses.
Be sure to do your research and find out what each province offers to businesses like yours.
Create a Business Plan and Secure Financing
When starting a company in Canada, you’ll want to secure some funding for your new venture. After all, you’ll likely begin racking up some expenses even before you open your doors.
As with any business, will help as you try to secure funding. The plan can also provide you with a road map of where you want to go and how you want to grow your business in Canada.
Once you’ve created a plan and registered the business, you can approach banks and other lenders.
Location is Crucial When Starting a Business in Canada
Once you decide which province you’ll operate in, pick a specific location for your new office, factory, or warehouse.
You may want to view listings for real estate to get a sense of what properties are available. This will also give you a good sense of cost in the area. Vancouver may offer you more access to infrastructure than Burnaby or Nelson, BC, for example.
File the Paperwork for Taxes and Licenses
The next step to doing business in Canada is making sure you’ve got your paperwork in order. Depending on the type of business you run, you may need to get a license before you can start operating.
You’ll also want to set up tax accounts. You’ll need one to collect both federal and provincial taxes. In some provinces, you’ll collect federal and provincial tax together.
Think about Employees
You may also need to think about employees. If you’re planning to work in Canada to oversee the business, you may need to get a visa or a work permit. If you’re sending some of your American workers to Canada, they’ll also need the right paperwork.
Finally, you’ll want to prepare to hire Canadian employees. Be sure you understand the legalities of hiring and terminating employees where you operate.
You should also be sure to think about your obligations as an employer. You may be responsible for paying holiday pay and vacation pay.
You may also want to think about hiring contractors in Canada instead of employees.
Finally, make sure you understand the job market in Canada when you want to hire. You’ll need to pay competitive wages, particularly when a job is in high demand.
Track Your Success
Starting a business in Canada is a great opportunity for American entrepreneurs. With these tips in hand, you can get a head start on the road to success.
If you’re not sure whether crossing the border to Canada is the right move for your business idea, focus on growth at home. Either way, for more informative articles.
