Open an LLC in Canada

Updated on Friday 08th November 2019

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There are various business forms available for registration in Canada. Among these, the private limited liability company or LLC. However, in Canada, the LLC is considered a hybrid business form that encompasses the characteristics of corporations and partnerships.

Below, we present the main features of Canadian LLC and the requirements for opening such a business form. Our company formation agents in Canada can help you open an LLC in this country.
 

The main characteristics of the LLC in Canada


Even if the corporation is the most employed type of company in Canada, there are businesspersons who prefer to open LLCs which usually have the following characteristics:
 
  1. they resemble sole proprietorships and partnerships, as they are considered unincorporated entities;
  2. from a taxation point of view, the owners of LLCs are taxed based on the personal income statements, as the income of the LLC is aggregated to their tax returns;
  3. LLCs, however, offer limited liability to the shareholders, and thus providing similar benefits to the Canadian corporation;
  4. with the help of LLCs, investors can enter various agreements and use the business form to sign on their behalf.
 
It is useful to know that the LLC is not a generally accepted business form in this country, which is why those who want to set up companies in Canada are usually recommended to use the corporation. If you need advice on the registration of a limited liability company, our local agents are at your disposition.
 

Registration options for LLCs in Canada


Just like any other type of structure, the LLC can be registered at a federal level or at provincial or territorial levels. The main differences between the registration formalities are related to the costs of the procedure (federal registration is slightly more expensive than provincial registration), however, an LLC can also be registered in several provinces.

Those who want to open an LLC in Canada need to follow the same steps as for any other type of company. They must also respect the conditions imposed by the Company Law.

Our Canadian company formation consultants can offer more information on the registration options for setting up a limited liability company.
 

Requirements for opening an LLC in Canada


As mentioned above, there are several requirements that need to be respected upon the incorporation of an LLC in Canada. These are:
 
  • having a business address in the region (province) the company will operate;
  • drafting the Articles of Association of the company;
  • appointing the company officers;
  • opening a bank account and depositing the share capital;
  • submitting the documents for registration with the Trade Register;
  • obtaining the tax identification code and GST number;
  • applying for the necessary licenses before starting any activity.

Foreign investors operating through LLCs have the option of bringing various amendments to their businesses by filing Articles of Amendments with the Companies Register.
 

Documents to be prepared when opening an LLC in Canada


In order to create an LLC in Canada, an investor must prepare the Articles of Association, but also an Initial Registered Office address and first Board of Directors. These are questionnaires that need to be filled out and in which information about the registered address and directors of the company are provided. Also, the Board of Directors document must contain the signatures of all board members.

Our company registration advisors in Canada can help with the preparation of the documents you will need to submit when registering an LLC.
 

How long does it take to register an LLC in Canada?


The company registration timeline for a limited liability company is the same as for any other business form. However, one must consider if the business he or she wants to set up is a resident or non-resident company, as for the latter the procedure is lengthier.

According to a report issued by the World Bank, the registration timeline for a company in Canada is as follows:
 
  • in the case of federal registration, the procedure takes around 1 week to complete;
  • in the case of provincial registration, the procedure is completed in about 2 days;
  • one must also consider the opening of the bank account which can take up to 1 month;
  • the business licenses can also take time, and thus the registration time can increase to 2 months.

Foreign investors have several choices when it comes to starting a business in Canada. Those who decide for an LLC can rely on our agents in Canada. Do not hesitate to contact us for support in incorporating a limited liability company or any other business form in this country.