Types of Companies in Canada

Updated on Friday 10th January 2020

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Entrepreneurs who want to activate on the Canadian market should, first of all, choose the type of business entity which suits their needs. In Canada, one can set up a sole proprietorship, a partnership (general or limited), a corporation or a cooperative.

In matters of documents and requirements when setting up a company in Canada, we suggest you address to our specialists in company formation in Canada.

Cooperative in Canada

cooperative in Canada can be registered if certain rules are met. For instance, the owners can entirely manage the business, they have democratic control and limited liability. The revenues are distributed equally because the resources have also been gathered equally. Even though a cooperative is not a preferred type of entity among businessmen, one should know that it puts the accent on common needs, whether in investment matters or other important decisions, like employment or the sale of services and goods.


Partnership in Canada

Partnerships in Canada are limited or general and they are registered with two or more individuals. When setting up a limited partnership, the entrepreneurs will agree on the responsibilities and rights of each partner. The extent of profit share and liability might vary, but all the details are mentioned in the agreement. As for a general partnership in Canada, each individual can manage the business, and he/she is responsible for the debts and obligations of the partnership.


Corporation in Canada

From the beginning, it is good to know that a corporation is a separate legal entity from its proprietors. The stockholders are not responsible for the company’s obligations or debts, as the only interest regards the value of their investments. A private corporation in Canada can be registered by one or more individuals, but it is good to know that the majority of the directors should domiciliate in Canada. Such an entity cannot trade shares freely. As for the public corporation, this is subject to listed shares to the public, in accordance with the rules and regulations mentioned in the Ontario Securities Act. No matter the type of company you are interested in, our company formation agents in Canada can guide each entrepreneur when preparing the documents and applying for special permits and licenses.

Corporations must also register for VAT in Canada.


Sole proprietorship in Canada

Another type of business structure is the sole proprietorship, and, as the name says, this is owned and controlled by a single person. Such business is subject to lower start-up costs and paperwork compared to the company structures mentioned above. A sole proprietor is in charge of the business management, responsibilities, and debts.

We also invite you to read about the main types of Canadian companies in the scheme below:
The main types of companies in Canada

Documents needed to open a company in Canada

Foreign and local investors who want to open companies in Canada must prepare a set of documents, among which:
  •           the statutory documents of the company in the case of corporation and deeds of establishment in the case of other entities;
  •           they will also be required to submit their personal information with the Trade Register;
  •           the declaration through which the directors of the company are appointed;
  •           other information based on the Canadian province where the company will be registered.

You can find the main types of companies available for registration in Canada from the video below:

How to choose the type of company to register in Canada

Choosing the right business form in Canada is not complicated and foreigners can follow the next steps in order to ease their decision:
  •           decide based on how large the business will be – the corporation is usually a good choice for small and medium-sized entities;
  •           choose based on the province where the company will operate (one can also register the company at the federal level);
  •           choose based on the costs generated by the management of the company and the liability the owner will have in case of bankruptcy, for example;
  •           one can simply ask for recommendations from our company registration agents in Canada.

For a better understanding of the types of companies available in Canada, we recommend you to get in touch with our team of company incorporation representatives in Canada.