If you are a foreign entrepreneur looking to start a business in Canada, various opportunities are available. This guide will provide a comprehensive overview of the steps involved in starting a business in Canada as a foreigner. Additionally, we will discuss the available options for business immigration, which is essential in launching a business as a foreign resident.
Immigration Options for Starting a Business in Canada as a Foreigner
There are 5 options that foreign business owners and entrepreneurs can use when starting a business in Canada.
How to Start a Business in Canada: Step-by-Step Instructions in 2024
Below, we will explore how to open a business in Canada, taking into account the business immigration aspect of the process. The 9 key steps that you should follow are:
Step 1 – Develop a Business Idea
Starting a business requires a strong and well-thought-out business idea. Understanding your target audience and determining whether your product or service suits the market is essential. Regardless of whether your idea is innovative or based on existing successful businesses, it’s crucial to ensure that it is fully developed because it will be the foundation of your success.
- Immigration requirement – relevant experience. From the standpoint of business immigration, you must also demonstrate relevant experience (either in the same or similar industry) and managerial skills to establish and run your business in Canada. The Immigration Officer assessing your application must be convinced you can execute your business plan. Therefore, in your application, include evidence of your educational background and employment or business ownership experience to demonstrate that you possess all the necessary skills and knowledge to undertake such a venture in Canada.
Step 2 – Seek Mentorship and Networking
Receiving advice from experienced professionals, colleagues, and mentors can be crucial while starting a business in Canada. As a foreigner, you may not be familiar with the Canadian market. The same industry can look completely different in Canada compared to your home country. Thus, learning from the experience of other entrepreneurs can help you better understand your business in Canada. The network you build in Canada will serve you and your business for many years! Feedback and assessment from trusted mentors, advisors, or even new business friends is always beneficial.
Step 3 – Create a Business Plan
When planning to open a business in Canada, you must have a viable business plan. No business anywhere should start without first creating a thoughtful and bulletproof business plan.
- Immigration requirement – viable business plan. Your business proposal is the most essential part of your work permit application, so ensure your business concept is specific, well-researched, and viable in Canadian market conditions. Include as many details as possible in your business plan. A good business plan should include the following sections, among others: description of business model, value proposition, competitive advantage, risks and challenges, long-term vision, short-term execution strategy, team & staffing plan, key partners/suppliers, monetization strategy, market research, marketing strategy, P&L analysis.
- However, remember that your business should NOT be an owner-operator type that generates income only for you or your partner. Your business should not be the “passive investment” type of business (like buying a real estate property to rent) but rather require your active involvement and day-to-day management.
- It should have a solid long-term expansion and growth plan, aim to create jobs for Canadians and contribute significantly to the Canadian economy.
Step 4 – Financial Investment
Knowing how much financial investment your Canadian business requires depends on the business type and business plan. With that figure in mind, you can start planning how to fund your business. Some entrepreneurs rely on personal savings or savings from other ventures, while others seek funding from venture capital funds, banks, or government loans and grants.
- Immigration requirement – financial capacity for starting a business in Canada as a foreigner. Entrepreneurs starting businesses in Canada must have sufficient funds to execute a business plan. They must also demonstrate that Canada will benefit from their investment in the business. They need to secure business financing and create a proper business structure. We are often asked how much entrepreneurs should invest in their businesses in Canada. The answer is always, “it depends.” It depends on the type of business you plan to establish in Canada. The investment must be reasonable to cover operational expenses in the next 1-2 years.
- In general, we recommend that you aim to invest at least $100,000 as seed capital to fund your business costs in year 1, provided that your business model is an “asset-light” business (IT, consulting companies, etc.). Realistically, you should have access to $300,000 – $500,000+ in liquid funds if the business requires additional funding before generating revenues.
- Please remember that you should NOT invest all your savings into your business in Canada. Every new business venture carries substantial risks, especially when entering foreign markets. Access to sufficient capital is essential for your business success and immigration application.
Step 5 – Register and Incorporate Your Business
For various reasons, taking the necessary steps to register and incorporate your Canadian company is crucial. The appropriate business structure can significantly impact your business’s growth in the future. There are significant differences in partnerships, sole proprietorships, and different types of corporations that you must consider.
- Immigration requirement – incorporation. Many Canadian business immigration programs will require foreign entrepreneurs to incorporate their businesses in Canada. Considering Canadian incorporation laws and regulations can be unfamiliar to foreign entrepreneurs, we recommend seeking professional advice.
Step 6 – Obtain Permits and Licenses
Obtaining the necessary permits and licenses is crucial for a successful business in Canada, and it largely depends on the industry in which the business operates. For example, there are differences in obtaining permits for operating a corner store compared to building a chemical factory. Of course, operating a business without the necessary permits can lead to considerable fines or even the closure of your business.
Step 7 – Open a Bank Account and Apply for a Business Credit Card
When managing a new business’s finances, it is essential to maintain a separate bank account from your personal account. Setting up a separate banking arrangement for your business will enable you to keep track of your expenses more efficiently, establish a credit history for your business, and access your business’s financial data to make informed decisions. You should research what types of business accounts various Canadian banks offer and which suits your business better.
Step 8 – Launch Your Business
If you have followed the steps to open a business, you are probably ready to launch your new venture in Canada. Congratulations! You are all set to press the start button. However, it is important to note that even though you have completed the process of setting up your business, there are still immigration aspects that you should be aware of.
- Immigration requirement – commitment & execution. You must demonstrate your commitment to executing your business plan as a part of your immigration application. Once you have your business plan ready from the previous steps, you should start taking action to execute the plan before submitting your immigration application. There are many ways to demonstrate your commitment to your business vision. For example, you can undergo federal or provincial incorporation, register a provincial sales tax account with the Canada Revenue Agency, order equipment or products, rent premises, hire local staff, etc.
- The more steps you take to launch your Canadian business before applying, the better your chances of getting a positive result.
Step 9 – Analyze and Reflect
To run a successful business in Canada, it is essential to continuously evaluate and reflect on your operations, achievements, and failures to identify areas for improvement and stay ahead of the competition. The market will not adapt to you; in reality, it is the other way around, and your business will have to adjust to the ever-changing market conditions. Any successful entrepreneur has a passion for learning and problem-solving. Thus, don’t forget to reflect on how your business is operating.
Bonus – Absence of Criminality & Clean Travel History
Lastly, you must have no history of criminality or prior incidents of breaching the immigration laws of Canada or any other country. A criminal record from any country will likely reduce your chances of success in an immigration application. Canadian authorities may find you inadmissible to Canada depending on the seriousness of your criminal record. The absence of criminal history is imperative if you wish to succeed in any available options for startup immigration to Canada.
How Sobirovs Can Help You to Start a Business in Canada
We can assist you with your immigration application to Canada to operate your business. Whether you own a small business or a large corporation, we can help. Besides, we will ensure that the business plan fits the Canadian realities. Our goal is to help you succeed in making a profit and immigrating. Book a meeting with our lawyers to discuss your business idea.
We have helped numerous foreign entrepreneurs open businesses in Canada. Here are some of our success stories:
- Trust the Process: Business Immigration Success from Nigeria
- A Punjabi Business Owner’s Triumphant Journey to Canada
- How U.S. Asylum Seeker Reunited in Canada with His Family as an Entrepreneur
- From Russia to Canada in 1.5 Months by Buying a Business
Frequently Asked Questions About Opening a Business in Canada
Below, you will find answers to the most commonly asked questions about the topic:
Can I open a business in Canada as a non-resident?
Yes, non-residents are eligible to start businesses in Canada. Any foreign entrepreneur who wants to start a business in Canada will have to go through the business immigration process if the entrepreneur wants to run the business while being in Canada. Depending on your country of origin, you may be eligible for faster processing of your immigration application.
How much does it cost to register a company in Canada as a foreigner?
Registering a company in Canada costs anywhere from $60 to $1000. This depends on which province the company will be registered in or if it will have federal incorporation. However, as a foreign resident, you must account for the additional costs of business immigration and starting your business. We recommend setting aside a minimum of $250,000 CAD to start your business in Canada, covering the startup costs, business immigration costs, and miscellaneous expenses. Of course, this figure is highly variable, depending on your business type.
What business can immigrants do in Canada?
Immigrants can start any business in Canada. There are generally no restrictions on what type of business one can begin as long as it complies with federal and provincial laws and regulations. In our experience, we have seen foreign entrepreneurs open car repair shops, convenience stores, hair salons, transportation companies, jewellery wholesale companies, and much more.
Is it difficult to start a business in Canada?
Starting a business in Canada can be challenging for some entrepreneurs. The key to success is having the right team support you and your business throughout the journey. Many foreign entrepreneurs have started numerous businesses in Canada and have successfully immigrated here with their families. One thing that they all have in common is that they sought professional advice when entering the Canadian market.
Can a non-citizen start a business in Canada?
Yes, non-citizens can start businesses in Canada. Foreign entrepreneurs who wish to run their businesses while residing in Canada must go through the business immigration process. The process involves registering and incorporating the business in Canada, which is essential for business immigration.
Can an international student start a business in Canada?
International students can start a business in Canada but must follow specific rules. During school semesters, they can work up to 20 hours weekly on their business. During school breaks, they can work full-time. To start a business, they should use the Lean Startup methodology, validate their idea, create a detailed business plan, and understand legal and financial aspects. They should know legal requirements like business incorporation, setting up a business account, and understanding tax rules. It’s advisable to attend informative sessions and seek guidance from experienced business immigration lawyers.
Can I get PR if I start a business in Canada?
Starting a business in Canada can be a pathway to obtaining permanent residency, especially under business immigration programs. However, simply starting a business does not guarantee PR. Entrepreneurs need to meet specific requirements, like demonstrating relevant experience, financial capacity, and the viability of their business plan. The success of the immigration application can also depend on how the business contributes to the Canadian economy, such as creating jobs for Canadians and its growth potential.
What financial support is available in Canada for new business owners?
Resources available in Canada for business owners who are not Canadian PRs or Citizens include access to business development services, mentoring, networking opportunities, and information on compliance with Canadian business regulations. These resources can be found through government websites, local business development centers, and industry associations. While some funding opportunities and programs may be restricted to citizens or PRs, many support services are available to all business owners to help navigate the Canadian business environment and facilitate growth.
What resources are available in Canada for business owners who are not Canadian PRs or Citizens?
Business owners who are not Canadian Permanent Residents (PRs) or Citizens have access to various resources designed to support business development and growth. This includes access to business incubators and accelerators, networking events, mentorship programs, and specific government-funded programs aimed at fostering entrepreneurship.
While some financial resources and grants may have residency requirements, there are still many opportunities for non-residents, especially in terms of support services, information resources, and community-based initiatives. Additionally, local chambers of commerce and industry associations offer valuable resources and networking opportunities to help non-resident business owners navigate the Canadian business landscape.
