Known as one of the world’s most economically free countries, Canada provides a unique opportunity for you to start or expand their business. With 14 free-trade agreements and counting, international trade moves are relatively unimpeded. As such, it promotes a healthy atmosphere for international business. If you are intending to expand to Canada, we offer a simple business solution, which gives you fast, low risk access to the market.
Starting a Business in Canada
If your business is looking to start operations in Canada, you will currently enjoy many advantages. Companies will be hard-pressed to find any disadvantage when considering the country as a location to set up shop.
Canada holds strong ties to several economic world powers such as the United States, China, the United Kingdom, Japan, France, Italy, and South Korea. Furthermore, the country is a member of APEC, G7, G20, OECO, and the WTO.
The country boasts a healthy population of highly skilled individuals. Among Canadians aged between 25 and 34, over 61% of them hold college degrees, making it easy for you to find highly skilled and qualified employees.
Legal System in Canada
Canada’s government functions as a constitutional monarchy, which means the monarch of the United Kingdom acts as the country’s head of state. However, a Governor-General is assigned to represent the Monarch in Canada.
The country also has a Prime Minister who acts as the head of government and makes up the executive branch. The legislative branch of the government is represented by the House of Commons, which is responsible for electing the Prime Minister. Finally, the judicial branch is headed by the Supreme Court of Canada.
Business Entities in Canada
There are three main types of business entities in Canada, and each has its shares of advantages and disadvantages to consider. The three main types of entities include:
- Sole proprietorship – The most common type of business entity in Canada, registering your business as a sole proprietorship is a generally affordable option. It gives the owner complete control of the company and receives all its profits. It is also easy to report taxes, as corporate tax returns are not required.
- Partnership – With the risk and management shared among partners, establishing this type of business is advantageous. While it is easy to set up, there should be a written agreement or a contract stating the rules about the division of income, responsibilities, and other important matters about the company.
- Corporation – A corporation is a legal entity where stakeholders hold a specific number of shares and has limited liability. Meanwhile, it involves annual financial audits, wherein reports must be submitted to the related government authorities.
Taxation in Canada
Canada has a tax system known as the “graduated tax system.” This means that the more you earn, the more tax you have to pay. Tax rates in Canada range from 15% to 33%. Non-residents will only have to pay income tax for the income they have generated for doing business in Canada. Meanwhile, corporate tax in Canada is set at 15%.
Additionally, there are two types of value-added tax (VAT): Federal Goods and Services Tax (GST) and Harmonized Sales Tax (HST). GST is a 5% VAT imposed on Canadian-made services and products.
Several essential goods are exempt from GST, such as basic essential groceries, prescription drugs, and feminine hygiene products. On the other hand, HST is a tax levied by five provinces within Canada, namely: New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island. GST is already incorporated into HST, so there is no double taxation. HST is 15% for four of the provinces, while in Ontario it is 13%.
Working Hours in Canada
The standard working hours in Canada are eight hours a day or 40 hours a week. Federally regulated workers are required to have at least one rest day per week. The maximum number of hours worked in a week is 48 hours. However, under exceptional circumstances such as having a permit or emergency work, this can be exceeded.
Work exceeding eight hours is considered overtime work. Overtime pay is calculated at a rate of 1.5 times the employee’s hourly wages.
Leave Days in Canada
Paid Vacation Leave
The basic allotted vacation leave for employees working in Canada is two weeks per year. After five years, this increases to three weeks per year. After 10 years, employees are entitled to a total of four weeks of vacation in a year.
Vacation pay is also calculated based on the tenure of the employee. It starts at 4% of your gross yearly income during the two weeks of vacation time, 6% for three weeks, and 8% for four weeks.
Sick leave rules in Canada differ across provinces and the type of company where one is employed. Paid sick leave is not common except for federally regulated industries such as banking and telecom. If you are working for the same employer for at least three months, the first three days of leave are paid, out of the five days of leaves the employee is entitled to.
Canada employs a system called the Employee Insurance sickness benefits, also known as EI. This benefit can provide employees with up to 15 weeks of financial assistance if they cannot work due to medical reasons. Employees will receive at least $500 per week while under EI.
Public Holidays in Canada
In Canada, there are five public or statutory holidays, which are applicable nationwide. On the other hand, each province has its own specific regulated holidays.
- New Year’s Day
- Good Friday
- Canada Day
- Labor Day
- Christmas Day
For federally regulated employees, there are additional holidays commemorated:
- Easter Monday
- Victoria Day
- Civic Holiday
- Orange Shirt Day
- Thanksgiving Day
- Remembrance Day
- Boxing Day
Canada is well-known for having one of the best healthcare services in the world. The country has a universal healthcare system called Canadian Medicare, which is funded through taxes. To gain access to the services, you must apply for a public health insurance. This is available for Canadian citizens and permanent residents. It covers most medical needs such as doctor visits, emergency room visits, surgery, mental health services, and diagnostic tests.
Your Partner in Canada
As one of the world’s leading global expansion firms INS Global has helped more than 600 businesses across the world. With more than 15 year’s experience our experts specialize in PEO, company incorporation, recruitment and more. Our goal is to make your expansion as simple and hassle free as possible. Get in touch with us today and let our consultants provide your business with the solutions you need.