How to Set Up an Entity in Canada (Federal Corporation)

In Canada, incorporating as a federal corporation gives businesses national reach, credibility, and stronger name protection across all provinces and territories. Many foreign investors choose this route when they plan to operate in multiple Canadian jurisdictions rather than confining activities to a single province.

While the process is relatively streamlined compared to some jurisdictions, it still involves multiple filings, regulatory checks, and compliance requirements. Key challenges include satisfying naming rules, navigating director residency expectations, handling both federal and provincial tax registrations, and understanding the payroll and social contribution regime. The main benefits include limited liability, a clearer governance structure, and the ability to carry on business across Canada under a unified legal entity.

Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or financial advice. Always consult official sources before acting.

What does “opening an entity” mean in Canada?

“Opening an entity” in Canada means incorporating a legal corporation (often under the Canada Business Corporations Act) via Corporations Canada, thereby creating an independent legal entity distinct from its founders. That entity can issue shares, enter into contracts, own assets, and be taxed. Foreign businesses can also establish branches, but incorporation as a corporation is the usual route for full operations.

Entity overview in Canada

Below is a snapshot of how federal incorporation works in Canada, key parameters, and considerations.

Step-by-step guide: How to open an entity in Canada

Step 1: Choose the right structure

In Canada, the main options include:

• Federal corporation (CBCA): Best when you want national name protection and plan to operate in multiple provinces or territories
• Provincial incorporation: Suitable if your operations are based primarily in one province (e.g., British Columbia or Ontario)
• Branch / foreign registration: A registration of a foreign entity rather than a new Canadian corporation, typically used for limited operations or testing the market

A federal corporation offers strong name protection and a unified governance framework. However, provincial incorporation is often simpler and less expensive for businesses with local operations.

Step 2: Verify business name availability

You must verify that your proposed corporate name is unique and acceptable under naming rules. In most cases, you use the Newly Upgraded Automated Name Search (NUANS) system to generate a name-search report. Corporations Canada integrates a name search (NUANS) as part of the incorporation application, and the federal cost is around $13.80.

Your name must include a “corporation”, “incorporated”, “limited” (or abbreviation) indicator, and avoid misleading or restricted terms (bank, insurance, etc.).

If you prefer, you can choose a numbered name (e.g., “1234567 Canada Inc.”), eliminating the need for a NUANS name search.

Step 3: Prepare incorporation documents

You must assemble documents to file with Corporations Canada:

• Articles of Incorporation (Form 201): Specify share structure, classes, rights, restrictions, and corporate name
• Notice of Registered Office: Address in Canada (could be different from principal business address)
• Notice of Directors: Names and addresses of initial directors, including whether they’re resident Canadians
• NUANS name search report: This is done if you are using a word name
• Cover letter or Fee Remittance Form (Form 26): Include one of these if filing by mail or in person to confirm payment and contact details (not required for online filings)

You can find sample Articles and forms in the Guide to Federal Incorporation published by Corporations Canada.

Step 4: Register with Corporations Canada

You file your incorporation online via the Corporations Canada Online Filing Centre.

If your business operates in one or more provinces, you may still need to register extra-provincially in those provinces (e.g., Ontario, British Columbia).

Step 5: Register for tax and social security

Once approved, you’ll receive a Certificate of Incorporation, a Corporation Number, and a Canada Revenue Agency (CRA) Business Number (BN), which is automatically linked to your federal corporate income tax account.

You may also need to register for additional program accounts—such as Goods and Services Tax / Harmonized Sales Tax (GST/HST), Payroll Deductions (PD), or Import/Export (RM)—depending on your business activities.

Step 6: Open a corporate bank account

With your certificate of incorporation, corporate number, and identity documents for directors/authorized signatories, you can open a Canadian corporate bank account. Banks will typically request:

• Certified copies of incorporation documents.
• Director/shareholder identity and proof of address.
• Corporate resolution authorizing account opening.
• Banking forms and signatures.

Some banks may require a physical presence or a Canadian address for signatories. Expect 1–2 weeks for onboarding in many cases, though delays can occur in foreign-entity cases.

Step 7: Set up payroll and employment compliance

To legally hire employees, you must:

• Register as an employer with CRA (obtain a payroll program account).
• Withhold and remit Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and income tax deductions each pay period.
  • Employer CPP contributions match employee contributions
  • EI employer contribution is 1.4x the employee’s EI deduction
• File T4 information slips annually.
• Prepare compliant employment agreements, benefits, vacation/pay, statutory leaves, termination law obligations (by province).
• Maintain Record of Employment (ROE) to report employment interruptions or terminations.

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Post-registration obligations

After incorporation, you must maintain compliance:

• Tax and financial reporting: File an annual T2 Corporate Income Tax Return with CRA. Also file GST/HST returns (monthly, quarterly, or annually, based on volume) and any provincial tax returns. Financial statements must comply with either IFRS or Canadian GAAP (ASPE), depending on size and other factors.
• Corporate registers: Keep updated records of directors, shareholders, and beneficial owners. Notify Corporations Canada of changes (e.g., director changes) via their online system.
• Compliance tracking: Monitor corporate annual return filing deadlines, tax installment payments, GST remittances, payroll remittances, and provincial registrations.
• Licenses and renewals: Depending on business activity, renew permits, trade licenses, municipal business licenses, or professional registrations as required by provinces or municipalities.
• Recordkeeping: Retain accounting records, payroll and HR files, transaction documents, and corporate minutes for at least six years (or longer where local rules require).
• Employment law compliance: Ensure you stay current with workplace standards, health & safety, employee benefits, statutory leave, data protection, and local provincial labor regulations.

Taxes and financial considerations

Here’s a brief summary of key tax obligations:

• Corporate income tax:
  • Federal general rate: 15 % on taxable income
  • Small business deduction: Canadian-controlled private corporations (CCPCs) may pay 9 % on up to CAD 500,000 (federal portion) of active business income (subject to limits).
  • Provincial/territorial taxation: Each province adds its own corporate tax (e.g., Ontario adds 3.2% on small business income, 11.5 % on general income).
• VAT/GST/HST: 5% federal GST. In provinces that use the Harmonized Sales Tax (HST)—including Ontario (13 %)—the GST and provincial tax are combined into one rate. Businesses must register once revenues exceed $30,000 in four consecutive quarters.
• Payroll and social contributions: Employers and employees must contribute to the CPP—each paying 5.95% on pensionable earnings above the basic exemption, with an additional CPP2 contribution for higher income levels. They must also remit EI premiums, where employees pay about 1.64% (outside Quebec) and employers contribute 1.4 times that amount. Employers are also responsible for income tax withholding, using the CRA’s payroll deduction tables (T4032) to calculate federal and provincial deductions.
• Accounting standards: Depending on size, you may use either International Financial Reporting Standards (IFRS) or Canadian Generally Accepted Accounting Principles (Canadian GAAP)—often the Accounting Standards for Private Enterprises (ASPE) for smaller corporations. Many companies file under ASPE unless they are publicly accountable.

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Expand internationally with Deel

Whether you’re hiring through an EOR or establishing your own local entity, Deel’s all-in-one platform gives you everything you need to expand into Canada—quickly, compliantly, and with confidence. From market entry to ongoing operations, Deel helps you hire, onboard, and manage teams seamlessly from day one.

With Deel, you can:

• Test new regions using Deel’s local entities through our Employer of Record service—hire employees compliantly, delegate payroll and taxes, and access localized employment contracts.
• Open entities with Deel Entity Setup, where our team manages everything—from incorporation and tax registration to coordination with local experts.
• Centralize your compliance and records with Deel Entity Management, including automated filings, calendar reminders, and visibility across all entities.
• Integrate with Deel Payroll and Deel HR for compliant payments, benefits, and workforce oversight—all in one platform.

For companies transitioning from the EOR model to owned entities, Deel ensures a smooth handover and consistent compliance every step of the way. Enter new markets, onboard talent, and manage your global workforce—all through one unified platform.

FAQs

How long does it take to open an entity in Canada?
Typically, 2–4 weeks, though delays can arise from name search, provincial registration, or additional reviews.

What is the minimum capital required?
There is no mandatory minimum capital in Canada for federal incorporation.

Can foreign companies own 100% of an entity in Canada?
Yes, foreign ownership is permitted. There is no general restriction preventing 100 % foreign shareholding.

Do I need a local director or representative?
Yes. At least 25 % of directors must be resident Canadians (i.e., a Canadian citizen or permanent resident). Some provinces have additional rules.

How much does it cost to register an entity?
Federal incorporation via Corporations Canada generally costs in the range of CAD 200–250 for online filings. Additional costs may include NUANS name search, legal or notary fees, and extra-provincial registration. You can estimate cost using our Entity Setup Calculator.

Can I hire employees before the entity is fully registered?
Technically, no. You should wait until your payroll account and legal entity status are in place. However, Deel’s Employer of Record (EOR) lets you hire and pay talent immediately while your entity setup is in progress.

Can Deel help me open an entity in Canada?
Yes. Deel Entity Setup manages the end-to-end process — from registration to payroll compliance—in over 100 countries. Deel’s local experts handle documentation, filings, and legal requirements on your behalf.

Does Deel offer ongoing compliance and payroll support?
Yes. Deel offers both managed services and self-service tools to help you stay compliant.

If you’re using Deel Entity Management, Maintenance, EOR, or Payroll, our team handles payroll, benefits, filings, and compliance obligations on your behalf.

For teams managing their own entities, Deel Compliance Hub makes staying compliant simple by providing real-time regulatory updates, risk alerts, and workforce insights across 150+ countries. Proactively manage compliance with our Compliance Monitor, Workforce Insights, and an AI-powered Worker Classifier, staying ahead of changing employment laws.

Can I switch from Deel EOR to my own entity later?
Yes. Deel supports seamless transitions when you’re ready.