Like many entrepreneurs, you may have heard that incorporating in the province of British Columbia (BC) is well worth it for many different reasons. Indeed, there’s a lot of noise on the Internet when it comes to figuring out whether or not to form your corporation as a BC Corporation, or organize it in another jurisdiction.
Below are some of most common reasons why Canadian and foreign entrepreneurs consider incorporating in BC more often than any other province in Canada.
No Canadian Residency Requirement
Most Canadian provinces and the Canadian federal government require a corporation to have at least one director who is a permanent resident or citizen of Canada. However, BC does not have the requirement of citizenship or permanent residency. All the directors, shareholder or officers can be non-Canadian citizen or non-resident. As a result, many international entrepreneurs choose to incorporate in BC, so they do not need to partner with a Canadian director. Please note, however, it is mandatory to have an address in BC to serve as the corporation’s head office address, even if that address is just a “virtual” office where mail can be received.
Attractive for Investment
Canada is the second largest country in the world and is one of the most attractive countries for investment. A Canadian corporation is considered a prestigious legal entity and offers many benefits to entrepreneurs such as flexible business law, trustworthy judicial system, and asset protection. Moreover, Canada has the lowest tax rate on new business investment in the G7 and has signed double taxation treaties with more than 90 countries.
Another potential advantage is lower incorporation and maintenance costs. Incorporating in BC is a no-brainer deal that can be done in the course of 1-2 days and a basic government fee for incorporating is only $380, which includes a $30 name reservation fee. However, there is a minimum cost of operating any business after the formation. This may include annual corporate filing fees to maintain an “active” status of your corporation, virtual office address, if you don’t have a physical address in BC, accounting, taxes, etc. In comparison to the world’s most popular jurisdictions, including Delaware, British Columbia offers affordable prices and transparent regulations which makes it a great alternative for entrepreneurs.
Global Market Access
BC Corporation enjoys all the advantages of being a Canadian-established business. Canada gives access to 1.5 billion consumers across 51 countries. Through 14 free trade agreements covering 60% of the world’s GDP, Canada opens doors to growth beyond borders. International entrepreneurs may benefit from these options in various ways. This includes (i) preferential access to world markets; (ii) lower risk for service providers and investors abroad; and (iii) facilitated business travel to partner countries.
There are plentiful tax and capital funding incentives offered to start-ups operating in Canada, particularly in provinces such as British Columbia (i.e. Venture Capital Program, Innovate BC, Employee Share Ownership Program, BCTech and others).
Moreover, some businesses may be eligible for certain investment tax credits under the Scientific Research and Experimental Development Program, both provincially and federally. Other government funding programs such as the Industrial Research Assistance Program, Sustainable Development Technology Canada, etc. Most programs, however, require that all eligible recipients be incorporated in Canada.
Deciding to incorporate is one of the first big steps to take as an entrepreneur. If you have questions along the way, our team would love to help out. Feel free to email us at email@example.com. We’ve helped many business owners across Canada and overseas in countless different industries. We’d love to help your business next.
This article should not be considered legal or tax advice. Please consult with a CPA or attorney to get advice specific to your business.