Our consultantscan help you select and set up any of the types of companies available in Canada. In this article, you can find out the basic details concerning the legal entities you can incorporate in Canada, as well as other information about the company formation process.
| Quick Facts | |
|---|---|
| Types of legal entities in Canada | There are 4 main types of companies in Canada: the sole proprietorship, the partnership, the corporation and the cooperative. |
The characteristics of the private corporation | The Canadian law does not prescribe the limited liability company, but it offers an equivalent – the private corporation. This has separate legal personality and offers limited liability to its founders. |
The characteristics of the public corporation | The equivalent of a joint stock company is the public corporation. It has the same traits as the private corporation, the difference being that its shares can be traded on the stock exchange. |
| The characteristics of the partnership | A Canadian partnership requires at least two partners. From a legal point of view, there is no distinction between the owner and the company, therefore the owners are liable for the company’s debts. |
| The characteristics of the sole trader | The sole trader is founded by a natural person who carries a business activity in his/her own name and who is fully liable for any debts. The structure is not a separate legal entity, therefore the founder and the business are considered to be the same entity. |
| The characteristics of the branch | A branch can be set up by a foreign company abroad that wants to expand on the Canadian market. From a legal perspective, the branch is fully owned by the parent company. |
| Legislation regulating company incorporation in Canada | The law that regulates the types of companies in Canada is the Canada Business Corporations Act. |
| Corporate taxes | Corporate taxes are applied at federal, provincial and territorial levels. The federal corporate income tax is 15%, while territorial/ provincial tax rates are charged as reduced or standard rates. They vary from 0% to 3.2% (reduced rates), while the standard rates vary from 11.5% to 15%. |
| Foreign ownership rules | Foreign investors can own companies in Canada. |
| Double tax treaties signed by Canada | 94 |
| Main company registration steps | Select one of the available types of companies in Canada, assign a trade name, draft and sign the statutory documents (they vary based on the business form), obtain a registered address, open a bank account, register for taxation. |
| Corporate tax number required (yes/no) | Yes |
| Resident director/shareholder requirements | There are no residency requirements for shareholders. In most provinces, residency requirements for directors have also been removed, but for corporations registered at a federal level, residency obligations for directors still apply. |
| Can investors modify the legal entity of a Canadian company? | Yes |
| Ways in which our team can assist investors | We can represent clients in: – selecting the most suitable company type, – preparing the registration file, – registering the business form with the competent authorities, – obtaining business authorizations, – finding a suitable office space, – signing contracts, etc. |
Table of Contents
What are the main types of structures in Canada in 2026?
The Canadian Company Law provides for various types of entities that can be registered by both local and foreign investors, natural persons and companies. These are:
- the cooperative which is asimple business form created by members sharing the same interests;
- the partnership which is a ratherpopular type of entity in Canada and which requires at least two members;
- the corporation which is the most popular type of company in Canada, often selected by foreign investors;
- the sole proprietorship is the simplest legal entity created by single investors seeking to run small businesses;
- the extra-provincial corporation is apopular business formemployed by foreign investors coming to Canada;
- the public company operates like joint stock company in other countries and can issue shares for public trading;
- the branch is abusiness entity employed by foreign companies seeking to expand their operations in Canada;
- the subsidiary is usually registered as a corporation and will serve the purposes of foreign companies expanding here.
What is a 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.
What is a corporation in Canada?
It is good to know that a corporation is aseparate legal entityfrom its founders. The stockholders are not responsible for the company’s obligations or debts, as the only interest regards the value of their investments. This entity resembles the most with the characteristics of the limited liability company (the Canadian law does not provide for LLC, the corporation being its equivalent).
What is a sole proprietorship in Canada?
Another type of business structure is the sole proprietorship, and, as the name says, is owned and controlled by a single person who carries out a business activity in his/ her own name.
What is the Canadian extra-provincial corporation?
A business form that can only be found in Canada is the extra-provincial corporation. This type of Canadian company is very popular among foreign investors who can operate in various provinces across the country. The particularity of the extra-provincial corporation resides in the fact that it needs to obtain a license in each province it operates and that it requires a registered agent.
We also invite you to read about the main types of Canadian companies in the scheme below:
What types of structures are available for foreign companies in Canada?
Foreign companies seeking to have complete control over their satellite companies can establish branches in Canada. Those who want to develop other activities than their own can set up subsidiaries.
What should I take into consideration when selecting a company type 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);
- select 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.
Do I need to have Canadian residency in order to start a business?
In general, for the majority of the business forms available in Canada, foreign investors do not need to have Canadian residency. However, if you plan to set up companies that do not have legal personality, as it is the case of the sole trader, where the company and the owner are the same entity,Canadian residency is mandatory, as the structure is set up based on the person’s Canadian social security data.
How long does it take to incorporate a legal entity in Canada?
Minor differences can appear based on the modality of incorporation (provincial/ federal) and the company type selected. In all cases, the process ofcompany formation in Canada will take maximum 2 weeks.
Do I need to arrive in Canada to complete the registration process in 2026?
No. The process of company formation in Canada can be completed by a trusted third party (such as our team of consultants) after the client has signed the power of attorney. The participation of the client is not mandatory, regardless of the company type the investor opted for registration.
You can find the main types of companies available for registration in Canada from the video below:
How much does it cost to set up a company in Canada in 2026?
Our prices start at $1,250. We recommend you to address our consultants for in-depth details on our prices and services we offer to clients (these can vary based on the type of entity you have selected).
Can you offer company formation services in other countries?
Yes, our consultantscollaborate with partners in other countries, therefore our team can ease the process of entering other markets by putting you in contact withreliable company formation specialists. Below, you can observe some of the locations where you can receive assistance in starting a company:
- we can put you in touch with our foreign partners in Europe, if you want to open a company in a European country, such as Luxembourg;
- if you are interested company incorporation in another region, such as Dubai, we can recommend our local partners from BridgeWest Dubai – you can find more details on companyincorporationdubai.com, a reliable online resource;
- we can also help you if you need to set a company in Costa Rica or other countries.
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.