The Impressive Advantages of Starting a Business in Canada
Canada is the country of choice for entrepreneurs looking to expand into foreign markets.
Its geographical location makes it easy for many countries to maintain trade relations with the United States. Other factors include the availability of skilled labor and the abundance of natural resources like gas, oil, and wood. Favorable trade agreements also make Canada an ideal destination for entrepreneurs.
If you are considering starting a business in Canada, your decision must be well thought out and well-informed. Here are great reasons to start a business in the Great White North.
U.S Entities in Canada
Most companies headquartered in another country have to pay hefty income taxes on their profits. In Canada, there is a provision that allows US-based companies room to relax.
This allows companies that do not have a permanent establishment (PE) in Canada to do business here without incurring the cost of income tax from their operating profits. A PE is a fixed place or place where the business can be conducted at full capacity.
In addition to not having a PE, you must also maintain compliance. This involves paying the costs under the tax agreement between Canada and the US. To use this agreement, you must ensure that you comply with its guidelines.
This means that you can avoid PE risk by working with an independent third party to sell your services and products to your customers. Independent contractors can also cooperate with other companies.
When forming a partnership, it is wise to make the decision carefully and to seek advice from a reliable advisor.
At the end of each fiscal year, you can take advantage of the business benefits of this tax agreement. File a Canadian income tax return detailing your business activities in both countries.
Canada’s Low Tax Rate
One of the main reasons companies want to expand into the global market is the high corporate tax rate in their home country. Some companies believe that this high tax rate is detrimental to their success.
This is especially true in economies like the US, where the national corporate tax rate was 21% in 2019. Local tax rates vary from state to state, typically ranging from 21% to 31%.
By contrast, Canada’s corporate tax rate is just 15%, one of the lowest in the world. There is also a small business deduction if you are starting. If you want to know how to grow a business, then a low tax rate is a great start.
The fact that Canada experienced continuous economic growth from 2005 to 2014 is proof of this. Canada ranks sixth on the Forbes Best Countries for Business list and has a relatively stable economy compared to the United States, ranking 17th on the list.
The reasons for this stability are the above-mentioned freedom of trade, low tax rates, and well-controlled bureaucracy.
For example, Canada was able to recover from the 2008 financial downturn, which shook the economies of several countries, thanks to the Bank of Canada’s timely intervention in its lending practices. A great economic environment is one of the best reasons to start a business.
Sustainable Growth for the Future
Currently, international think tanks and institutional observers continue to forecast sustainable growth for the Canadian economy, and this is a solid reason for companies to consider doing business in Canada.
Recent trends appear to be good for the financial services sector, renewable energy, and digital media markets.
Canada has a high availability of skilled workers, owing to its good universities and vocational training institutions.
According to the Organisation for Economic Co-operation and Development (OECD), the number of 25-34-year-olds with tertiary education in Canada is 62% (after the US).
If you plan to expand your business in Canada and hire talent, you can be sure you will get the quality you are looking for.
Plus, you might also be eligible for a business grant in Canada if you’re looking to expand internationally. You can seek the help professionals to help you with your CanExport grant writing needs.
Great Business Culture in All Regions
When you run your business in a foreign nation, it is essential to understand social norms to thrive. With the right caching and local consultants, this can become an obstacle in a country with a different culture. Fortunately, Canada is very similar to the US in terms of social behavior.
Most people greet each other in the same way and have the same demographics. Language is no obstacle, either, except in Quebec, where many speak English.
Does your company operate in Quebec, where French is widely spoken? If so, then it is a good idea to have materials available in English and French. This will avoid confusion with customers and suppliers.
If you decide to expand into international markets, Canada is your country of choice. You will benefit from a friendly business environment with many growth opportunities.
Starting a Business in Canada Is a Great Move
If you’re starting a business in Canada, you should remind yourself of what a great place it is to work. There is a great international culture that makes it a very open place and easy to get the talent you need.
With multiple languages such as French and English, there are innumerable opportunities to do well here. Canada’s favorable tax regime also encourages American entrepreneurs to start a business.
Interested in learning more about starting a business in Canada or getting more entrepreneurship tips? Check out the rest of our site.