Doing Business in Canada: Branch or Subsidiary

One of the threshold issues for a foreign entity wishing to establish a business in Canada is whether that business should be carried on directly, as a branch of the foreign entity, or should be created as a separate Canadian business organization, such as a subsidiary corporation (with either limited liability or, in some provinces, unlimited liability). Other forms of business include a proprietorship, a partnership (which may be a general partnership or limited partnership, or possibly a limited liability partnership) or some form of joint venture. Generally speaking, a foreign entity may carry on business directly in Canada through a branch, but will be subject to the same sort of federal and provincial registration requirements that would apply to a corporation.

Branch or Subsidiary in Canada

A number of issues should be considered in choosing whether to operate as a branch or as a subsidiary.If the Canadian operation is expected to incur significant losses in its early years of operation, the foreign entity may wish to carry on business in Canada directly through a branch, in order to deduct those losses for foreign tax purposes, if possible. A Canadian branch structure might also be relevant to enable a better matching of the Canadian corporate tax paid with the foreign tax credits available in the home jurisdiction.

Many foreign investors prefer to carry on business in Canada through a Canadian subsidiary. The use of a Canadian subsidiary is more convenient for administrative purposes. For example, having a Canadian subsidiary can make the process of contracting in Canada simpler.The use of a Canadian subsidiary generally limits the liability of the foreign parent corporation to its capital investment in the Canadian subsidiary. In conducting business through a branch office, however, the foreign parent corporation exposes itself directly to all of the liabilities of the Canadian operation.

Canada Branch or Subsidiary Registration:

Company Formations offers new Canada company registration or Canada extra provincial registration for foreign companies for only $2200 (All Inclusive.) Company Formations provides fast and easy Company Registration in Canada for foreign companies wishing to operate in Canada and provides all the documents your new Canada corporation will need to stay up-to-date and in compliance with your province of registration corporations law.

Incorporation Fees:

$2200 (All Inclusive)

Our Canada Incorporation Service includes:

Name Search Report
Preparation of Articles of Incorporation and Incorporation Documents
Incorporation Agreement
By-Laws, Company Minute Book, Share Certificates
Canada Registered Agent Service for 1 year
Government Fees
Our Service Fees
Original Certificates
Copy of Documents in PDF

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