The flexibility of a British Columbia Limited CompanyBritish Columbia, Limited Company, wealth management, and Canada tax policy
Why British Columbia?
Canada, and more specifically the province of British Columbia is an excellent place to start a digital business:
- Neither sales of software consulting services nor database access pay sales tax to the province.
- Website subscriptions with articles that include text only, or text and still photos are not taxable sales to the province.
- You pay no sales tax to the national government if you make less than $30,000 a year in sales, and greater than that … only 5%.
- There is a 15% corporate income tax levied by Canada and 12% corporate income tax levied by British Columbia for a combined rate of 27%; less than half that if all of your controlling parties are natural-person Canadian residents.
- British Columbia is one of the few provinces which allow incorporators AND directors to be non-residents of Canada; Alberta and Nova Scotia will too, but there is no online self-serve portal with Alberta and Nova Scotia has high annual renewal fees.
- If you are not a resident of Canada, by starting a business, investing in it, and permanently employing a Canadian resident you can be eligible for express entrepreneur immigration.
Get a British Columbia address
For ~15CAD/month you can get an address in British Columbia with Anytime Mailbox or iPostal1, which you can remotely manage. This will allow you to satisfy the requirement to have an office and mailing address within British Columbia.
Investment Canada Act
If you are a non-resident of Canada, creating a resident Canada business, then you have to notify Innovation, Science and Economic Development Canada of this new investment by filling out ISED-ISDE3675E.pdf and returning it to them by email.
If you make a >1 billion CAD investment then you have to wait for their review.
Get a personal Tax Identification Number
To file paperwork with the Canada Revenue Agency on behalf on your new business entity, you will need to get an ITN from them by filling out and returning Application for a Canada Revenue Agency Individual Tax Number (ITN) for Non-Residents. Be sure to include a notarized copy of your passport with a wet signature from the notary; I did this at my local UPS store for $5.
The Limited Company application process
- If you want to use a specific name for your corporation instead of a series of numbers issued by the province, use the Name Request tool to reserve a name for $30. This will take a few days to process before you can proceed to the next step.
- Go through the BC Registry Services wizard to incorporate for $350.
- Add your name and the business name to the example incorporation agreement and the example incorporation articles … don’t forget page 18’s proxy designation. Convert these to PDF and have them notarized online with Notary Pro.
- You need to hold an Annual General Meeting (AGM) and record the notes of the meeting to stay compliant with the BC Business Corporations Act. For a small business with just yourself, this could look like you jotting down actions you have taken or will take in the company minute book. Or with a unanimous resolution of all the voting shareholders (you), can waive this requirement. 1
- Directors (you) must approve, sign, produce and publish financial statements prior to the AGM unless a resolution with unanimous consent from all the voting and non-voting shareholders passes. 1
- An auditor must be appointed, unless by unanimous resolution this requirement is waived. 1
- File an Annual Report with BC Registries within 2 months of your incorporation date anniversary.
- File your T2 and tax calculation paperwork with the Canada Revenue Agency.