Can I Start a Business While on an Open Work Permit? - We Are Here to Help
Starting a business in Ontario is the dream of many, but if you’re on an open work permit, you might be wondering whether this is really possible to do incorporation in Ontario. The great news: it is certainly possible to start and operate a business in Ontario as options available for temporary residents and work permit holders in Canada. This blog post goes ahead to discuss your available possibilities and help answer some very common questions in incorporating a company. We will also look at how our services are going to be used to assist you through it.
Our Services: Supporting Your Business Journey
We at Online Business Registry understand the unique challenges that individuals on a work permit or temporary residency status face when trying to start a business or do an incorporation in Ontario. The service is therefore tailored to meet your needs, ensuring you are properly guided and supported in the process of incorporating a company. Whether you need help with business registration, incorporating in ontario, are puzzled by what the law requires, or would like to set up a business structure within the laws of Canada, we are just right here to help.
Can You Start a Business on an Open Work Permit?
In short, yes, you can start a business in Ontario with an open work permit. However, the specifics can vary depending on the type of permit you hold and the conditions attached to it. Now, let’s get into more details.
What is an Open Work Permit?
A work permit in Canada allows you to work in any part of the country and with any employer; it, therefore, gives you flexibility in choosing where to be employed. An open work permit is not job-specific and does not link one with a particular employer. These features give it wide applicability and offer more freedom in opportunities. However, with respect to complexity, being involved in one’s own business / incorporation in Ontario adds another dimension. While an open work permit allows you to work for any employer, starting a business means that you are essentially self-employed, which may require additional considerations.
Eligibility to Start a Business on an Open Work Permit
Starting a business on an open work permit will only require you to ensure that the permit does not have any restrictions in terms of self-employment. Most open work permits do not carry such stipulations, but it is always good practice to confirm that with your specific permit conditions.
For example, if your open work permit was issued through spousal sponsorship or is a post-graduation work permit (PGWP), then you are normally permitted to open a business. However, if you have a work permit with an additional clause that prohibits self-employment, you could not own your business or do the incorporation in ontario under that work permit.
How to Choose the Right Business Structure
Below are the options for business structure plans to make your selection while starting a business in Canada on an open work permit:
- Sole Proprietorship: This is the simplest and most common structure of the business for an individual who is just starting on a work permit. As a sole proprietor, you will own and operate the business all by yourself. It is not a separate legal entity; therefore, in regard to tax and law, the business and you are seen as one entity. This structure is ideal for small businesses, freelancers, and those just starting out.
- Partnership: If you’re going into business with at least one partner, a partnership is the ideal business structure for you. In a partnership, all the partners share in the profits and losses of the business. In addition, they share all the liabilities of the business. However, do be careful because partnerships can get pretty complex in terms of obligations for tax as well as legal responsibilities.
- Corporation: If you do incorporation in Ontario, it becomes a separate legal entity from you, the owner. What this means is that a corporation can take ownership of property, get into debt, and contract in its own name. There are numerous benefits to incorporation in Ontario, such as limited liability, a potential lowering of the level of taxation, and more credibility to mention but a few. On the other hand, incorporation in Ontario involves more paperwork, a higher fee, and hard regulatory requirements.
Our services will include advising you on the most appropriate business structure that best fits your objectives, taking into consideration the nature of your business and the legal and tax ramifications of each option.
Can a Temporary Resident Register a Business in Canada?
Yes, temporary residents can register a business in Canada. The process is not that easy, and most times there are extra steps if the status of the individual is such or the province/territory in which the business plans to operate requires it.
Legal Considerations for Temporary Residents
As a temporary resident, you may start and operate a business in Canada, or set up the incorporation in Ontario. However, you must respect all applicable federal, provincial, or municipal laws. Some important considerations to make:
- Business Registration Requirements: The terms and conditions attached to the work permit will largely determine if you can register for any business or not. As indicated above, there are those types of permits that may not allow the holder to engage in self-employment. It’s very crucial to verify if the kind of work permit you hold will accommodate ownership of a business.
- Provincial Regulations: Registration requirements in every province and territory in Canada are specific. For instance, the requirements for registration of your business name could include obtaining a Business Number (BN) with Canada Revenue Agency (CRA) or obtaining other appropriate licenses or permits. For instance, in Ontario, you will be required to register with the Ontario Business Registry if your business name is different from your personal names.
- Business Structure: You may choose to be a sole proprietor, enter into a partnership, or do incorporation in Ontario. With each such status comes its own consequences for liability, taxation, and the way business is conducted. Our team will be available to assist you in determining the best structure for your business, given your specific circumstances.
- Partnerships and Corporations: Business people interested in partnerships or incorporating a company are likely to be required to hire a Canadian citizen or permanent resident. In some provinces, additional requirements are likely to be imposed on foreign nationals while forming a corporation or a partnership among other businesses while operating as temporary residents.
Register Your Business as a Temporary Resident
Business registration/incorporation in ontario as a temporary resident is typically done in the following manner:
- Choose a Business Name: The name has to be unique, and there are some naming regulations within the province. You may have to search and ensure that the name chosen is not already in use.
- Register Business Name: Depending on the province in which you live, you may have to register your business name with the government of that province. Mostly this is also necessary if you are going to do business with a name different from your own legal name.
- Register for a Business Number (BN): This is a unique number identifier for your company. It’s required for most government programs and services, including any dealings with your tax return and paying your employees.
- Register for the Harmonized Sales Tax (HST): You are required to register with the CRA for HST if you expect your business to have more than $30,000 of revenue in a year.
- Get Licenses and Permits: Depending on the nature of your business, you might need to take some individual licenses or permits related to your business from the city or province.
Do I Have to Register a Business to Be Self-Employed in Canada?
If you think you want to become self-employed in Canada, one of the first questions that will come to mind is whether or not it is necessary to register a business/ incorporating a company. The answer to that is based on how you are planning to run your business.
Operating as a Sole Proprietor
If you will be running the business under your own legal name, it is not necessary to register a business name. However, you may choose to register the name of your business for several reasons:
- Professional Identity: Registering your business name helps to create an air of professionalism and boost credibility in the eyes of clients and suppliers.
- Business Service Access: Most banks and financial institutions require a registered business name in the course of opening a business account or during the process of seeking credit and facilities for the business.
- Legal Protection: The registration of a business name does not afford any protection to liability; however, it prohibits other businesses from using the same business name in your province.
- Regulatory Compliance: In some provinces, sole proprietors that use their own names are supposed to register when providing specific kinds of services.
Tax and Regulatory Considerations
Under law, whether you do so or not, if you are self-employed, you must declare your income to the CRA. This will then require you to keep proper records of your earnings and expenses and make a filing of a self-employment income tax return.
Apart from collecting income tax, you may also be required to register for and collect HST if your business reaches a threshold of $30,000. In conducting your business, other requirements may be imposed that would have to be met, possibly including but not limited to a business license or registration with some professional body.
Examples of Businesses Started on an Open Work Permit
Many successful businesses and incorporation in Ontario were started by people with open work permits. The following are some examples:
- Freelance Graphic Designer: A graphic designer with an open work permit can start their own design business, offering services to clients across Canada and internationally. By registering as a sole proprietor, they can establish a professional identity and access business services.
- IT Consultant: An IT professional under an open work permit may give consulting services to businesses or help in developing software for businesses in respect of cybersecurity or digital transformation. They can incorporate their business, limiting liability and possibly gaining tax benefits.
- Restaurateur: A temporary resident skilled in the culinary art and with a love of food may operate a small restaurant or catering business. This would require incorporation of the business in most provinces or registration as a sole proprietor, depending on the province.
- Online Retailer: An entrepreneur on a work permit can establish an online store and sell goods to customers from across Canada and beyond. By registering the business and obtaining the required permits, the entrepreneur ensures compliance with Canadian legislation.
- Language Tutor: A language tutor under an open work permit can offer language tutorial services to students both in person and online. By registering as a sole proprietorship, the tutor can legally offer their services and access a wider market.
