prairiechicken

So if I want to work for myself in Canada, what do I need to do in terms of registering my business, taxes etc?

I currently have my own business in the UK but I plan to wind it up. I won't be doing the same thing in Canada - it's not worth the effort - but I am interested in continuing to work for myself, if I can do something that allows me some flexibility to work around my family etc.

And does anyone know whether there is an equivalent to setting up a Ltd company vs being self employed, and the related tax advantages/disadvantages?

Thanks

JonboyE

In general, the advantages and disadvantages of incorporating vs being a sole trader are the same in both countries. The advantages of incorporating are limited personal liability, the business has a life independent of you so it can be sold or passed on to future generations, and you can partially defer tax on surplus income up to $1/2m a year. The main downside is that it is more paperwork and is more expensive to manage.

If you are self-employed you will need to register for GST/HST (like VAT) if your revenue is $30,000 pa or more. You can trade using your own name but if you want to use another business name then you have to get this approved by the province. Cost $30 in BC. Depending on the type of business you may need a license from your City Hall.

rivingtonpike

I'm not sure how easy it is these days to get into Canada on a self-employed basis unless you meet the criteria for permanent residency status as a Federal Skilled Worker 1 to get your initial visa. I seem to remember the criteria to get in on a self employed basis are pretty strict. The FSW1 route is pretty tough too. What do you do in the UK? Would you be able to apply via this route? We came originally as FSW1 permanent residents but then set up our own company straight away. We've never had an employer in Canada (other than as employees of our own limited company).

It seems it will depend on whether you can apply for FSW1 status or I believe there is a route to come to Canada as an Entrepreneur - but that requires loads a money!

R I C H

It's not a usual route, but it's possible to become self-employed and enter on a regular TWP. There are no specific $ requirements for this route, each case is judged on it's own merit.

rivingtonpike

I didn't know that. Depending on what the OP does for a living this might be an option. If he wants to do something completely different to what he does/did in the UK then might that be a problem?

R I C H

Wasn't a problem for me. I was a marketing director in the UK, here I owned an equestrian business.

prairiechicken

Oh, sorry guys, I should have said. I am actually already a Canadian Citizen by birth. Have been in the UK since childhood but I won't need to apply through immigration channels to live/work there. I can effectively just go.

So no immigration issues to consider from my point of view.

My husband will be sponsored by me so that's a whole different kettle of fish, but shouldn't be an issue.

rivingtonpike

That makes life rather easier! Only limiting factor then is funds and your imaginations! Good luck!

prairiechicken

Thank you all! Sounds like the deal is pretty much like the UK then. Same things to think about, only with a much lower turnover before you have to do the GST/HST thing.

Rather a specific question, but does anyone know how GST/HST works if your income comes from outside Canada? So if you invoice a business in the USA for work you have done, do you have to charge GST/HST?

foreigngirl

As far as I know, it doesn't apply to USA and Europe. But probably best for someone more experienced to confirm.

Aviator

If your income as a business is over $30k, you have to register. Matters not on the source. If you bill a supplier outside of Canada for goods that were exported (or service) you don't charge tax.

JonboyE

To be overly pedantic (what, me?) if your customer is outside Canada you do charge GST/HST but the rate is 0%. The reasoning behind this apparent silliness is that if you don't charge GST/HST on your outputs then you cannot reclaim the GST/HST you pay on your inputs.

For example, a medical clinic cannot recalim an input tax credit because medical services are exempt from the tax. An exporter can reclaim an input tax credit if they produce taxable goods and/or services - even if the tax rate is 0%.

prairiechicken

Much like VAT in the UK then, really.

Although on the face of it, VAT exempt looks like 0% VAT, they are, in fact, quite different and have to be recorded differently on a VAT return.

That's all great, and on the face of it the principles look very much the same as the UK, which makes it relatively easy for me!

Thanks everyone!

james.mc

Cheers for that. Another question answered for me too

Aviator

Some provinces have GST only, some GST & PST, some HST and at different rates, so not as simple VAT. If you do business in miltiple provinces, you charge tax at the rate of the customers province of residence charges. In BC right now HST is 12%, in ON it is 13%, so a BC business selling to a ON customer charges them 13%, whereas they would charge an AB customer 5% and a BC customer 12%. When there is PST involved it gets more complicated.