Canada – Self-Employment

How does self-employment work for expats in Canada?

Foreign nationals are permitted to pursue self-employment in Canada, but the ability to do so is directly dependent on immigration status. Canadian citizens and permanent residents face no restrictions in this regard. Those on temporary status — including holders of work permits — may only carry out activities that fall within the terms authorised by their permit. Performing work outside those boundaries constitutes a violation of immigration law and places your standing in Canada at serious risk.

Under Canadian law, self-employment refers to earning business or professional income as an unincorporated individual — rather than through a corporation, you are simply working on your own account. Freelancers, independent contractors, consultants, tradespeople, content creators, and gig economy workers all fall into this category. The concept is broadly analogous to being a sole trader in the UK, an auto-entrepreneur in France, or operating as a Freiberufler in Germany — in all cases, the individual and their business are treated as a single entity for most legal and tax purposes.

The federal government’s dedicated immigration route, the Self-Employed Persons Program, was created to offer permanent residence to individuals with relevant backgrounds in cultural activities or athletics. However, as of April 30, 2024, the government suspended the intake of new applications in order to address a growing backlog, where wait times had stretched beyond four years, and to explore possible reforms to the programme. Those considering this pathway should consult the official IRCC website for the latest developments before making any concrete plans.

Expats who already have permanent residence, a valid open work permit, or a work permit that expressly authorises self-employment may begin operating as self-employed in Canada immediately. Those whose primary intention is to move to Canada to start a business should investigate the Start-Up Visa Program or the entrepreneur streams administered by individual provinces as viable alternatives.

What are the different self-employment and business structures available in Canada?

Canada recognises four primary business structures: sole proprietorship, partnership (which may take the form of a general, limited, or limited liability partnership), corporation (incorporated either federally or at the provincial/territorial level), and co-operative. The structure you select has significant implications for how you are taxed, the extent of your personal liability, and the administrative burden you will carry on an ongoing basis.

Sole proprietorship is the simplest and most widely used starting point for self-employed individuals. There is no legal distinction between you and your business. It is inexpensive and quick to establish, profits pass directly to your personal tax return, and you retain complete control over operations. The trade-off is unlimited personal liability: any debts the business incurs or legal claims brought against it may reach your personal assets. This structure is closely comparable to a sole trader registration in countries such as the UK, Ireland, or Australia.

Partnerships come in general and limited varieties. A partnership exists when two or more individuals or corporations engage in a business venture together with the goal of generating profit. Partnership law falls under provincial jurisdiction, and each province has enacted its own distinct legislation. All provinces recognise both general and limited partnerships. For tax purposes, a partnership is not treated as a separate legal entity; profits and losses flow through to each partner in proportion to their share, and partners pay tax on those amounts through their individual returns.

Corporations provide the greatest degree of legal protection. A corporation is a distinct legal entity, separate from its shareholders, that can own property, enter into contracts, borrow, lend, and pursue or defend legal claims in its own right. Shareholders are generally shielded from the corporation’s liabilities. Corporations also benefit from limited liability, straightforward transfer of ownership, and indefinite existence — though because a corporation is a separate legal person, it must pay tax on its own income. This structure is comparable to a Private Limited Company (Ltd) in the UK, a GmbH in Germany, or a Pty Ltd in Australia.

For most expats, sole proprietorship offers the quickest path to legal operation, while incorporation becomes increasingly attractive as the business scales, seeks outside investment, or the owner wants a clear separation between personal and business risk. A large number of expat founders eventually incorporate, particularly once they take on employees or begin working with institutional clients.

How do you register as self-employed in Canada?

The majority of businesses are required to register in the provinces and territories where they intend to operate. In some circumstances, a sole proprietorship that uses only the owner’s personal name does not need to be registered. Check the website of your provincial or territorial business registrar for the specific requirements that apply to you.

The steps below outline the typical process for registering as a self-employed sole proprietor in Canada. Requirements differ by province, and you should confirm current fees and procedures with your relevant provincial authority and the Canada Business Network.

1. Choose your province or territory of operation. Decide where you will be based, as registration requirements, fees, and processing times differ across Canada’s 10 provinces and 3 territories.
2. Select and check your business name. If you use your legal name as your business name, you do not need to register it. If you want to trade under any other name, you will need to register that trade name with your province or territory — either through an online portal or by visiting a registry in person.
3. Register with your provincial registry. Submit your registration through your province’s online portal or by mail. Online registrations are typically processed the same day to within a couple of days; postal submissions can take up to two weeks. Most provincial portals issue instant confirmation — for example, registering a sole proprietorship online in Ontario generates a Master Business Licence immediately. As of 2024, the online registration fee for a sole proprietorship in Ontario is CAD $60.
4. Obtain a Business Number (BN) from the Canada Revenue Agency (CRA). Your business may require a federal business number and associated tax accounts. In certain provinces, your federal business number is automatically assigned as part of the provincial registration process. You may also register directly with the CRA through My Business Account.
5. Register for GST/HST if your revenue exceeds the threshold. Once your revenue from taxable supplies surpasses CAD $30,000 over any three consecutive months or four consecutive calendar quarters, you lose “small supplier” status and must register for GST/HST, then begin charging, collecting, and remitting it to the CRA. Voluntary registration ahead of reaching this threshold is possible and may allow you to claim input tax credits on your purchases.
6. Apply for any sector-specific licences or permits. Depending on the nature of your business, you may require additional permits or licences from municipal, provincial, or federal authorities. The BizPaL tool on the Government of Canada website helps you identify which requirements apply to your specific sector.
7. Set up your CRA accounts for payroll, if applicable. If you intend to hire employees or pay yourself a salary through a corporation, you will need to open a payroll account (BN + RP0001) and submit source deductions to the CRA on a monthly or quarterly basis.

How do you set up a company in Canada as an expat?

Incorporation in Canada may be pursued at the federal level — which entitles you to operate under a single corporate name throughout the country — or at the provincial level, which is generally more affordable and sufficient for businesses focused on a single province. The principal authority for federal incorporation is Corporations Canada.

An important point for expats to be aware of: federal corporations are still subject to a rule requiring that at least 25% of directors be Canadian residents. This requirement varies from province to province, so it is essential to verify the rules in the jurisdiction you choose before proceeding. Some provinces — including British Columbia and Alberta — have eliminated the Canadian residency requirement for directors altogether.

The step-by-step process for incorporation is as follows:

1. Choose federal or provincial incorporation. Federal incorporation allows you to operate under the same corporate name across all provinces and may be preferable if national expansion is planned. Provincial incorporation is typically faster and less costly for businesses that will operate in a single province.
2. Reserve and approve your company name. You must commission a NUANS (Nationally Unified Automated Name Search) report to confirm that your proposed corporate name is not already taken. In British Columbia, for example, name approval and reservation costs CAD $30 (as of 2024). Fees vary between provinces.
3. Prepare and file your Articles of Incorporation. These documents establish the fundamental structure of your corporation. Some businesses opt for a “basic incorporation” using a standard template, while others choose to customise their articles to define elements such as share structure and business restrictions in greater detail.
4. Provide a registered office address. A physical address in Canada is required for incorporation; this may be your home address. Those who prefer not to make their home address part of the public record often use a virtual office address instead.
5. File online and pay the incorporation fee. Federal online registration costs CAD $200 and is typically processed within one business day; an additional CAD $100 buys a 4-hour express service (as of 2024). Always verify current fees on the Corporations Canada website before proceeding.
6. Maintain your corporate records (minute book). Once incorporated, you must establish your registered office, appoint your first directors, and maintain a minute book containing official corporate records. This is a legal obligation under the Canada Business Corporations Act.
7. Report beneficial ownership information. Federal corporations are also required to file information about “individuals with significant control” (beneficial ownership) following incorporation.
8. Register in additional provinces if needed. If you intend to carry on business in one or more additional provinces, you will need to register as an extra-provincial or extra-territorial corporation in each of those jurisdictions.
9. Obtain your Business Number and open CRA programme accounts. Register with the CRA for corporate income tax, GST/HST, and payroll accounts as your business activities require.

There is no minimum share capital requirement under the federal Canada Business Corporations Act, which makes incorporation relatively accessible for new founders. That said, given the intricacies of corporate structuring, most expats are strongly encouraged to work with a Canadian lawyer or accountant at this stage.

Can you work as a digital nomad in Canada?

Canada has not yet introduced a dedicated digital nomad visa. In contrast to countries such as Portugal, Spain, or Costa Rica — all of which have launched specific visas aimed at location-independent workers — Canada has no formal immigration category tailored to people earning remote income from foreign clients while residing in the country.

This creates a legal grey area for individuals who enter Canada as visitors (whether on a visitor visa or under a visa-exempt arrangement) and continue to carry out remote work for a foreign employer or client base. Visitor status does not ordinarily authorise work in Canada, even where that work is conducted entirely online and all income originates outside the country. Immigration, Refugees and Citizenship Canada (IRCC) has not released formal guidance explicitly permitting remote work under visitor status, meaning there remains a degree of legal exposure for those in this situation. Anyone affected should obtain professional immigration advice before assuming that remote work is permissible under their current status.

The most practical immigration options for location-independent workers who wish to live and work legally in Canada over an extended period include:

• Open Work Permit: An open work permit — such as a Post-Graduation Work Permit, a spousal open work permit, or certain arrangements under International Experience Canada (IEC) — allows the holder to work for any employer, including themselves, making it well suited to freelancing and remote work arrangements.
• International Experience Canada (IEC) / Working Holiday: Eligible young people from countries with bilateral agreements with Canada can obtain a working holiday permit, which functions as an open work permit. This is a common route for digital nomads who fall within the applicable age range.
• Start-Up Visa Program: Entrepreneurs developing a scalable or innovative business may be eligible for permanent residence through the Start-Up Visa Program (described further in the incentives section below).
• Provincial Entrepreneur Streams: A number of provinces operate dedicated entrepreneur immigration pathways with varying investment and business plan requirements, each capable of leading to permanent residence for qualifying applicants.

Anyone researching digital nomad options in Canada should monitor the IRCC website at canada.ca/en/immigration-refugees-citizenship for the most up-to-date policy position, as immigration rules can shift rapidly.

What taxes and social contributions apply to self-employed expats and business owners in Canada?

Canada operates a graduated federal income tax system, with additional provincial or territorial income tax applied on top. The rate you pay depends on your annual earnings. In 2025, the federal Basic Personal Amount (BPA) is CAD $16,129 for individuals with net income up to CAD $177,882 — a non-refundable tax credit that effectively allows taxpayers to earn income up to that amount without paying federal income tax on that portion.

There is no distinct tax return for self-employed individuals. Instead, self-employment income is declared on your T1 General personal income tax return, with Form T2125 (Statement of Business or Professional Activities) used to itemise your earnings and eligible expenses. This differs notably from jurisdictions where self-employed people submit entirely separate business tax declarations. As a general guide, financial advisers typically recommend setting aside between 25% and 30% of self-employment income to cover tax obligations.

Canada Pension Plan (CPP) contributions are mandatory for the self-employed and represent one of the most consequential differences from salaried employment in many countries. In a standard employment relationship, both the employer and employee each contribute 5.95%; when you are self-employed, you must cover both portions yourself. For 2025, this means self-employed individuals are required to contribute 11.9% of their net income, up to a maximum of CAD $8,068.20. As part of the CPP Enhancement introduced in 2024, self-employed Canadians may also be liable for an additional contribution of up to CAD $792 under CPP2.

Employment Insurance (EI) works differently for the self-employed. Unlike employees, self-employed persons are not automatically required to pay EI premiums; however, they may choose to do so in order to access special benefits such as maternity and parental leave. Participation in EI for the self-employed is therefore voluntary (covering special benefits only) and requires entering into a formal agreement with the Canada Employment Insurance Commission before premiums can be paid through your annual return.

GST/HST (Goods and Services Tax / Harmonised Sales Tax) is Canada’s equivalent of VAT. The GST is a federal sales tax charged at 5% on most goods and services supplied in Canada. It operates as a value-added tax at each stage of supply, and registered businesses may recover the GST paid on their own purchases as an input tax credit, to the extent those purchases relate to commercial activities. Five provinces have fully merged their provincial sales tax with the federal GST to create a single Harmonised Sales Tax (HST), which combines the 5% federal component with a provincial element.

Once you earn or expect to earn more than CAD $30,000 per year, you must register for a Business Number and a GST/HST account, after which you charge GST/HST on your invoices, collect it from clients, and remit it to the CRA either quarterly or annually. Note that Quebec manages its own Québec Sales Tax (QST) at a rate of 9.975%, administered by Revenu Québec alongside the federal GST.

Corporate tax applies to incorporated businesses. The federal small business tax rate is 9% on the first CAD $500,000 of active business income for Canadian-Controlled Private Corporations (CCPCs), while the standard federal corporate rate is 15%. Provincial corporate taxes are imposed in addition to these federal rates. Always confirm the current figures with the Canada Revenue Agency.

Canada maintains an extensive network of tax treaties with countries around the world, which can affect how your income is taxed and help prevent double taxation if you are also subject to tax obligations in another country. The CRA’s full list of tax treaties is available at canada.ca.

Are there any incentives, grants, or programmes to encourage expat entrepreneurs in Canada?

Canada has developed a range of programmes specifically designed to attract overseas entrepreneurs and business founders, placing it among the more deliberate countries globally when it comes to supporting immigrant entrepreneurship — comparable in scope to the UK’s Innovator Founder visa or Germany’s self-employment permit schemes for skilled professionals.

Start-Up Visa Program is Canada’s principal immigration route for entrepreneurial talent. To be eligible, the applicant’s proposed business must secure backing from a designated organisation in Canada — specifically a venture capital fund, angel investor group, or business incubator that has been formally approved by the Canadian government to invest in or support emerging start-ups. As of April 30, 2024, IRCC introduced a cap of 10 start-ups per Designated Organisation per year. IRCC has also announced it will give priority to Start-Up Visa applications supported by the venture capital and angel investor streams, as well as those backed by a business incubator that is a member of Canada’s Tech Network. Successful applicants receive permanent residence. Full programme details are available at canada.ca.

Provincial Nominee Programs (PNPs) — Entrepreneur Streams are run by the majority of Canada’s provinces and territories. These streams enable provinces to nominate foreign nationals who make a binding commitment to establish or acquire a business within the province. Requirements differ considerably across jurisdictions: some stipulate a minimum personal net worth (for example, British Columbia’s BC PNP Entrepreneur Immigration stream), a minimum investment amount, and a commitment to create employment for Canadian residents. Consult each province’s official immigration portal for current thresholds, which are subject to regular revision.

Scientific Research and Experimental Development (SR&ED) Tax Incentive is a federal programme offering tax credits to businesses conducting eligible research and development activities in Canada. For qualifying Canadian-Controlled Private Corporations, the basic investment tax credit rate is 35% on the first CAD $3 million of eligible expenditures, with a rate of 15% applying beyond that threshold. This is a substantial incentive for technology start-ups and innovative enterprises. Details can be found on the CRA SR&ED programme page.

Canada Small Business Financing Program (CSBFP) assists small businesses in obtaining loans through financial institutions for the purpose of purchasing or upgrading assets. While not restricted to immigrant-owned businesses, it is available to any eligible business operating in Canada, and many expat-founded enterprises use it to access start-up capital that might otherwise be difficult to secure through conventional lending channels.

Federal and provincial grants are available through organisations including the Business Development Bank of Canada (BDC) and the National Research Council’s Industrial Research Assistance Program (IRAP), particularly for technology-driven or export-oriented businesses. The canada.ca funding search tool allows you to identify programmes relevant to your specific sector.

What are the practical challenges of being self-employed or running a business in Canada?

Provincial variation is among the most frequently encountered practical hurdles. Unlike countries that operate a single, nationally unified business registration system — such as New Zealand’s Companies Office or France’s single-window CFE — Canada’s business regulations, registration procedures, and tax rules differ considerably from province to province. What is standard practice in Ontario may not apply in British Columbia or Quebec. Expats should research their target province thoroughly before moving ahead with registration.

Language requirements in Quebec add a further layer of complexity. Quebec functions primarily in French, meaning business registration, correspondence with Revenu Québec, and legal documentation will typically be conducted in French. Revenu Québec administers the GST/HST on behalf of the CRA for most registrants resident in the province and handles the QST as a separate regime. In practical terms, self-employed individuals based in Quebec must deal with two distinct tax authorities and comply with French-language business obligations under the Charter of the French Language.

Banking for newly arrived expats can prove more complicated than anticipated. Opening a business bank account generally requires proof of incorporation or registration, government-issued photo identification, and a Social Insurance Number (SIN) or Individual Tax Number (ITN). New arrivals who lack a Canadian credit history may face additional scrutiny from lenders. Canada’s major banks — including RBC, TD, Scotiabank, BMO, and CIBC — all offer dedicated small business accounts, and it is worth comparing their offerings, as fees and services vary meaningfully between institutions.

Accountants and tax advisers are strongly recommended and, in some situations, practically indispensable for maintaining compliance. If you decide to incorporate, seeking the assistance of an accountant or lawyer to guide you through the process is wise. A Chartered Professional Accountant (CPA) holds the recognised credential for tax and financial advisory work in Canada, equivalent to a Chartered Accountant (CA) in the UK or a Certified Public Accountant (CPA) in the United States. The CPA Canada directory at cpacanada.ca is a useful starting point for finding a qualified professional.

Invoicing and contracts should make clear whether quoted prices include or exclude GST/HST, display your GST/HST registration number once you have one, and meet provincial requirements. When billing foreign clients, services exported outside Canada are generally zero-rated for GST/HST purposes — but this is a technical area where professional guidance can save considerable trouble.

Social Insurance Number (SIN) is a prerequisite for working in Canada, filing taxes, and opening financial accounts. Foreign nationals holding a valid work permit may obtain a SIN from Service Canada. Without a SIN, you are not legally entitled to work on a self-employed basis or register for CRA accounts. Applications can be made in person at a Service Canada location or, in certain cases, online through canada.ca.

Quarterly instalment payments come as a surprise to many people newly self-employed. You are responsible for monitoring your income and outgoings, charging and remitting GST/HST when required, and making tax instalment payments when the threshold is met. If your net tax owing exceeds CAD $3,000 in two successive years, the CRA will require you to make quarterly instalment payments rather than settling the full amount at year-end. Failing to make instalments on time results in interest charges from the CRA.

Frequently asked questions

Can I be employed and self-employed at the same time in Canada?

Yes. The CRA incorporates your business income into your total taxable income for the year. If you also receive employment income reported on a T4, your self-employment earnings are combined with your employment income when determining your overall tax liability. Both income sources are reported on the same T1 General return. While your employer deducts income tax and CPP contributions from your employment pay, you must separately calculate any CPP owing on your self-employment income when you file.

Can I invoice foreign clients from Canada and what are the GST/HST implications?

Yes, billing clients located in other countries is entirely permissible. Services exported outside Canada are generally treated as zero-rated for GST/HST purposes, which means you do not add GST/HST to those invoices. However, you are still required to register for GST/HST once your combined revenue from taxable supplies — whether from Canadian or foreign clients — exceeds CAD $30,000 per year. If you work with clients across multiple countries, you may also have reporting obligations to more than one tax authority, and may need to document foreign income. Engaging a CPA with experience in international tax matters is strongly advisable in these circumstances.

What happens to my business if my visa or permit expires or changes?

Your right to work in Canada — including the right to be self-employed — flows from your immigration status. If your permit lapses or your status shifts to one that does not authorise self-employment (such as a visitor record), you must stop all self-employed activities immediately. A registered corporation may continue to exist as a legal entity, but you as an individual cannot operate it without valid work authorisation. It is essential to keep your immigration status and work permits current, and to consult an immigration lawyer promptly if your circumstances change.

Do I need a separate business bank account as a sole proprietor in Canada?

There is no statutory requirement for a sole proprietor to hold a dedicated business bank account, but doing so is very strongly advisable from both a practical and tax perspective. Maintaining distinct accounts and credit cards for business and personal use makes it far easier to identify deductible expenses and reduces the risk of raising concerns with the CRA. Corporations, by contrast, are legally required to hold accounts in the corporation’s own name.

How do I get a Social Insurance Number (SIN) as an expat starting a business?

Applications for a SIN are made either at a Service Canada office or, in some cases, online. You will need to present your valid work permit or other documentation confirming your authorisation to work in Canada. A SIN is necessary for filing taxes, registering CRA accounts, and taking on employees. If you do not yet qualify for a SIN — for example, because your work authorisation is still pending — the CRA may issue an Individual Tax Number (ITN) solely for tax filing purposes. Visit canada.ca for up-to-date eligibility information.

Is it possible to incorporate a Canadian company without living in Canada?

Non-resident founders wishing to incorporate a federal Canadian corporation should be aware that at least 25% of the board of directors must be Canadian residents — a rule that applies regardless of the founder’s citizenship or place of residence. This residency requirement varies by province, however, and some jurisdictions — including British Columbia and Alberta — have removed it entirely, making provincial incorporation a more accessible option for non-residents. That said, operating a Canadian business from abroad without physical presence and legal work authorisation raises its own complex tax and legal considerations; obtaining specialist legal and tax advice before proceeding is essential.

What is the tax filing deadline for self-employed individuals in Canada?

Self-employed individuals have until June 15 to submit their annual income tax return for the previous calendar year. However, any balance owing must be paid by April 30 — the same deadline that applies to regular employees. Filing by June 15 does not prevent interest from accruing on unpaid amounts: the CRA begins charging interest on any outstanding balance from May 1 onwards. Where both spouses are self-employed, the extended June 15 filing deadline applies to both of their returns.

Does Canada have tax treaties that protect expats from double taxation?

Yes. Canada has concluded comprehensive tax treaties with a wide range of countries, including the United States, the United Kingdom, Germany, France, Australia, Japan, and many others. These agreements typically define which country has the right to tax particular types of income, cap withholding tax rates, and include tie-breaker provisions for determining where a person is considered tax resident. If you are self-employed in Canada, you are generally required to file a CRA tax return and pay Canadian income tax on your worldwide income. Non-residents, by contrast, are taxed only on income derived from Canadian sources. The complete list of Canada’s tax treaties is published on the Department of Finance website.