Reasons Setting up a Canadian Company is Better than the USA: Brief Overview

In today’s competitive global marketplace, choosing the right jurisdiction for business incorporation is crucial. For many entrepreneurs, especially international investors and startups, North America is a prime destination. But when faced with the decision between incorporating in Canada or the United States, many are surprised to learn that setting up a Canadian company offers more strategic benefits.

In this article, we’ll explore the top reasons why setting up a company in Canada is better than in the USA, covering taxation, immigration incentives, business climate, costs, regulatory frameworks, and more. Whether you’re a startup founder, or an international business looking to expand, you’ll find Canada an appealing choice.

What are the reasons setting up a Canadian company is better than the USA?

Here are the most important reasons why setting up a Canadian company is better than the USA

1. Lower Corporate Tax Rates for Small Businesses

One of the key advantages of incorporating a business in Canada is its favorable tax regime, especially for small and medium-sized enterprises (SMEs).

• Federal small business tax rate: 9% on the first CAD 500,000 of active business income.
• Combined federal and provincial rates: Ranges between 12% to 15% depending on the province.

In comparison, the U.S. corporate tax rate stands at 21% federally, not including state taxes (which can range from 1% to 12%).

Why it matters: Lower corporate tax means more retained earnings and reinvestment capability—critical for startups and SMEs aiming for growth.

2. Easier for Foreigners to Incorporate and Own 100%

Unlike the United States, where non-residents face several restrictions and tax complexities when incorporating a business, Canada welcomes foreign entrepreneurs.

• Foreign nationals can own 100% of a Canadian corporation in most provinces.
• You don’t need to be a Canadian resident, except in a few provinces (e.g., BC, Ontario, and Quebec allow 100% foreign ownership with a local address).
• No need for Social Security Numbers (SSNs) or ITINs to register.

Why it matters: Canada makes it far more straightforward for foreign business owners to enter the market without complex residency or ownership hurdles.

3. Simpler and More Transparent Tax System

The Canadian taxation system, while not perfect, is generally more predictable and transparent compared to the U.S.

• No double taxation on dividends for Canadian-controlled private corporations (CCPCs).
• No Alternative Minimum Tax (AMT) complexities like in the U.S.
• Clear GST/HST system versus the fragmented sales tax regime across U.S. states.

Why it matters: Fewer tax surprises. Entrepreneurs can focus on business strategy rather than deciphering convoluted tax laws.

4. Business-Friendly Immigration Pathways

Canada offers pro-immigration business programs that encourage foreign investment and entrepreneurship, unlike the U.S., where immigration policies are stricter.

Key Canadian programs include:

• Start-Up Visa Program (SUV) – for innovative entrepreneurs with VC, angel, or incubator backing.
• Provincial Nominee Programs (PNPs) – business streams for entrepreneurs investing in provinces.
• Owner-Operator LMIA pathway – for foreign entrepreneurs acquiring or starting a business.

In contrast, U.S. investor visas (like the EB-5 or E-2) are more restrictive, expensive, and uncertain in terms of approval timelines and quotas.

Why it matters: Canada provides more accessible pathways for international founders to gain permanent residency while building their businesses.

5. Lower Cost of Doing Business

When compared to major U.S. cities like New York, San Francisco, or Los Angeles, the cost of operating in Canadian cities is significantly lower.

• Office rents, salaries, utilities, and even health insurance are cheaper.
• Canada’s public healthcare system means employers don’t bear excessive health insurance costs.

Example: The average salary for a software engineer in Toronto is about 25% less than in San Francisco—without compromising on quality talent.

Why it matters: Lower overhead means better ROI and more funds for growth.

6. Highly Educated and Multilingual Workforce

With more than 56% of adults having post-secondary degrees, Canada has one of the most educated populations worldwide.

• Access to talent from top institutions like the University of Toronto, McGill, and UBC.
• Bilingual (English and French) workforce—especially beneficial if you’re targeting global or European markets.

Why it matters: A skilled, diverse team can help your business scale faster and enter multiple markets with ease.

7. Strong Intellectual Property (IP) Protection

• Canada offers robust protection for intellectual property rights, aligning with international treaties like the WIPO, NAFTA/USMCA, and TRIPS.
• The process of patent, trademark, and copyright registration is streamlined and affordable.
• Canada’s IP regime is considered less litigious and more founder-friendly than in the U.S.

Why it matters: If your business relies on innovation, software, branding, or technology, Canada provides a safer ground to protect your assets.

8. Access to Global Markets via Free Trade Agreements

Canada is a member of numerous high-profile trade agreements, giving your Canadian company preferential access to over 50 countries.

Key agreements include:

• USMCA (with the U.S. and Mexico)
• CETA (with the EU)
• CPTPP (Asia-Pacific countries)

Why it matters: Canadian businesses can export to Europe, the U.S., and Asia with fewer tariffs and regulatory hurdles.

9. Stable Banking and Financial Systems

• Canada’s banking system is consistently ranked among the safest and most reliable in the world, backed by conservative lending and strong regulation.
• Access to world-class financial institutions like RBC, TD, BMO, and Scotiabank.
• Business-friendly support from credit unions and government grants.

Why it matters: Financial stability leads to investor confidence, better funding opportunities, and risk mitigation for startups.

Conclusion

From tax savings and faster incorporation to global trade access and immigration benefits, Canada provides a more welcoming and supportive environment for entrepreneurs than the United States.

If you’re a global entrepreneur looking to establish your company in North America, consider setting up in Canada—not just as an entry point to the U.S. but as a thriving market in its own right. With world-class infrastructure, global trade connections, and pro-business government support, Canada isn’t just a safer bet—it’s the smarter one.

Book a free consultation with our Canadian incorporation experts today.