How To Start a Business in Canada as a Newcomer

Newcomers to Canada are making a significant impact on the business landscape, with around one-in-four private sector businesses being owned by an immigrant.

But, while you’ll be in good company as a business owner and newcomer in Canada, there are still plenty of hurdles you’ll face along the way. Some of these may be unfamiliar, even daunting. We’re sharing this guide to answer some of the most common questions we hear about the strategy of starting a business in Canada, and the practical steps you’ll need to take to get there. We’re also sharing some real stories from newcomers who have successfully launched businesses in Canada with the support of Scotiabank.

Tips for Starting a Business in Canada as a Newcomer

First things first, you need to confirm you’re allowed to start a business in Canada as a newcomer. Visit Immigration, Refugees and Citizenship Canada to confirm your legal status.

Validating Your Business Idea in Canada

A great business idea needs to fit the Canadian market. Before launching, research your target audience, competition, and pricing. Talking to potential customers, testing demand with a pilot or pre-sales, and gathering feedback can help refine your offering. Many business incubators and startup programs offer support in market validation, helping newcomers build businesses with strong foundations.

This research should form the basis of your business plan. Your business plan acts like a roadmap for your business’ success, and can help attract investment and keep you on track. Scotiabank has a helpful Business Plan Writer tool which may help you at this stage.

Choose The Right Business Structure & Name

There are a range of different legal structures your business can have in Canada, and they each have different startup costs, tax obligations, and benefits. The three more common structures are sole proprietorship, partnership, and corporation (learn more).

While the right structure will vary depending on your goals and unique circumstances, there are two things you should know at this point:

1. If you’re on temporary status in Canada, you may be permitted to start a business (depending on your work authorization) but there can be immigration-related implications as some programs ask candidates to show work experience on an employer-employee basis. But there may be other options depending on your circumstances. It’s best to seek advice on this from a Canadian immigration lawyer or consultant early on if you’re a temporary resident starting a business in Canada.
2. Corporations have a reputation for being challenging and expensive to set up. But this often isn’t the case and, in fact, incorporating comes with a range of benefits, including shielding the owners from certain risks. So, it may be worthwhile to consider incorporating – even if the startup costs may be higher. If you’re not sure which one will work best for you, talk to a Scotiabank Business Banking Advisor.

Once you’ve decided on a business structure, you’ll need to choose and register a business name. This starts with a brainstorm, goes through a formal name search process, and ends with you registering your business name. You can learn more about Canada’s Newly Upgraded Automated Name Search.

Find A Bank That Meets Your Business Needs

Opening a business bank account is a crucial step that is sometimes overlooked.

A business bank account builds trust with your customers, makes managing your business finances simpler, and can help to reduce the risk of accounting and legal problems. Further, it’s just more professional.

Depending on which bank you choose, your bank may offer advantages like:

• Flexible accounts tailored to your business to help manage your needs.
• Responsive customer service and advice that helps you address business changes.
• Invaluable networks and partnership opportunities to grow and sustain your business.
• Expert tips and information about starting and growing a business in Canada’s corporate ecosystem.

The Interplay Between Your Personal Finances and Your Business Finances

While it’s important to set up a separate business bank account, it’s also important to remember that your business finances and personal finances are interlinked in many respects. Your business success can help improve your personal finances, just as the state of your personal finances (including your credit score) will impact your business finances and funding opportunities – particularly in the startup stages.

Learn more about the differences between personal vs business accounts in the dedicated content from Scotiabank, published in their Advice+ for business site.

In the early stages of setting up a business, some common sources of funding include:

• Personal savings
• Bank loans or business lines of credit (which you will need a good credit score to access)
• Government grants
• Angel investors or venture capital.

Your business bank can play a key role in looking at your finances holistically so you can thrive professionally and personally in Canada.

Be Prepared for Challenges and Hurdles

Owning and operating a business can be challenging. In 2024, newcomer business owners reported inflation, interest rates, and labour shortages as being among the most common challenges they faced running businesses in Canada.

On top of that, newcomers may also face hurdles around understanding Canadian business culture, navigating a new financial and legal system, and establishing a local professional network.

Here are some tips that can help you to prepare for challenges with operating a business in Canada:

1. Build strong professional networks. These relationships, whether with suppliers, mentors, other entrepreneurs and business support organisations, provide valuable information, insights, and opportunities. It’s helpful to work with organizations that can help to make networking easier, like the Scotiabank Women Initiative.
2. Plan for financial fluctuations. It’s important to understand your business finances, and how taking dividends or other owner withdrawals impact your cash flow and growth potential – or even your business’ survival during turbulent times. Working with a bank offering business advisory services can help here, alongside a qualified and experienced accountant.
3. Diversify your revenue streams. Much like investing in your personal finances, diversifying your income streams in your business can help to shield you from certain risks.
4. Manage your debt levels responsibly. Taking on too much debt can be risky, even when done for business purposes.
5. Leverage digital tools, including automated and artificial intelligence tools, to streamline your business operations and make informed, data-driven decisions. From accounting and customer management to marketing and automation, technology allows businesses to operate more efficiently. Many accelerators and incubators also provide access to tools, training, and mentorship, helping newcomer entrepreneurs scale their businesses effectively.

Understand the Canadian Business Culture

Starting a business in Canada isn’t just about registration—it’s about understanding how business is done. Canadian business culture values professionalism, transparency, and strong relationships. Building trust with customers, suppliers, and partners is crucial. Newcomers should also familiarise themselves with consumer expectations, marketing norms, and workplace culture to position their businesses for success.

Don’t Hesitate to Ask for Help

Starting a business in a new country can be daunting. There are new rules you’ll need to manage in every element of your business operations, and these rules only get more complicated as you grow. Seeking accounting or legal advice, immigration advice (if applicable), financial planning, or mentorship and networking opportunities can pay off in the mid- and long-run.

Here are some of the resources available to you as a business owner in Canada:

• Business Banking Advisors – Banks like Scotiabank offer dedicated advisors who can guide you through business financing, account setup, and financial planning. Find a Business advisor near you
• Legal and Tax Professionals – A lawyer or accountant can help ensure your business complies with regulations, manages taxes efficiently, and avoids costly mistakes.
• Government and Community Support Programs – Newcomers can tap into government grants, funding programs, and business support initiatives such as Business Development Bank of Canada (BDC) designed to help them succeed. Resources like business loans, mentorship programs, and startup incubators can provide financial support, guidance, and networking opportunities. Many cities also offer entrepreneur hubs where newcomers can connect with advisors and other business owners.
• Industry Mentors and Networking Groups – Connecting with other entrepreneurs, joining trade associations, and participating in business incubators can open doors to new opportunities.

Finally, technology can also help you with compliance in a cost-efficient way. Tools designed to manage HR, payroll, and business administration can reduce the money and time you spend on these tasks while also improving outcomes.

If you’re looking to start a business in Canada, get in touch with Scotiabank. The team will work with you to help you uncover your business banking needs and provide you with advice, tools, solutions, services, and networks to help you succeed in Canada.

Scotiabank has already published some advice articles discussing everything you need to know about starting a business as a newcomer.

Get started with booking an appointment with a Scotia Advisor.