There are many reasons to expand a business into Canada. The country has a thriving economy, with a low tax bracket and plenty of opportunities. Being close to the United States making it an ideal location to access the North American market.
These are only some of the reasons and in this article, we want to show you more about the current economy of Canada and the 5 reasons to consider a business expansion in Canada.
Economy of Canada
Canada’s economy is one of the most sophisticated and largest in the world. In 2020, the country’s annual gross domestic product (GDP) was $1.64 trillion in current USD. As a result, Canada is now the world’s ninth largest economy.
Despite the effect of the Omicron coronavirus strain and protests that shut down key border crossings, the Canadian economy entered 2022 on a strong footing, with a 2021 fourth-quarter growth of 6.7%, beating the expectations of analyst of 6.5%.
The global recovery of 2021 will continue in 2022, with a lower rate because of a slower rebound since the re-openings of the countries.
In 2022, Canadian households will continue to be critical to the country’s economic recovery. They are well-positioned to help the economy, thanks to the money they saved during the pandemic, which has provided them with a small cushion to withstand inflation. However, when constraints on the services sectors gradually loosen, their consumption habits are projected to revert to normal.
The outlook for the Canadian economy in 2022 remains positive. In the first few months of the new year, GDP should return to pre-pandemic levels, while some factors that led to the slowdown in the second half of 2021 will weigh more heavily on the recovery.
Top Industries in Canada
The service industry in Canada accounts for a whopping 80% of the country’s GDP and employs nearly three-quarters of the workforce. Retail, business, education, and health care industries provide for the majority of the sector’s revenue.
The manufacturing industry in Canada is involved in the transformation of materials or substances into new products, either physically or chemically. These items could be final goods for human consumption or semi-finished goods for use in manufacturing operations.
Mining, Quarrying, and Oil and Gas Extraction
The extraction of naturally occurring minerals is the primary focus of Canada’s mining, quarrying, and oil and gas extraction industries. Oil and gas extraction dominates the business, while other mining activities include coal mining and the extraction of a variety of metals such as gold, silver, copper, nickel, and others.
Real Estate, Rental, and Leasing
The real estate, rental, and leasing industry in Canada is made up of businesses that do things like real estate management, selling, renting, or buying real estate for others, appraising real estate, renting and leasing tangible assets like automobiles, and leasing nonfinancial intangible assets like copyrighted works.
5 Reasons to Consider a business expansion in Canada
1. International Trade Networks
Canada is the only G7 country that offers investors preferential market access to over 1.5 billion consumers in 51 countries.
A business with a Toronto address is in the epicenter of the financial and political sectors of North America, with close proximity to New York, Chicago, Boston, and Washington D.C. This gives your business quick and easy communication and travels with many other major cities and regions.
Business owners in Canada benefit from several international trade agreements, like the North American Free Trade Agreement and the Comprehensive Economic Trade Agreement between Canada and the European Union.
This expands Canada’s reach to more than a billion consumers across the United States, Mexico, and the European Union.
2. Canada’s Stable Economy
As we mentioned earlier, Canada was ranked number nine in terms of GDP in 2020. From 2005-2014, Canada experienced stable economic growth. The economy remained strong even through the global financial crisis of 2008.
Forbes states that Canada’s stable economy comes from early intervention by the Bank of Canada and the organization’s conservative lending practices. The financial damage was not as severe when compared to the banks in the USA.
After the Covid-19 pandemic hit the world in 2020, Canada showed signs of growth in 2021 and its economy will continue to grow in 2022, based on current projections.
This is the perfect opportunity for foreign business owners to expand in a growing market like Canada with low risk.
3. Highly Skilled Workforce
Canada has a large number of skilled people in the workforce because of its prestigious universities and institutes for vocational training.
According to the Organization for Economic Co-operation and Development (OECD), 62% of 25-34-year-olds in Canada have a secondary education; the second-highest rate globally.
Additionally, due to its friendly immigration practices, the number of employable foreign-born individuals above the age of 18 with a university degree is the highest in the world at 65%.
Foreign business owners who seek to hire in Canada will have an expansive talent pool full of educated and competent candidates to choose from.
4. Competitive Corporate Income Tax Rates
One of the main reasons businesses plan to expand into other global markets is because the corporate income tax rates are too high in their home country.
Canada’s corporate income tax is one of the lowest corporate income tax rates internationally. The Canadian government reevaluates this rate often in order to make trade conditions flexible for companies.
Foreign investors should look forward to setting up shop in Canada as tax rates are projected to decrease in the future.
5. Canada’s Social Familiarity to USA
Canada and the USA share many similarities in business culture. This makes it easier for local business owners to migrate up north.
Canadian demographics are also similar to American demographics in terms of religions and ethnicity. Both countries speak English, but French is also spoken in Canada.
Canadian business dress code is very conservative. Canadians are mindful of the weather and dress appropriately to it.
Punctuality in the workplace is a priority, especially in meetings. For an informal social event, it is acceptable to be fifteen minutes late, but no later than thirty minutes.
Canadians also appreciate eye contact and feel more comfortable talking to you when they can look you in the eyes.
Personal space may differ, as French Canadians tend to stand closer than two feet from each other. Companies that already have offices in the USA will have an easier time adjusting to Canadian business culture than other Western countries.
Starting a new business in Canada can be a great way to expand your company and take advantage of the many benefits that the country has to offer.
We are here to help any business hoping to make an impact within the Canadian market. We offer services that range from employment solutions, payroll, mandatory contributions administration in Canada.
If you’re interested in hiring employees in Canada and starting your expansion in the country in an easy and fast way, please contact us today for more information about our Employer of Record solution in Canada. We’d be happy to help!