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Establishing Your Business

Establishing your business requires more than a business plan. You need to register your business with the government, apply for any required licences, learn about regulations that will impact your business, and so much more. Click on each of the links below to see detailed information on each topic.

 

Collapse Naming Your Business

Having the right name for your business is essential. It ensures that your customers know how to find you and gives them an idea of what products or services you offer.

Think about a few options for your business name. Then check the Canadian Trade-Marks Database (opens new window) to ensure the name is available. If your business will be incorporated, you will need to run a search on NUANS (opens new window) and provide a report to the federal government before incorporation.

Will you have a web site? You can use your business name as your online domain name. Visit the Canadian Internet Registration Agency (opens new window) web site for more information on the registration process.

 

Collapse Permits, Licences, and Regulations

Depending on the industry your business is in, you may need to obtain special permits or licences. You may also need to be aware of regulations that must be followed to operate your business safely. For example, some municipalities require a Public Health inspection for businesses that prepare and/or serve food to customers. For more information, visit the Canada Business Network (opens new window) web site.

 

Collapse Your Business Structure

The way you structure your business will have tax and legal implications. There are three basic business structures:

  • Sole proprietorship: You alone own the business and are 100% responsible for all debts and liabilities. All earnings are taxed as your personal income.
  • Partnership: You and another owner (or more) agree to share profits and losses according to each owner’s share of the business. All partners are liable for debts. In a limited partnership, one or more owners can limit their liability by not actively managing the business.
  • Corporation: The business earns revenue, incurs losses and pays taxes separately from its owners. The owners’ liability is limited to what they invested in the company, and they have options as to when and how they take money out of the company.

Not sure what business structure is right for you? Take this simple quiz to find out.

 

Sole proprietorship or partnership

  • You will be the sole owner or own the business with just a few partners or family members.
  • You plan to start the business using only personal savings or investments from friends and family.
  • You expect business revenues to support only you and your partners or family members.
  • You plan to do most of the work yourself.
  • You will borrow personally on behalf of the business.
  • You are in a low personal income tax bracket.
  • Your business is highly unlikely to face a lawsuit or get into debt.
  • You have limited net worth (personal assets).

Corporation
 

  • Ownership will be divided among several shareholders.
  • You expect significant start-up costs.
  • You will be hiring employees and paying out wages and salaries.
  • You will require additional financing beyond savings and investments from family and friends.
  • You expect increasing revenues and a rising asset base.
  • You will probably need to raise equity or issue debt, either now or later.
  • You will put a full management and organizational structure in place.
  • You expect to look into income-splitting and tax-deferral options.
  • You want to protect your existing substantial net worth.

Collapse Registering Your Business

Most businesses require various forms of registration with federal, provincial, territorial and sometimes municipal agencies. In Canada, the federal government assigns each company with a unique Business Number (BN). You will need a BN to register for one or more of these accounts with the Canada Revenue Agency (opens new window) (CRA):

  • Goods and Services Tax (GST)/Harmonized Sales Tax (HST) account
  • Payroll account if you have employees and will be making deductions
  • A corporate tax account if your business will be incorporated
  • An import/export business account

In order to apply for a BN, you will need to provide the following information:

  • Your Social Insurance Number
  • Business name, location and activity
  • Business structure
  • Company year end
 
 

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