Starting a business in Canada can seem overwhelming at first glance. There are a few steps in the process, so it will be helpful to do this step by step. This guide is designed to help you fulfill your dream of becoming an entrepreneur.
1. Find a good business idea
It doesn’t matter if you’re in Canada or elsewhere – a successful business starts with a good idea. Study your skills, follow current trends and look for ways to improve existing concepts or contribute to the market with something new. And test your idea thoroughly before investing time and money in it.
2. Write a business plan
The best way to test your idea is to turn it into a business plan. This will allow you to thoroughly research everything related to the industry, products, and market of your business. It will also give you something you can present to investors and creditors – the ultimate proof space for your business idea.
Before starting a business, you should have a comprehensive and comprehensive business plan that will guide you. However, early in the process, you can create a quick start plan that will show you if your business idea is feasible.
3. Pick a winning name for your business
The choice of the trade name is associated with legal and marketing aspects. In Canada, the government imposes more naming restrictions on companies than on individual owners, but every business owner will need to consider legal issues when naming their business. Most companies will need to at least register their name with the Canadian government. When it comes to marketing, your business name should communicate what the company is doing in a way that is visually appealing, memorable, and positive.
4. Choose a form of commercial ownership
When starting a business in Canada, there are only three basic forms of corporate ownership to choose from for the business structure: sole proprietorship, partnership, and corporation. There are several options, such as a cooperative or a limited partnership, but they all fall under these three umbrellas. Deciding which facility is right for your business will depend on several factors, from the level of affordability with accountability to the business tax deductions you want for your business.
5. Find finance for small businesses
While some homeowners can finance their new small businesses out of their own pockets, many others need to infuse funds from other sources to get started. There are many options to consider, from debt financing to stock sharing to government subsidies. Be aware of the differences between the different types of financing and make sure you are prepared to face the responsibilities of the one you choose.
6. Obtain a commercial license
While this isn’t necessary for all businesses, many new businesses will need to obtain a business license before they can legally operate in their communities. If your city doesn’t have a website, you can find contact information for government agencies online.
7. Register for GST / HST
In most cases, if your new small business gross income doesn’t stay below $ 30,000 for four consecutive quarters, you’ll need to register for Goods and Services Tax (GST) and Harmonized Sales Tax (HST). This small supplier exemption limit also does not apply to all businesses. For example, taxi and limo services must always register for GST / HST. Hiring a small business accountant can help you take care of your business tax and corporate tax, for that matter.
8. Provincial VAT registration (if necessary)
Some provinces have not aligned their sales taxes with federal GST tax, and you will also need to register in these provinces to collect and pay the applicable provincial corporate tax. If you’re starting a business in Alberta, British Columbia, Manitoba, or Saskatchewan, you’ll need to register as a provincial sales tax (PST) collector. In Quebec, you will need to register for the Quebec Sales Tax (QST). Consult any small business accountant.
9. Be prepared to have employees
When starting a business, hiring employees may be the remotest thing you can think of. But it’s amazing how fast that moment can come. Prepare in advance for everything you need to make sure you have legal coverage for hiring employees in Canada. This includes payroll deductions, employee compensation insurance, and labor insurance.
10. Purchase additional business insurance
In addition to statutory employee insurance, your company may need additional protection. There are a number of principles regarding wealth, general responsibility, business interruptions, key people, and disability. Be sure to discuss these options with your insurance agent and attorney to find out which ones work for your business.
11. Straighten your records in a timely manner
If you have good results from the first moment you open your business, things like bookkeeping and paying taxes will become a lot easier. Start by opening a separate business bank account and storing and organizing your merchandise. Using basic accounting software will help you keep a timely organization and grow your business as it grows. A small business accountant might also be able to help you.
12. Marketing your business
After all the work you’ve put into organizing and starting your business, remember one of the most important steps: promoting your business. You should have your marketing strategy planned when creating your business plan, but now is the time to put it into practice. Start translating these plans into specific marketing goals and initiatives so you can get your business going.
Frequently Asked Questions
What are input tax reductions?
If you do business in Canada, you will collect and pay GST / HST and, in some areas, Provincial Sales Tax (PST). The rules about business tax/ corporate tax would stay the same here, but you may be able to take ITC for something you have to pay for.
If I don’t make a lot of money, should I still sign up for GST / HST?
Even if you don’t make a lot of money at first, you may want to immediately sign up for GST / HST for input tax rebates, which are basically your way to recoup the GST / HST your business has paid for business purchases.
Do all businesses need a business license?
Depending on the type of business you are starting, you may need additional licenses and permissions. Industry Canada BizPaL is a useful tool for finding out what permissions and licenses you will need for your business. Available in most provinces and territories, BizPaL will provide the customized list of business documents required for all levels of government.
How do ITCs work?
You must be registered for GST / HST to claim the input tax refund. Once this is done, you will need to track all eligible GST / HST expenses for your business purchase in order to record and apply them to your GST / HST refund.
What are the unqualifying expenses?
Goods and services you have purchased for personal use or for pleasure are not eligible for ITC.
Bottom line
Each step of this guide references detailed information which will go into more detail. The steps are more or less good, but there is some flexibility. For example, it doesn’t matter if you complete the third step before completing the second.