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Start A Small Business In Canada

Updated on January 28, 2010

Operating a Small Business Can Be Very Rewarding

Starting a small business in Canada can be an exciting and rewarding venture for anyone wanting to be their own boss. However, it's important to be aware that there are many steps involved that will require a lot of time and yes, money, in order to complete them.

Likely, you already have an idea of what your business will entail; whether it's retail, trade, manufacturing or services, so the first thing to do is extensive market research. Determine if there is a need for what you will be offering and if the demand is high enough for you to charge standard rates. You'll also want to find out if anyone else is offering the same thing you are, and if so, how your business will be different enough in order to succeed.

Test your idea by talking to potential customers. Create a short questionnaire or survey that people can fill out within five minutes time, or talk to them directly. Make it clear that you are not trying to sell something and that your questions are for research purposes only.

If you will require funding for start-up expenses then you will need a comprehensive business plan. Many websites offer free business plan templates for download but you may also hire a professional to help you create one.

Once funding has been attained, or if you plan to fund the venture yourself, it's time to register your business. Each Province has their own procedures and regulations for business registration so these are just general guidelines for starting a sole proprietorship.

Your first step is to visit your local government service branch or go online to do a business name search to determine if the name you've chosen has already been used. It's a good idea to have at least two alternatives in case your first choice is not available.

For example:

1st choice: ABC Widgets
2nd choice: ABC Widgets Company
3rd choice: ABC Cogs

Once your business name has received approval, you're ready to register with the Canada Revenue Agency (CRA). Different government accounts are required depending on what type of business you are starting and which province you live in. Everyone is required to register for a Business Number (BN) that identifies their company. A business number is like a social insurance number in that it is unique to you, and it will be used for any future businesses you may start.

You will also need to register for the appropriate tax accounts. Canada has three different sales taxes: Goods and Services Tax (GST), Provincial Sales Tax (PST) and Harmonized Sales Tax (HST), and they vary depending on your province.

Determining which accounts you need is done during the CRA registration process. You can start the process here:

If you plan to hire employees, a Payroll Deductions account will be needed. This account will be used for remitting deductions such as income taxes, employment insurance and CPP. Also, all businesses with employees are required by law to register with the Worker's Compensation Board. Not only does WCB cover an injured worker's medical costs and wage losses, it also protects you from lawsuits from injured workers.

Local Steps For Starting a Small Business

 Once you've completed all CRA registrations you will need to register your company in your municipality. Generally, this only entails applying for a business license, however if your business will be handling dangerous goods or chemicals you will also need to apply for certain permits.

If you haven't already found a location, now would be a good time to do so, as well as purchase any supplies you will need. If you've chosen to operate from your home, you most likely have all the equipment and supplies needed and are ready to start making money. Once that money starts coming in, you may want to set yourself up with a business bank account. For accounting purposes, it's better to keep business transactions separate from your personal transactions.

Lastly, if you don't have any accounting knowledge, you may want to consider hiring a bookkeeper or accountant to handle your business records. While there are many at-home bookkeeping programs, a professional will help you keep track of government remittances and maximize your deductions when it's time to file those dreaded taxes!


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