Starting a business can be an intimidating process, but some legislations make it a bit easier for new entrepreneurs. Canada, in particular, has relatively quick and straightforward rules for starting a new business for its citizens. Besides, this country also has business immigrant visa programs, and even though this process is more complicated for foreigners, it is still a valid possibility. But let’s focus on the standard procedure for permanent residents for now.
What qualifies as a small business in Canada?
Before we get to the specifics of starting a small business in Canada, let’s get legal details out of the way. For many people, the definition of a small business seems self-explanatory, but when the legal side of the process is concerned, different countries have somewhat different formulations when classifying a small business. Generally, there are limits on the maximum number of employees and the revenue a company makes. In Canada, any company that has from 5 to 100 employees and makes from $30,000 to $5 million dollars a year is considered a small business.
There are a few other requirements on top of that, though. For example, if you plan to sell your products internationally, the export limit in Canada is $1 million. For those business owners who want to have a company credit account, the maximum business loan limit set by Canadian Bankers Association can be no higher than $500,000. But the primary focus any time someone applies for a business license is still on the number of employees and expected revenue. If your business idea meets the under ‘100 employees and no more than $5 million a year’ limits to qualify for a small business, keep reading.
Creating a business plan
This may sound like an obvious step, but sadly, a lot of first-time entrepreneurs rely on enthusiasm rather than actual numbers. Of course, a detailed business plan may not be obligatory if you are not planning to attract investment to your new business endeavor. But you still need to do a little market research just to be on the safe side. Doing so will give you a better idea of what’s the market you are targeting really like — and as many aspiring business owners discover, it is often different from what they originally imagined.
A little word of encouragement if this proves to be your case — do not give up too quickly. In fact, working on a business plan can give you a unique perspective on what your potential customers may need —for example, a minor change in the products or services offered can give you a real advantage over the existing competitors. Or, for example, you may discover that the best cities in Canada you hoped to operate in are already oversaturated with offers like yours, but there are other cities not too far away where the competition is practically non-existent. In other words, it all goes down to factual market research and predictions.
Registering a business name specifics
Once you have researched the market and are quite confident that your business idea will take off, it is time to start thinking about a name for your new company. According to Canadian law, a business name must be unique, and it should not resemble a name of an already existing company in any way — particularly if those companies are in the same market niche. So, you need to go to the Canadian business registry (fortunately for you, available online) to check if the name you want is already taken. Once again — do not despair if it is; there is time to rethink another suitable name that would reflect the nature of your company.
Once you’ve established the name, you should register it — this step comes even before registering a company. At this point, you must also know how your business will operate. There are just three options here:
- Sole proprietorship
Note that acting as a sole proprietorship does not necessarily require a unique ‘trademark’ name for your new company — you can easily operate under your legal name. For larger companies involving partnerships, a trademark is required.
Getting all licenses and permits
The next step is registering your business with Canada Revenue Agency. You can start this process on their official website, which is quite handy and shows once again how supportive of small entrepreneurs this country is. After registering, you will get a GST/HST number and a unique business number. Both will be necessary when you file tax reports.
Probably the most challenging step when opening a business in Canada is getting all the necessary permits and licenses. Here, you will need authorization from all three government segments, namely:
Sadly, there is no universal guide at this stage because everything will depend on your business specifics. Besides, you will need to pay a business registration tax that varies from one province to another. In most provinces, including Ontario, British Columbia, and Manitoba, this tax will be around $350. Alberta has the highest business registration fee of $450. On the bright side, Saskatchewan and Nova Scotia charge around $200.
Keeping track of company finances
Since we have already started talking about finances, it would not be such a bad idea to hire an accountant to help you with taxes. In Canada, you can manage your business profits yourself — especially if you are certain you have the time and experience for it. The final step while registering a new company is starting a separate bank account in any Canadian bank of your choosing.
As you can see, starting a small business in Canada is a relatively straightforward procedure — it most certainly has less red tape than in most other countries. The final word of advice would be to remember that starting a business is always less challenging than developing and maintaining one. So, if at any point you need to hire a business mentor, an accountant, or any other expert to help you along the way — remember that it is absolutely natural, even when managing a small company. There can be plenty of tasks you may need to delegate eventually because a business, no matter how small, is not something a person can handle alone. Teamwork makes dream work, right?
Like what you're reading? Subscribe to our top stories.