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Expert: Michael Fromstein
“I want to open an alteration and dressmaking store as sole proprietor. Could you outline all steps beginning with business registration and ending with information what insurance I should buy and how to set up bookkeeping?”
Michael Fromstein answered:
A significant task for the new business owner is assuring that the business is properly complying with the extensive tax and information filing requirements imposed by various governmental agencies. Stiff penalties are commonly assessed if you do not file the required forms and returns properly and on time. There are several forms you must file when the business is started. While we do not intend this chapter to be an all-inclusive list of the filing requirements, it summarizes some of the more prominent requirements common to most businesses. Many industries have specific filing requirements, which are not part of this text, but which nevertheless, must not be overlooked. Professionals with experience in your industry should be consulted to assure that any such filings are properly handled.
Business Name Registration
If a business uses a name other than the owner's or any other words are attached to the owner's name (i.e. John Smith AutoBody), you must register the trade name before using it. This registration does not ensure the exclusive use of that name, so you should do a name search at any private registration office to ensure that the name is available. If the name is not searched and it infringes on a Corporation or trademark, you may be found liable.
What does registration do?
Registration places your business name in the public record maintained by the Companies Branch of the Ministry of Consumer and Commercial Relations. This allows consumers and business people to find the owners or the principals behind a business name. This sort of information is important to people trying to settle disputes. Anyone may search business name information contained in the public record during regular hours for a fee. Registering a business name does not give you exclusive use of the name.
Choosing a business name
Choose a distinctive name to stand out from your competitors. Make sure the name is not misleading or confusing in its description of the goods or services you will provide.
It's your responsibility to make sure your business name does not contain any of the above words or expressions unless proper consent has been obtained.
Registering a name does not give a business special powers. If you need licences, other registration or certification to run your business, registering your name does not exempt you from obtaining the necessary documents. It's up to you to learn what laws apply to your business. A lawyer or business consultant can help you do this.
In Ontario, start-up businesses registering their business through any of the Ontario Business Connects workstations will get their Master Business Licence immediately following registration, or by mail when registering through the Ontario Business Connects website. Clients can use the Master Business Licence as proof of business registration at financial institutions and as part of any other business-related program registration in Ontario.
This licence will eventually replace many of the government forms, licences and certificates required by businesses. (Helpline toll free at 1-800-565-1921 or (416) 314-9151, or www.cbs.gov.on.ca/obc/english/4TJTBS.htm )
A corporation, however, must have an exclusive name and a name search must accompany the incorporation documents.
The Business Number (BN)
All tax forms filed with the CCRA require the use of a Business Number. CCRA describes this as “It is based on the idea of "one business, one number." You need one number, and can obtain it directly from CCRA when you register for one or more of the four accounts that the BN includes. We have all the forms you need in the Canadian library portion of our resources section on the www.sfgroup.ca website (look in the “Knowledge Bank” under “Canadian Tax”).
A sample BN might be 123456789 RP1234.
The first nine digits are the registration number. This registration number will stay the same no matter how many or what types of accounts a business has.
The next six digits identify the account, as follows:
|corporate income tax||RC|
In Quebec, the ministиre du Revenu du Quйbec (MRQ) administers GST on behalf of the CCRA, so businesses registering in Quebec have to contact both the CCRA and the MRQ. 800-567-4692 or online at http://www.revenu.gouv.qc.ca.
You can register businesses online at www.businessregistration.gc.ca
if you have Social Insurance Numbers (SIN) for all owners, directors, partners and officers. Non-residents will therefore not be able to register online. You may have to fax articles of incorporation where CC&RA does not have record of the incorporation (for example Ontario provides CC&RA with monthly listing of newly incorporated companies). People having trouble registering online can try 1-800-959-5585 or 1-877-643-3388 (Calls from outside of Ontario may have to be placed to 1-705-669-2130)
- GST/HST Goods and Services Tax/Harmonized Sales Tax (If a business's main mailing address is in Quebec, the business must contact the ministиre du Revenu du Quйbec to register for a GST/HST account)
- Payroll deductions
- Corporate income tax
About the author
Michael Fromstein is a tax specialist with Integrated Professional Specialist Services.