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Registering three small business at the same time in Ontario
Expert: John R Mott
I am looking to register three small businesses in Ontario. None of the three will bring in more than $30,000 on their own but combined they have potential to reach $30,000 in the future. So for that reason should I go ahead and register for a HST number now?
I am leaning towards sole proprietorship. Do I register as a sole proprietor and apply for my GST number at the same time, and do I only need to do this once for the three businesses? Do I then register the three business names and does this allow me to operate under those names, legally signing contracts etc? Will they all have different business and GST numbers? What steps would I need to take to be able to invoice and receive payment under those names?
Any other info on the best (and most affordable) way to set this up would be appreciated.
John R Mott answered:
Launching three businesses at once, that's an ambitious undertaking! You may want to evaluate whether indeed these must be separate businesses.
There is nothing to preclude a business from offering diverse products and services. Interpretation Bulletin IT-120R, available at the CRA web site, will be helpful in this analysis. One possibility would be to carry on your business under one name, but register trade marks to protect brand names for your separate products and/or services.
As a sole proprietor, you are permitted to have only one federal business number. However, you can set up separate GST sub-accounts for each business - e.g. RT0001, RT0002, etc. You do this on CRA form GST10. You are not required to register for the GST until your taxable gross revenues from all businesses combined exceed $30,000 in any contiguous 12 month period.
If you want to operate each business under a unique name, then you will have to register each business name with the applicable provincial department where you reside. You will then be free to legally conduct business under these names. You will have to open a separate bank account for each business, so that you can deposit your revenues. You will also be required to maintain a separate set of books and accounting records for each business.
About the author
John Mott is a chartered accountant and tax specialist with a private practice in mid-town Toronto. He provides tax, accounting and advisory services to individuals and small businesses. He may be visited online at: johnmott.com.