Ask an Expert
AB: Starting a home business
Expert: Julie King
Jack from Alberta asks about starting a home based consulting business. He informed us that he plans to operate the business under his own name.
"I have recently decided to start a business out of my home I am aware of the differences (legal and tax implications) between LTD and sole proprietorship, and have decided to do Sole propr. To begin a S.P. business, what needs to be done (legal requirements, registration, etc.) before I begin doing business. Are there other considerations I may be missing?"
Julie King answered:
"When you start a sole proprietorship there are many things that need to be done. Here are some of the administrative issues that you will need to consider.
Because you will be operating under your own name, when you establish your business you have the option of not registering it as a sole proprietorship, which costs $30.00. However, if you plan to operate your business under a name such as Jack's Name Consulting, it is a good idea to register the sole proprietorship.
You will also need to decide whether or not to register for the GST. A Business Number (BN) is a single number that the federal government uses to keep track of businesses, and upon registration for the GST businesses are now given a Business Number rather than a GST number.
You won't need to collect GST until you have taxable sales of more than $30 000 in any four consecutive calendar quarters or in any one calendar quarter. However, there are several advantages to registering for the GST immediately. You cannot claim GST taxes that you pay on purchases unless you are registered for the GST. You will probably have a number of up-front costs as you launch your business, and registering for the GST right away will enable you to claim a credit to recover the GST that you paid on those purchases.
Alberta GST contacts:
Edmonton: B. Titanich , District Manager, I and S, Revenue Canada (403) 221-3070
Calgary: Information Services Officer, Revenue Canada (403) 495-3200
Licenses and Permits:
In Alberta municipalities have the authority to license, control and tax businesses. You will need to determine what licenses and permits you will need in your municipality; this information can be obtained by checking with your local municipal office.
For example, if you are a consultant in Edmonton, you are required to purchase a $50 retail business license. There is also a $20 application fee for a home-occupation use permit, unless your business will require clients to come to your office, in which case an $80.00 development application is required. For a development permit check with Edmonton Planning and Development at 496-3100. Contact City of Edmonton License Division at 496-5233 for more information.
Consultants are not licensed in Calgary, but a home occupation permit will still be required. The home occupation permit in Calgary will cost $27.00 if you receive less than 3 visits a week, and it will cost $162.00 if you require clients to come to your office more often than this. Contact the Calgary, Planning and Development at 268-5351 for further information.
Business and Liability Insurance:
When you establish your business you should also look into business and liability insurance. There are several packages available, and you may be able to find discount rates by joining a local business organization. Ask other business owners to recommend insurance companies to you, and shop around for the package that best meets your needs.
Resources for further information:
The Business Link Business Service Centre
The Virtual Business Link
Alberta Government Website
Calgary Business Information Centre
The Centre for Business Development, Alberta Northwest
I hope this information helps. Best of luck in your new venture!"
About the author
Julie King is the co-founder and managing editor of CanadaOne, Canada's first small business portal.