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Ten Steps to Your Own Business

By Julie King |

So, you want to start a business. You have assessed your options, have decided that you have the persistent, determined personality that it takes to start a company from scratch, and have done sufficient research to convince yourself that it's viable.

What's next? Here are 10 steps to take before hanging up your shingle.
  1. Select a name.
    The name you choose for your business is vital, as it will send a marketing message to your customers. From a legal standpoint, the name should separate you from other companies, giving your business a distinct identity. In most provinces, securing a name is part of the overall business registration process, so you will need to look up provincial naming guidelines as you work on your list of possible names.

    A great name will be unique, with the potential to grow into a memorable, well recognized brand. For more insights into getting a great name, read our article on the topic, Choosing a Business Name.

  2. Decide on the best form of business for you.
    Businesses operate in several different forms, which include sole proprietorships, partnerships, and corporations. Before you can actually register your business, you need to decide on the form that is best for you.

    Do you want to be able to offset business losses against other income, or are you eager to ensure that potential problems with the business won't affect your personal assets? Each form has its pros and cons, as well as other questions you must answer to decide which is best for you. For help deciding on the best form for you, check out ask-an-expert: Forms of Business.

  3. Address your licensing, permit, and bylaw obligations.
    Do you need any licenses or permits before you can legally operate the business? Do your location plans violate any local bylaws? Before you get started, you need to look into your obligations and secure all required permits and licenses. Your municipal and provincial governments should have this information available, and many now publish the information online. Keep one thing in mind as you move forward: not knowing is not considered a valid excuse for noncompliance with government or industry requirements.

  4. Register the business.
    Okay, now you're ready to actually register your company. Congratulations! The registration process varies from province to province, and many provinces now allow you to register online. CanadaOne currently has guides to registering a business for several provinces, with new provinces added each month. Check out the Where to Get Registered section of our Starting a Business Guide to see if information is available for your province.

    If you have decided to register a corporation, you should consider using the services of a lawyer or paralegal. Yet watch out for involved — and expensive — consulting, which may not be necessary if your needs are straightforward. If you do use a professional, get referred to a talented professional who specializes in business transactions. Ask for a quote, and if you are not comfortable with the first quote, ask for a few more from other firms. An important point: you may have a great relationship with the lawyer who helped close the deal on your house, but this doesn't mean you should use this person for the legal needs of your new business. Lawyers have different specialties, and you will save yourself time and possible headaches if you retain counsel that specializes in business law.

  5. Get a business number, if it's needed.
    Canada Customs and Revenue Agency (CCRA, formerly Revenue Canada) has developed a single numbering system, known as the Business Number, to manage their interactions with business. You will need a Business Number (BN) to set up a GST/HST, corporate tax, payroll deductions, or import/export account.

    If you need a business number, you can register in person or by phone, mail, fax, or Internet. When applying for a business number, you must provide the name of the business, its location, its legal structure (e.g., sole proprietorship, partnership, or corporation) and its fiscal year-end. You will also have to provide an estimate of the business sales. Depending on the accounts you register, additional information may be required. If you register through mail or fax, you need to complete Form RC1, Request for a Business Number (BN) .

    In Quebec, the business number does not include GST/HST accounts, which are administered by the ministère du Revenu du Québec (MRQ). Contact the MRQ at 1-800-567-4692 to register for a GST/HST account in Quebec.

  6. What taxes should you charge?
    GST, PST, HST. To the new business owner, the myriad of taxes can seem confusing. The federal government levies The Goods and Services Tax (GST) on most goods and services in Canada. In addition to the federal GST, most provinces levy Provincial Sales Tax (PST) on goods sold in the province. Three provinces, Nova Scotia, New Brunswick, and Newfoundland, combined their provincial tax with the federal GST into a single, "harmonized" sales tax, the HST. Alberta is the only province that does not charge provincial sales tax.

    While you only need to charge the GST if your business earns $30,000 or more a year (or will earn $7500 or more in any consecutive three months), registering for a GST number right away provides two advantages. First, you can only claim your GST expenses if you have a GST account. So, if you want to claim the GST costs on start-up costs, you will need to register. Second, you may not want your clients to know that your business earns less than $30,000 a year, but that will depend on the type of business.

    Provincial sales tax requirements vary widely. To find out whether or not you need to charge provincial sales tax, look up the appropriate guidelines on the relevant provincial website, or contact the business division of your provincial government.

  7. Workers' compensation?
    If you employ staff, you will likely need to register with their provincial Workers' Compensation Board. Registration offers protection to your business and staff in case a worker gets injured on the job. For information on registering in your province, visit the appropriate site for your province or territory:
    Workers Compensation Boards

  8. Cover your business, legally.
    Many new businesses are tempted to cut corners to save cash. While understandable, you don't want to take a shortcut that may hurt your business at a later date. For this reason, it's highly advisable to find a business lawyer you can trust and meet with this advisor to determine what legal matters must be addressed before you begin operations.

    A lawyer should be able to develop any contracts you may need, such as a nondisclosure agreement or no-compete contract, and advise you on things like what type of insurance you will need. You need to carefully decide what you must have now versus what purchases can wait.

    Most lawyers offer a free half-hour consultation to discuss your business needs. Don't be afraid to ask about hourly rates. When discussing work to be done, ask for a quote or estimate of charges. Be ready to question suggestions if you feel they may not be necessary, and get a second opinion if you are not comfortable with the recommendations.

  9. Setting the books straight.
    Many new businesses use a "shoebox" approach to accounting as they get started, throwing receipts into a box or an envelope, without going through the trouble of setting up formal "books." This approach can make many of the most basic tasks of running your business a chore. Whether it's ensuring that your outstanding receivables are paid, getting financial information to the bank when you submit a loan application, remitting GST/HST in a timely manner, or just having an overall handle on company cash flow, carefully tracking the money as it moves in and out of your business is a must.

    Many excellent software programs currently on the market make bookkeeping easier. However, setting up the books can be a daunting, if not impossible, task for the new entrepreneur. For a new business, you should find a bookkeeper who can help, or you may want to use an accountant for more complex businesses.

    This small, upfront investment will save time. It will help you keep better track of your cash, and it is a worthwhile investment.

  10. Get equipped.
    It's now time to get the equipment you need to operate your business, if you haven't done so already, and start to work on the actual operation. Businesses that operate out of the home (assuming local bylaws allow this) can have low start-up costs. Others, such as small manufacturing companies or a retail store, may require expensive commercial space, equipment, or inventory.

Click here for provincial-specific information and links.

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