I have decided to take the first step to start a business, but do I need to prepare anything before starting a company?
- Develop a business plan. A business plan will help you organize your ideas about what you will need in your new business. As you develop your plan, you need to think about and judge the market potential of your customers and business, outline how you will market your new business, determine your business start-up costs, and plan financially for the first few years of your business.
- Choose a suitable business form.
- Register your company (Processes and requirements vary between provinces – see your province for information).
- Do you need a business license? Check with your municipality for details.
- Does your company comply with zoning and bylaw requirements? You need to check your local bylaws. For example, some cities have restrictions on the operation of home offices and may have special requirements. If you're renting out your home, it's also important to check whether your home's original use complied with zoning requirements.
- Register for provincial taxes and provincial licenses, if required. Depending on the type of business you have, you may need to collect provincial sales tax and apply for a vendor license or other license. Service businesses are generally only required to charge consumption tax, but there are some exceptions.
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GST, PST, HST. Businesses are charged two main taxes: the Goods and Services Tax (GST) and the Provincial Retail or Provincial Sales Tax (PST). Some provinces combine these two taxes into one, called the harmonized sales tax (HST). You will be issued a business number when you open one of four accounts with the Canada Customs and Revenue Agency (CCRA):
- Goods and Services Tax (GST)
- Corporate income tax
- Wage tax deduction
- Import and export
- Research and purchase commercial insurance. There are many types of insurance that provide protection against the hazards of running a business. In addition to protecting your property and business assets, you may also want to select some liability and business loss insurance that offers specialized protection. Ask several commercial insurance agencies. Each agency's fees and plans will be different. Before purchasing, you should understand the products that meet your business needs.
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Understand HR issues and responsibilities. Will you hire employees? If so, you need to understand your obligations. There are three things:
- On employee wages, you need to pay tax to CCRA
- Labor Laws. As an employer, you must comply with the labor laws and human rights standards of your province or territory.
- Workers’ Compensation Board (Workers’ Compensation Board ). Some businesses require registration.
- Keep necessary records. When you run a business, you are required to keep permanent books and records for a specific period of time—usually 6 years after the end of the last tax year—to keep records of all company income and expenses. These records will include receipts, invoices, vouchers and canceled checks showing the amount spent. Importers must retain additional information about the goods they import.