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Are you thinking of starting a small business in Ontario or anywhere in Canada? Then, it may interest you that by doing so you will be part of the engine that drives the Canadian economy.
How To Start Small Business In Canada
Small business is huge in Canada. As of December 2021, there were 1.19 million (or 98%) small businesses in the country, making them the top employer businesses.
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Some of the most popular small business ideas include dropshipping, selling online and digital products, commercial cleaning, repair services and food trucks.
Whether you’re considering starting a top 10 small business online in Canada or investing in a brick-and-mortar business, this step-by-step guide will help you through the process.
Setting up your own business is a big decision and can seem daunting at first. It is recommended to start a small business checklist to avoid overlooking any tasks.
By itemizing the processes you must complete into manageable tasks, you can begin building a business with more confidence.
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Come up with a business idea that has the potential to be profitable. If you’re passionate about something, think about how to turn it into a money-making endeavor.
Do market research on current trends in your area. If there’s a product or service you feel strongly about, look for ways to improve it. The idea is to find new ways to do old things.
When you’ve decided to sell a product or service, create a solid and simple business plan that covers the following:
Create a unique business name that is short, memorable and easy to spell. It should represent what you are selling and reflect positively on your business.
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List up to three choices so you have other options if your first preference isn’t available. Use Canada’s business registries to find out if your preferred name is available.
When starting a business, choose the business structure that best suits your objectives. Following are the three types of business structure:
In this structure, you are the sole and exclusive owner of all the company’s assets, profits and debts.
As the sole proprietor, you have full control and authority over the business and sole decision-making responsibility.
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A partnership is a formal agreement between two or more parties to jointly manage and operate a business, their ownership being governed by a partnership agreement.
A corporation is a legal entity that can enter into contracts and acquire property in its own name separately from its owners.
After deciding on a business structure, think of potential business names. Check that they are legally and actually available for you to use.
You can easily register your sole proprietorship or incorporate a new company in Canada using Ownr. This online service is owned by RBC and simplifies business registration so you can complete the process from the comfort of your home.
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The owner also offers a cash bonus of up to $300 when you use the service. Learn how the employer works.
Find permits and licenses for your business using the online tool BizPal, which provides a list of requirements based on your location, industry and business activities.
There are three levels of government from which you need to obtain the appropriate permits and business licenses in Canada. These are provincial, municipal and federal.
The proposed use of your property must be in accordance with the municipality’s zoning bylaws, which govern land use in your community.
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If you want to construct, renovate, or demolish a building related to your business, you need a building permit.
A site plan is a set of informational architectural drawings that show proposed improvements or arrangements to a property.
This document is required to obtain a building permit that allows you to build, add to or renovate a property.
If your business is incorporated, a business bank account must be opened under your registered business name.
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Sole proprietorships and partnerships are not required. But it is important to separate personal and business finances, so opening a business bank account is essential.
One of the benefits of having a business bank account is that it is easier to apply for a business loan or a business line of credit as your business grows.
The requirements for opening a business bank account vary depending on which bank you choose. This often includes valid ID, business registration documents, proof of residency, and information about authorized users.
A business credit card provides a flexible way to access and build business credit while helping you manage start-up costs and monitor spending.
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It’s a convenient option for paying bills, covering travel expenses, and purchasing supplies and inventory. To apply for a business credit card, you will need to provide the following:
You do not need to register for Goods and Services Tax (GST) and Harmonized Sales Tax (HST) numbers unless your business gross income is less than $30,000 per year.
However, when you register for GST and HST, you benefit from an input tax credit, which lets you get back the GST/HST that your business paid on your business purchases.
Are you starting your business in Alberta, British Columbia, Manitoba, or Saskatchewan? If so, you should register as a Provincial Sales Tax (PST) collector.
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If your business is located in a province that does not align sales tax with the federal GST, you need to register to collect and remit the appropriate provincial tax.
If you want to hire employees, you need to open a payroll deduction account with your Business Number (BN), which you can get from the Canada Revenue Agency (CRA).
Small business owners face many challenges, including those that arise from a lack of business insurance policies and can often result in bankruptcy.
Use accounting software that will help you organize your business. It can automate bookkeeping tasks like invoicing, reports, and payment tracking.
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Having accounting software helps keep track of your books. It also frees up your time, so you can spend more time running your business.
Since both options have advantages and disadvantages, weigh the pros and cons of each in relation to your business.
If you feel confident about using a particular software, an annual contract can be useful and come with a discount.
If you’re still looking for a good option, try the monthly setup. It offers a more practical arrangement, and you can cancel the service if it is unsatisfactory.
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Create a website for your startup business to inform customers about your company and promote your products or services.
A website is also an effective way to generate leads and increase revenue. No matter the size of your business, having a website is a must for business growth.
Choose between creating a free website or hiring a professional. If you hire an expert, there are two options on which service to get: a one-time fee structure or a monthly subscription.
Likewise, using social media to promote your business is a beneficial and cost-effective strategy for your bottom line.
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Not only does it provide a free platform, but it is also the easiest way to reach your customers, build brand awareness and generate leads.
The amount will vary from location to location, with areas like Toronto costing businesses more than Nunavut. On average, a small business owner in Canada spends about $5,000 to $10,000 to start a small business.
Selling online is the easiest way to start a small business in Canada, often requiring less than $1,000. All you need to do is research, buy inventory and set up an online shop for less than $100.
For 2023, a small business in Canada can earn $15,000 before paying taxes. This increases from $14,398 (for the federal basic personal amount) during the 2022 tax year.
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To qualify as a small business in Canada, it must have fewer than 100 paid employees. As of December 2021, 1,187,658 companies were recognized as small businesses with 1 to 99 employees.
Most businesses are required to register their business, except sole proprietorships. You do not need to register if you use your legal name as your business name.
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Enoch Omololu is a personal finance expert and a veterinarian. He holds a Masters in Finance and Investment Management from the University of Aberdeen Business School (Scotland) and has completed several courses and certificates in finance, including the Canadian Securities Course. He did his M.Sc. in Agricultural Economics from the University of Manitoba and a Doctor of Veterinary Medicine degree from the University of Ibadan. Enoch is passionate about helping others win with their finances and has been writing about money matters for over a decade. He has been featured or quoted in The Globe and Mail, Winnipeg Free Press, WealthSimple, CBC News, Financial Post, Toronto Star, CTV News, Canadian Securities Exchange, Credit Canada, National Post,