How To Start A Business In Canada
Opening a business in Canada beholds many opportunities for you to start your journey. If you have ever wondered what steps to take to start your journey, you’ve come to the right place! In this guide, you’ll know the essential steps needed to start a business in Canada
Canada is well-known internationally as a great location to start a business. With its trade freedom, investor protection, low corruption, minimal red tape and low corporate tax rates. They have earned the top position in Forbes’ Best Countries For Business list in 2011. Besides this, it actually has one of the lowest tax rates of just 15 percent! The government constantly lowers corporate taxes to aid companies with this expense.
Although Canada is a dynamic market filled with opportunities for you to start your journey, the steps needed to be taken to open your business may be complicated. For example, some important things you need to know would be your immigration visa type which is the start-up visa program and a program for self-employed persons. Also what entity should you register your business under?
In this guide, we walk you through the most important steps on how to start your business journey in Canada. The steps included below are:
1. Explore the market
Have a good idea that seems unique and fresh? What if someone else has already had that idea and started their journey? That’s why it is always important for one to execute a good analysis of their market through market research.
As you can see, Canada is a lucrative market with one of the lowest tax rates, thus it appeals to many other entrepreneurs. When you explore the industry you want to start your business in, you gain more knowledge which enables you to avoid mistakes made by the previous newcomers.
These are steps on how to conduct extensive research:
1. Define your research.
A good research objective would be to assess whether there is a demand for your new product or service and how much they’ll be willing to pay for it.
2. Come up with questions to assist you and your research.
Since you’ve got your objective down, develop questions you’d want answers for about your industry, customers and your competitors
3. Gather your research information with analysis tools like Fanpage Karma and Mentionlytics.
Social media analytic tools provide you with real-time data analytics that different businesses provide. From here you will be able to see how well your business might perform in the industry.
4. Interpret your research findings.
Once you’ve collected your data it is easier to identify major marketing trends as well as to conduct a SWOT (strength, weakness, opportunities and threats) analysis
5. Lastly, draw conclusions and make decisions.
What did your findings show you and do you think it’s a good decision to start a business in this industry?
You’ll find yourself a lot more confident once you research your market. With more knowledge on the trends, competition, opportunities and other necessary information, starting a business in an industry you’ve researched will benefit you greatly.
2. Plan your company’s structure
Now that you’ve done your research and have the insights you need, it’s time to come up with a plan on how to manage your business.
With the first step down, it is easier to make decisions on how you want to structure your business. To kickstart your journey, come up with an attractive and appealing name. Something that resonates with you and also your consumers.
The next step would be to identify your business structure. In Canada, there are 5 business structures that are essential to understand, you should find the most appropriate for your business type. The 5 Business Structures are:
1. Sole Proprietorship
A sole proprietorship is a business owned by one business owner. These business entities are not registered as corporations with the government. Owners of the business are responsible for making decisions, receiving all the profits, claims all losses and you as the owner alum all the risks your business might face
In this kind of business structure, there is usually 2 or more business owners who share the same goals and interest. A partnership is branched out into subcategories namely, general partnerships, limited partnerships, and joint ventures. Partners usually form an understanding through contractual agreements.
Corporations are more complicated legal structures than proprietorships or partnerships.
Incorporation is a process of business ownership that creates a distinct legal entity separate from its shareholders. Corporations are expected to keep records and report their financial situations to the government yearly.
According to the Business Development Bank of Canada (BDC), corporations are more costly to operate than sole proprietorships and partnerships, and hence, new businesses do not usually incorporate unless they plan to acquire capital through the sale of shares or desire greater credibility. Typically, companies consider incorporating when they generate at least $50,000 in annual revenue.
These business structures are incorporated businesses that are democratically controlled by people with common needs. Canada has 5 types of such cooperatives and they include:
- Consumer Cooperative
- Producer Cooperative
- Worker Cooperative
5. Non Profit
The process for setting up a Non-Profit is similar to starting any other business in Canada. Nonprofits provide products or services that benefit the community.
For more information on what business entity you should register your company as, read the government’s official website. There they give a thorough walkthrough on the steps to identify your business entity.
3. Register with the government
Now that you have gotten these steps down, it’s time to register your business with the government.
Registration carries no legal requirements or tax implications. This can be done through a government agent or online in the operator’s local community
To register your business, you need to be a Canadian Immigrant or a landed Immigrant. It is good to note that you can’t start a business while you’re in Canada on a visitor, student visa or work permit. Partnerships with Canadians do not require you to migrate to Canada however if you plan on starting your own business, you need to immigrate to Canada.
It is good to note that, for people intending to register their company as a sole proprietorship under their own legal name, there is no need to register your business with the government. However, other forms of business entities are required to do so.
The process for registering your business depends on your business entity type as well as the province you are registering in. Different provinces have different sets of requirements that one needs to follow in order to ensure the successful registration of their business.
As a company that attains an annual gross income of more than 30,000, registering for GST (goods and service tax) and HST (harmonised sales tax) is essential.
For Incorporated business entities, it is necessary that you register your business under corporate names within province jurisdiction. Federal Incorporation allows you to have exclusive use of your business name across Canada, whilst provincial and territorial corporation grants you approval of using your corporate name in the province or territory you decide to register your business under
For trade names, mainly for people intending to start off as a sole proprietor, you’ll need to register your legal business name, if not your own. Please note that failing to register a name that you are using can result in significant fines and other legal consequences. For more information on the province regulations with trade names, click the link for each province below.
- British Columbia
- New Brunswick
- Northwest Territories
- Nova Scotia
- Prince Edward Island
4. Apply for permits and approvals
Once you are done with the three steps, it’s time to get you the right permits and approvals to kick start your journey.
If your business includes broadcasting or telecommunications, there is no federal or provincial licensing permits or approvals your business requires to undergo. However, new businesses that involve hygiene, healthcare or other important specifications, are subjected to licensing, certification or approval from professional organisations.
In Canada, there are many types of licensing and permits a business is subjected to attain. It is the owner’s responsibility to find out so. BizPal is a website created by Industry Canada, where you can easily check the licensing and permits that your business requires. It is a useful tool for providing a list of the business documents you need to apply for with the government.
5. Getting the right support for your business
Lastly, we move on to the grants your business might be applicable to receive from the government.
Standard government small business loans or capital assist Canadian entrepreneurs by investing in them and funding them.
Small business grants, however, is not money you get for free to start your business. The grant that you receive will typically be awarded to you as a means of investment. Although you are not required to repay the grant back. The government, as well as companies, provide companies with the potential to cultivate projects of specific purposes.
To sum it up, being awarded a grant may not be particularly easy as you would have to prove to such corporations the potential of the success of your business.
Canada is a great place to start your business. With its dynamic market that beholds many opportunities and its similar practices to the United States which allows you to possibly expand your business in the later years. It is truly a location filled with ideas for entrepreneurs.
There are, however, many important requirements and steps needed to be taken before officially starting your journey. Make sure you do all of the steps required to ensure a steady start for your business.