How to Start a Business in Canada
Canada is home to over 1.2 million small businesses, which account for 97.9% of all businesses in the country. Nearly 69% of the total labour force works for a small business, showing how important it is to shop small.
With millions of entrepreneurs finding success in the Great White North, you may be wondering how to start a business in Canada. Keep reading to see our short guide on all the necessary steps to get your new venture up and running.
7 steps to start a business in Canada
Follow along and check off each of these items to ensure you cover all your bases before opening day.
1. Give yourself a reality check
Starting a business is no easy feat. You will need to be ready for long hours, upfront costs, and some level of risk. Before you commit to a plan and sign any paperwork, take a moment to evaluate your readiness.
Ask yourself these questions to get started:
- Is there consumer demand for my idea?
- Do I have enough savings to take care of personal expenses before sales come in?
- Am I prepared to put in long shifts for little instant reward?
- Can I lead others and interact with customers all day?
- What will happen if I fail?
2. Draft a business plan
Once you are confident in your ability to run a business, it’s time to put pen to paper. Your first task is to write a thoughtful business plan. Even if you are opening a part-time hot dog stand, you will want a plan to ensure all affairs are in order.
A business plan not only helps you solidify your idea but it also shows investors and partners that you are serious. By taking the time to draft the document, you demonstrate your commitment, professionalism, and forward-thinking.
Follow this link to get a free business plan template from The Business Development Bank of Canada.
3. Choose a form of business ownership
While writing your plan, you will state what type of business structure you’ll form. This decision is important because the structure determines how ownership will work as well as some legal matters.
In most cases, a small business will operate under one of these forms:
- Sole proprietorship: The simplest structure, a sole proprietorship, falls under your personal control. You can do business under your own name and may not need to register the business in some cases. The business will pay taxes, but you will report this income under your personal income tax form. You will hold personal liability under this structure.
- Partnership: If there will be more than one owner, a partnership outlines who these owners are and their stake in the business. This structure can exist as a General Partnership, Limited Partnership, and Limited Liability Partnership.
- Corporation: Under this form, owners create a separate business entity that acquires its own debt and obligation. The corporation will pay separate taxes as well.
For more information, please read over this article by The Balance Small Business.
4. Register your business entity with the government
As part of forming your structure, you will need to register with the Government of Canada.
Since each province has set registration standards, the Government has created this guide to help. Follow along with the instructions to see how to register your new business in your region.
While you’re at it, you will also want to obtain a business number to file taxes. In some provinces, you automatically receive this number upon registration. If this does not apply to you, visit the Canadian Revenue Agency to learn more.
With this taken care of, you can register for the Goods and Services Tax and Harmonized Sales Tax.
5. Find small business financing
Without money, your business will not go far. Starting a business is expensive, and many new entrepreneurs do not have the capital to make their dreams a reality. So, what options do you have when it comes to financing?
In Canada, business owners can acquire funds from these sources:
6. Obtain business permits and licenses
The Canadian government regulates businesses to protect workers and consumers, as well as ensure other standards are being met. You must acquire the proper licenses before accepting any sales.
Some common licenses include:
- Liquor sales license
- Building and land use permit
- Place of amusement license
- Entertainment establishment license
To make this step easy, Canada provides the BizPal search tool to local federal, provincial, municipal and First Nations documents.
7. Invest in the right equipment
Your business might solve a critical need, but without the right supplies, you won’t get many sales. While your trade will require specific tools, almost all business owners need reliable technology to manage their affairs. From bookkeeping to inventory management, you will need the right software to get business done.
For many hospitality and retail businesses, no piece of equipment is more important than the point of sale system. Your POS will be responsible for a variety of operations, freeing up time and helping you serve your customers. However, not any POS system will do.
You need a POS that:
- Processes transactions quickly and securely
- Accepts cash, card, and contactless payments
- Features powerful inventory management tools
- Allows for 24/7 remote access
- Integrates with dozens of applications
Epos Now produces modern POS systems backed by the cloud. Our devices run on Windows, Mac, and Android, allowing you to use your existing hardware and making it easier to learn operations. Best of all, we offer countertop and portable devices, so you can choose the option that best suits your business.