June 13, 2010
Decide on the form your business will take
There are four different types of businesses in Canada (see this article for their different advantages):
- Sole proprietorships—Simplest form of business, which offers relatively low start-up costs and few regulations, but where you are personally responsible and all debts and obligations.
- Partnerships—Each partner shares the profits and obligations; requires a partners/shareholders agreement.
- Corporations—A legal entity, entailing more regulations, higher startup costs, and higher taxes, but where shareholders have limited responsibility for the debts and obligations of the company.
- Co-operatives—A corporation controlled by its members.
Choose a business name
- This may prove more difficult than you'd expect: your name must be accurate, catchy and, most importantly, available. Finding the right name can almost be a science - there are even companies who specialize in this.
- Your business name may already be taken, so try to think of a few names. When you register your company (see below), normally a search is done; finding a unique name may be extremely difficult or as simple as adding your initials or rearranging the words slightly.
- If you will be operating under your own name (for example, as a consultant) and using your personal bank account, you do not need to register your company or choose a name, but if you earn more than $30,000 a year, you will need to apply for a GST number (normally part of registration).
Look into hiring business professionals
Although you can do much of the work yourself, at some point you may want to use the expert advice and experience of an accountant to help with your business plan, tax and fiscal issues, and a lawyer for incorporation or shareholders' agreements.
- To find a lawyer, you can try your region's Law Society.
- For an accountant, try CGA Canada, CICA or CMA Canada's list of provincial associations.
- BDC Consulting can help you, for a fee, with the entire business planning process.
- See this article on choosing business professionals, which also explains the different types of accountants.
Register your business (and get a business number)
- The registration process varies slightly in each province. Consult Registrex.
- If you are incorporating, you must decide whether to incorporate provincially (if you plan to do most of your business within your province) or federally (good for protecting your company name Canada-wide).
- You may be able to incorporate federally online; here is an overview of the process.
- Your Business Number (BN) will help you file your taxes, among other things. You can apply for one online. (Depending on your province, you may be able to register for provincial programs at the same time.)
- If you need to protect your ideas read this article by BDC. As well, look into patents (for your inventions), trademarks (words, symbols, designs) or copyrights (created works). The Canadian Intellectual Property Office offers more inforomation and several searchable databases. Try the Trade-mark database tutorial for guidance and advice on how to search their database.
Set up shop
- If you are renting space, you will have to sign a commercial lease. (Do not forget to secure financing before signing a lease. Find out more about financing in Step 4.) You may want to consult your lawyer, but here is an overview of common issues.
- Depending on your industry, business incubator possibilities may exist, where you can find office space and access to experienced business professionals, investors, and other specialists all under one roof.
- Find out more about business incubators and angels by reading this article.
- You will need insurance to protect your investments. Most banks will suggest an insurance broker, but it can pay to shop around yourself.