Step 3–Get your new business off the ground
Read time: 3 minutes
With your business plan in hand and a clear idea of where your company is heading, you now have to determine what structure your business will take, decide on a name and choose where your business will be located.
Select a company structure
The first thing you’ll want to do is determine what business structure best meets your needs. The structure you choose will in large part depend on whether you are running the business by yourself or together with partners.
There are four different business structures in Canada.
1. Sole proprietorships
This is the simplest form a business can take. It offers relatively low start-up costs and few regulations. But be aware that you are personally responsible for all debts and obligations your business incurs.
In a partnership, each partner shares the profits and obligations of the business. This type of business structure requires a partners/shareholders agreement.
A legal entity entailing more regulations, corporations have higher start-up costs. The advantage is that shareholders have limited responsibility for the debts and obligations of the company.
A corporation controlled by its members.
Choose a business name
Choosing a name 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 providing this service.
When you register your company, a search is typically done on the Canadian trade-marks database. Finding a unique name may be extremely difficult, or as simple as adding your initials or rearranging the words slightly.
You do not need to register your company or choose a name if you plan to operate under your own name and are using your personal bank account—as a consultant, for example. But you will need to apply for a GST or HST number if you earn more than $30,000 a year.
Register your business (and get a business number)
- A number of provinces require businesses to register for provincial tax regimes. Visit the Canada Business Network site for additional information on registration across Canada.
- 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 across Canada).
- When you register your business, you will obtain a business number, which will help you file your taxes and hire employees, among other things. You can apply for a business number online. Depending on your province, you may be able to register for provincial programs at the same time.
- Do you need to protect your ideas or inventions? Learn about patents (for inventions), trademarks (for words, symbols, designs) or copyrights (for created works). The Canadian Intellectual Property Office offers more information and several searchable databases.
Set up shop
- If you are renting space, you will probably have to sign a commercial lease. You may want to consult your lawyer to understand all the clauses in the lease before signing it.
- Whether renting or buying your premises, you will need insurance to protect your assets. Most banks will suggest an insurance broker, but it can pay to shop around yourself.