Ranked as 23rd worldwide in the World Bank’s Ease of Doing Business 2020, Canada provides an ideal business ground for foreigners to set up a business. This can be attributed to the easy procedures to register company in Canada, while providing a strong and dynamic economy for businesses to thrive in. You may be wondering how to register business in Canada, regardless of whether you are an aspiring entrepreneur or an experienced business owner. Here are 12 things to take note of before choosing to setup business in Canada.
12 things to take note before you setup business in Canada
#1 Start with a good business idea
- Starting a business is no easy venture. While you may have a long list of great business ideas, how viable is your business idea? Therefore, before deciding on a business idea, you should ask yourself these questions such as:
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- How feasible and sustainable is my idea in the long run?
- What unique selling points will my business have?
- Am I meeting a need or providing a solution to a problem?
- Are there other brands already doing this? If so, what differentiates me from other businesses?
#2 Come up with a business plan
- After you have decided on a business idea, you can proceed to draft a business plan to kickstart your entrepreneurial journey. This enables you to have a deeper understanding of the industry, products and market for your business. However, it is not necessary to come up with a very comprehensive business plan. It should include these main points, such as the executive summary, company overview, target audience, marketing plan, financial plan and operations plan.
#3 Choose a name for your business
- After forming your business plan, you can proceed to choose a name for your company. Here are some important considerations you will need to take note of when choosing a business name:
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- Ensure that it is reflective of the product or service you offer
- Consider how you want your business to be viewed by the public
- Select a name that is easy to pronounce and remember
- Ensure that the name is distinct and unique to avoid legal problems and confusion
- Your name has to be unique as if an existing business is already using it, you will not be legally permitted to use it. To check if your selected name is unique and it is not taken up by someone else, there are several avenues for you to do so. You can search national name databases such as the Canadian corporate names and trademarks database (Nuans) and Canada’s business registries. After searching the national databases, you may also wish to search registered trade names in other provinces and territories if you plan to do business there. Alternatively, you may use the internet to check if someone else is already using your proposed name for your business.
#4 Choose the right business entity to setup business in Canada
- Canada offers different types of business entities for you to choose from, where each business entity caters to different types of business activities. Foreign company registration in Canada is warmly welcomed. Foreign companies that wish to operate a business in Canada can choose between these 5 business entities. This includes Sole Proprietorship, General Partnership, Limited Partnership, Corporation and Co-operative.
- Prior to Canada company registration, it is crucial to fully understand your business model before choosing the most suitable business entity. Some of the factors you should consider include the personal liability that you may incur from the business, the accounting and tax obligations that you will have to comply with, as well as the kind of business activity that you wish to conduct.
#5 Register your business name
- Before you register a business name, it is crucial that you decide which structure you will use for your business. Most businesses will have to register their names with the Canadian government. If you are a sole proprietor operating a business under your legal name, it is not mandatory to register your business name.
- For corporate names, you will need to complete name registration within the jurisdiction of incorporation. In the case where you are incorporating federally, you will have exclusive use of your corporate name across the country. Whereas if you are incorporating provincially or territorially, you will have exclusive use of your corporate name in the province or territory where you incorporate.
#6 Obtain a business license
- While it is not necessary for all businesses, numerous new businesses will have to obtain business licenses prior to legally operating within their municipalities. Different kinds of business activities may also require different kinds of additional permits. You may use tools such as Industry Canada’s BizPaL to find out the licenses and permits you will need to conduct your business.
#7 Register for the Harmonized Sales Tax/Goods and Services Tax (HST/GST)
- You must register for goods and services tax (GST) and harmonized sales tax (HST) if your business’ annual gross income exceeds $30,000. However, many businesses that are making less than $30,000 in revenue per year volunteer to register for GST/HST. This is due to businesses being able to enjoy Input Tax Credits, where businesses can get back taxes they paid out on purchases for business use.
#8 Register for the provincial sales tax
- Most provincial and territorial governments require businesses to register with them apart from registering with the federal government. Additionally, businesses are required to collect provincial sales tax in some provinces.
- If you wish to start a business in Alberta, British Columbia, Manitoba, or Saskatchewan, it is mandatory to register as a collector of provincial sales tax (PST). You will need to register for Quebec Sales Tax (QST) in Quebec.
#9 Market your business
- The last step before embarking on your entrepreneurship journey is to promote your business. If you have yet to develop a marketing strategy for your business, having a good knowledge of your target customer is your first step. Translate your plans into goals and enact marketing initiatives to kickstart your business.
#10 Source for financing for your business
- Prior to starting a business, it is imperative to come up with a financial plan to get your business running. Have you thought of where you will obtain funds from? It may be from your personal savings, borrowing from acquaintances, crowdsourcing or an investor. While there are pros and cons of each method of funding, it is crucial to evaluate which best suits your business.
- Having sufficient finances to operate your business may be an uphill task, but there is a range of government and private-sector sources of finance that you can receive support from. You can find more about the grants and financial support available on the Canadian’s government website. Some examples include innovation funding and support, business support for young farmers and support for immigrant entrepreneurs.
#11 Be ready to hire employees
- As your business starts to expand, hiring employees for your business should be your next priority. You will need to register with the provincial Workers Compensation Board (WCB) in your area, and learn about worker’s compensation insurance. Additionally, you will need to learn about payroll deductions and employment insurance.
#12 Buy business insurance
- Apart from the legally required employment insurance, you may require additional protection for your business. This is dependent on the type of business activity and your risk preferences. Apart from getting insurance for your business property, goods and vehicles, you may wish to consider getting insurance covering general liability, product liability, professional liability or business interruption.
Looking to setup business in Canada?
Canada company registration is hassle-free if you are familiar with the entire incorporation process. Tetra Consultants strives to provide our clients with a seamless experience when setting up a company in Canada. Our team of experts will ensure that your Canada company can be operationally ready as soon as possible.
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