How to Register Your Business
The information provided below is for informational purposes only, is not intended to be construed as legal or any other type of professional advice or guidance and may not be accurate or suitable for your specific situation.
Most small businesses need to register with their municipality and their province/territory. In general, municipalities need to authorize business licences and permits. Provinces/territories deal with most taxes. Some small businesses also need to register with the federal government, specifically the Canada Revenue Agency (CRA).
Municipal registration
Municipalities have the responsibility for issuing business licenses and permits. They can also issue sanctions against businesses that operate without the necessary permissions. The easiest way to get information on the requirements in your local municipality is to check its website.
In general, if you run a knowledge-based business, registration is a formality. The possible exception to this is if you are planning to run it from your own home. In that case, you might be required to show that it will not disrupt your neighbours. Even so, getting the necessary permissions is usually very straightforward.
With other business types, you may need to demonstrate how you will ensure that your business does not cause excessive disruption. Remember that municipalities tend to be concerned with both appearances and safety. If your business could affect either of these, you need to show how you will mitigate its impact.
For example, if you need outdoor storage bins, show how you will store them out of sight and where people will not bump into them. Also, show how you will deter vermin and protect against smells.
Provincial/territorial registration
Provincial/territorial registration is essentially to ensure that your business pays the correct taxes in the correct way. The two factors that determine this are your location and your business structure.
Sole proprietorships
Sole proprietorships are unincorporated business structures. This means that there is no separate company to register. Sole proprietors can choose to use their own name for their business. Alternatively, they may use a separate business name for trading purposes.
The rules around registration for sole proprietorships vary widely between provinces. A few provinces do not require sole proprietorships to register at all. They simply require sole proprietors to declare their income for tax.
Some provinces require all sole proprietorships to be registered. Others only require sole proprietorships to be registered if they use a separate business name.
Registering a sole proprietorship can help to give some level of protection to a business name; however, this is often very limited. If your business name is important to you, it’s generally best to try to protect it in some other way as well.
Partnerships
All provinces recognize general partnerships and limited partnerships. Some provinces also recognize limited liability partnerships. All partnerships need to be registered according to the rules set out in the relevant province. These typically require the partnership to have a legally enforceable partnership agreement.
Partnerships themselves do not currently pay tax, but the partners within them do. This means that all partners must be separately registered as either sole proprietorships or corporations.
Corporations
Overall, Canada recognizes five types of corporations. In practice, there are only really two that matter to small businesses: Canadian-controlled private corporations (CCPCs) and Other private corporations.
The rules set down for qualifying as either of these are set down by the federal government. The processes to incorporate as either of these are set down by the various provinces. Generally, all the information you need to know how to register your business is on the province’s website.
Keep in mind that registering a corporation can take much longer than registering a sole proprietorship or partnership. It’s therefore highly advisable to start the registration process as soon as possible.
All corporations pay tax in their own right according to the rules set out by the local government. When money is withdrawn from corporations, it is taxed again. The tax applied depends on the nature of the withdrawal (e.g. payments to employees are taxed as personal income).
Federal registration
There are only a limited set of circumstances in which small businesses need to register with the federal government. In short, the key ones are if:
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Your business revenue exceeds $30,000 per year
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You have employees
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You are responsible for collecting/paying certain taxes, especially GST/HST
You have the option to register with the CRA if your revenue is less than $30,000 per year.
Next steps
Manage your business
You have successfully completed the previous steps and your business has finally opened its doors. Congratulations! Now you have to learn how to manage your day-to-day affairs.
Grow your business
There are different ways to develop and grow a business. Find out how to take your business even further!