Create Your Business (For Canadians)
This is a doc for those who want to start a business in Canada and have a guidance on where to start and tips and tricks
Businesses as an entity have been the cornerstone of economy. Creating a business comes with many challenges but will be rewarding if successful (big if here). With that being said and you still want to peruse it, read on and good luck!
🚧 Warning: 20% of businesses within the first year, 30% by year 2 and 50% by the five year mark according to sources
Types of businesses
There are 3 main types of businesses, sole proprietorships, partnerships, and corporations. I will give a very short run down of these three types
sole proprietorship - great for just starting out with one person but should only be used for very small operations
partnership - same as sole proprietorships but with a partner instead
corporation - a legal entity that is distinct from the owner. This means legal and financial consequences (ie debt) will not directly impact the owner(s) of the company [this is what makes corporations fundamentally different from the previous two]
For this doc we will mainly focus on corporations but some sections still apply to the others (like taxes)
Starting a business
The first step to start a business. This does not have to be official but you need to think of a general idea of the business. This should be a precise goal and should be reflected in a 1 sentence statement most people refer to as the mission statement.
✨ Tip: if you want to be extra prepared, write a doc with market analysis, target market, timeline, cost analysis, etc. Most people refer to this as the business plan. See below for an example of a plan’s overview:
Create a business
The first step to legally creating a business is to register it with the government. To do this head over to the government website for registration and click on the incorporate button. Follow the steps and you will officially be a business after than. In doing so, you also get a business ID where you can use to open a bank account! In addition if you chose to register your name, no one else in the province will be able to claim the same name. Most of the documentation required are generated for you but you must keep these documents as they are the founding documents although you can make amendments for a fee.
✨ Tip: make sure you do a quick Google search for your company name to make sure it’s not conflicting with anything and to register your domain
This is not financial advice but seek a financial advisor before making any important decisions. Otherwise just keep track of all expenses, revenues, and the such in a spreadsheet or financial tracking software. In addition keep records for all transactions (ie memos, receipts, or bills) related to the business such that you can go back to them or if you are audited by the government
✨ Tip: It is highly recommended to keep a month over month balance sheet and financial journal. You can find many templates for them online
This is not legal advice but you should seek legal advice from a trusted source. With that said, here is my non legal advice. Create a contract for yourself as the sole owner and employee. This will not make you legally liable from company’s concerns. In addition to codify the company there needs to be an annual board meeting, even if you are the sole shareholder.
Taxes are one of the highest expenses for businesses. However businesses can take advantage of many tax write offs since
revenue - expenses = profit.
See the CRA website for a full list of tax deductible expenses
✨ Tip: It is also recommended to find a tax accountant or consult/firm to help you fill returns (this will be a tax write off 😎)