HOW to START a BUSINESS in CANADA // REGISTER Sole Proprietorship with CRA //Canadian Business Guide

Summary

In this informative video, Adrian, the Canadian in a T-Shirt, simplifies the process of starting and registering a business in Canada. He explains the benefits of business ownership and clarifies that starting a sole proprietorship is straightforward and cost-effective, requiring no initial registration or fees. Adrian also covers the steps for registering a business name, securing a brand, obtaining a federal tax number, and the considerations for incorporating a business for liability protection and tax benefits, especially when earnings exceed $100,000.

Takeaways

• 🇨🇦 Starting a business in Canada is accessible to everyone and does not require a large initial investment.
• 👕 A sole proprietorship is the simplest form of business and is recommended for new entrepreneurs, as it involves no separation between the individual and the business.
• 💼 Sole proprietorships are easy to start, with no need to register with the government or pay fees, and business income is taxed under the individual's personal name.
• 🔒 The downside of a sole proprietorship is the lack of liability protection, putting personal assets at risk in case of lawsuits.
• 🤔 Incorporation is an option for businesses with higher earnings or those concerned about potential lawsuits, offering liability protection and tax benefits.
• 💡 It's advisable to separate personal and business finances, even when starting with a sole proprietorship, for easier tracking and tax compliance.
• 🔍 Before registering a business name, a NUANS search is necessary to ensure the name's availability and uniqueness.
• 📝 Registering a business name with the provincial government is required when operating under a name other than the individual's own and involves a fee.
• 🌐 Securing a domain name and social media accounts is crucial for brand protection, even if a website is not yet operational.
• 📈 As a business grows, considerations such as registering for payroll and GST/HST become necessary, depending on revenue and business activities.
• 🏢 Incorporation makes financial sense at higher income levels, typically above $100,000, due to the costs involved in setting up and maintaining a corporation.

Q & A

What are the benefits of starting a business in Canada according to Adrian?

According to Adrian, there are huge benefits to being a business owner in Canada, including financial and tax benefits, and the ease of starting a business without needing a lot of money.

What type of business structure does Adrian recommend for most entrepreneurs starting out?

Adrian recommends starting with a sole proprietorship, especially for those who are just getting started, as it is the simplest form of a business.

How does a sole proprietorship handle taxes in Canada?

In a sole proprietorship, all business income, after expenses, is taxed under the individual's personal name. This makes taxes easy as the business income is combined with personal employment income on one tax return.

What are the risks associated with a sole proprietorship?

The main risk with a sole proprietorship is that there is no liability protection. If the business gets sued, the individual can potentially lose their personal assets, such as their house, car, or savings.

When does Adrian suggest considering incorporation for a business?

Adrian suggests considering incorporation when the nature of the business might lead to potential lawsuits or when the business starts earning a lot more money, as incorporating provides liability protection and tax benefits.

What is the cost of registering a business name in Ontario, Canada?

In Ontario, it costs $60 to register a business name, and this fee is tax-deductible as a business expense.

What is a NUANS report and why is it important?

A NUANS report is used to search for all registered business names and trademark names across Canada or a particular province. It is important to ensure that the chosen business name is unique and not already taken.

Why is it necessary to separate personal and business finances when running a business?

Separating personal and business finances is good practice as it makes it easier to track revenue and expenses, simplifies tax returns and bookkeeping, and provides a clear money trail in case of an audit.

What is the difference between a Business Identification Number (BIN) and a Business Number (BN) in Canada?

The BIN is used by the provincial government to identify a business, while the BN, issued by the federal government through the CRA, is used for tax purposes and is more important for business operations.

When is it required to register for GST/HST in Canada?

A business must register for GST/HST if it earns more than $30,000 in revenue over four consecutive quarters or twelve months. This threshold is based on revenue before expenses.

What are some of the factors to consider when deciding whether to incorporate a business?

Factors to consider include the financial costs of incorporation, the potential for high income levels, the need for liability protection, and the tax benefits associated with incorporating a business.