"Start Your Canadian Business in 2023: The Ultimate Step-by-Step Registration Guide"

Starting a profitable small business in Canada can be achieved before registering, typically as a sole proprietorship. However, as your company expands, the required responsibilities will increase too. Registering your business may entail obtaining a business name registration, a GST/HST number subscription, or incorporating your business. These steps will procure a unique business identification number from the federal or provincial government. Moreover, your business may require licenses and permits, such as obtaining health permits to serve food for a restaurant.

This article contains an in-depth guide on registering your business in Canada. The guide primarily focuses on:

1. The necessary steps to establish your business

2. Registering your business name, corporation, and GST/HST number

3. Commencing a business without registration

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How do I set up a business in Canada?

Starting a business in Canada requires more than just registration, it requires consideration of your corporate structure and business name.

Related: Best places in Canada to start a business

1. Determine your corporate structure

In Canada, businesses typically operate as a sole proprietorship, partnership, or corporation. Other structures, such as a co-operative or limited partnership, apply to specific circumstances.

Sole proprietorship:

An uncomplicated way to run a business where you own and manage the business without any legal distinction between you and the company. However, as there is no legal differentiation, you must include all profits in your personal income tax returns, and you are personally accountable for all business-related risks.

Partnership:

A partnership is operated by at least two people. Each partner would share the profits and contribute money, labor, property, and other assets. You and your partner can draft a partnership agreement that specifies how to distribute profits and responsibilities, but it's advisable to get a lawyer's help in drafting this agreement.

Corporation:

This structure necessitates business registration or incorporation, establishing a separate legal identity. The company can take risks without affecting you, and it has its own legal contracts and tax returns. As a shareholder, you own the corporation if you incorporate your business.

Related: Things to consider when starting a business

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2. Select a name

Your business name is your identity and a prime marketing tool, influencing how people locate your business through search engines. An everyday word as a name may result in difficulty finding your company online. It's critical to check domain and social media availability before naming your business.

How do I register my business' name?

In Canada, most businesses must register their business name unless registered as a sole proprietorship, allowing the use of your name as the business name.

The process of registering a business differs across provinces. Nevertheless, to initiate the process, start by conducting a business name search utilizing the Canadian corporate names and trademarks database. This database informs you whether your preferred business name is available. Next, register your chosen business name with your specific province's business registry, which in most cases, can be done online.

The amount charged to register a business name varies between provinces. For example, to register a business in Ontario, the fee ranges between to . Moreover, there is a charge of to $26 to search for names using the corporate names database.

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How can I incorporate my business?

Business incorporation can be achieved either at a federal or provincial level. You begin the process by filing your articles of incorporation.

Federal incorporation provides more name protection and allows you to do business across Canada without various registrations. However, it involves more paperwork. Conversely, provincial incorporation is more straightforward but offers lesser protection and requires registration in each province you intend to operate.

Federal incorporation costs between $200 and $250. On the other hand, provincial incorporation charges vary by province, with incorporations in British Columbia costing around $350.

Related: Do I need business insurance

Incorporating your business follows the same process as registering a business name. Incorporation at the federal level can also be done online through the Government of Canada website. Each province also has its incorporation portal.

These systems lend adequate guidance for entrepreneurs through the process. However, more complex business structures may require assistance from a corporate lawyer. Such scenarios arise in the presence of different types of shareholders, multiple corporations, and partnerships in a corporate group.

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Incorporation confers several benefits such as business legitimacy and protecting your assets. In case of a client lawsuit against your business, your personal properties are protected from the lawsuit, as the lawsuit can only claim the possession owned by your business and not your personal possession. Conversely, if you opt not to incorporate, lawsuits brought against your business may result in personal liability.

Many entrepreneurs incorporate their businesses to limit lawsuit risks. However, you can enjoy similar protection if you choose not to register, but only with the right business insurance plan. The appropriate insurance can cater to legal fees and award damages in case your business faces a lawsuit. Even after incorporation, having the correct business insurance remains crucial.

Related: How to get a small business loan

How can I register a GST/HST number?

You can register for a GST/HST number online, by fax, mail, or telephone. Businesses that earn more than $30,000 per year must register for a GST/HST number and collect the associated sales taxes, depending on the province. However, if your business earns less than $30,000 annually, registering for a GST/HST number is not mandatory, but you can still do so.

If you're registered for the Goods and Services Tax/Harmonized Sales Tax (GST/HST), you'll need to submit regular GST/HST returns and pay the sales tax you've collected to the government. On a positive note, you can typically claim back the GST/HST you've paid for business-related purchases.

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Is it Possible to Commence a Company Without Registration?

While it's entirely feasible to initiate a business in Canada without registration, there are significant restrictions. To do so, you must:

- Use your first and last name as your business name. Even if you add "...and company" or "...'s baking company," you'll need to register a business name.

- Keep your revenues under $30,000 per year. As long as your revenues are below this limit, you'll be classified as a small supplier and won't require GST/HST collection unless you choose to register.

- Operate as a sole proprietorship. This means you won't be required to incorporate. While partnerships don't necessitate incorporation, you'll still have to register a business name.

Numerous ways can "register" your Canadian company, including business name registration, incorporation, or GST/HST number acquisition. While some registrations may be mandatory in specific circumstances, you can still run a successful business without them.

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In which province do you plan to launch your enterprise? We have a step-by-step guide that explains how to start a business:

Ontario Guide Alberta Guide British Columbia Guide Original publication date: December 3, 2021 | Updated: May 1, 2023