How to Register a Business in Canada
Becoming a business owner often comes with numerous advantages, such as being your own boss. However, starting a business is also a difficult process that requires problem-solving and a bit of jumping through hoops and ladders.
Even registering an online business requires a good amount of work upfront.
You have to find all the licenses you’ll need, figure out the tax requirements, and learn about all the regulations in your industry. On top of all the legal requirements, you need to create a business plan to set yourself up for success.
To make the process of registering a business in Canada easier, follow the guide below, so you can focus on the success of your business!
Choose Your Business Name
The first step in becoming a registered business in Canada is selecting a name. This step may seem like a trivial part of the process, but, in reality, it will play a key role in your business's future.
As an online business owner, you want to have a name that provides information about your store. Your name should give a hint to what services and products you’re selling. However, you don’t want to be overly specific with your name. If you create a name that is too specific, you’re going to limit your business’ ability to expand into other products and markets in the future.
Thus, find a middle ground between random and overly specific.
Once you’ve come up with a few options, you need to make sure you can legally use the name. Follow this link to see if one or several of your desired business names are available. You can search Canadian business registries and Canadian corporate names.
When you’ve decided on the final name and you’re sure it’s available, you need to register the business and the name.
Decide What Kind of Business You Want
Before you can be legally registered with the Canadian government, you need to choose what kind of business you want to have. You can choose a corporation, sole proprietorship or partnership, or a cooperative.
You can read more about each type here to see what the best fit for your business is.
Likely, if you’re starting an online business, you’ll either go the route of a sole proprietorship or partnership, or you’ll choose to create a corporation. Check out the sections below to see more information on the two options.
If You Choose Incorporation, You Must Choose Federal or Provincial
When a business is going to be incorporated, it must be federally or provincially. The choice is up to the business owner, but there may be more benefits if done federally. For example, as a business, you have to regularly pay fees and send documents.
When you incorporate federally, all of this can be done online making it easier and quicker. Find more information about incorporating your business here.
Registering as a Sole Proprietorship or Partnership
The different provinces of Canada have different requirements for registering a business. If you’re registering a business with the desire of having a location in a province, you need to go this route.
You must check with your provincial government to see what regulations and requirements exist. See this website to find the links to the different local governments.
Register for Your Business Number
Now that you’ve determined your type of business, and registered the name either federally or locally, you have to obtain a business number. This is a nine-digit number that’s created by the Canadian Revenue Agency.
The process of obtaining this number is easy, and it can be done by mail, phone, fax, or online. Check this website to find all the necessary information on registering for your business number.
While obtaining your business number with the CRA, you can also opt to register for some other common programs. For example, there are GST/HST programs, payroll deduction programs, and more.
Get Your Licenses and Permits
Depending on the type of online business you’re running, you may need to obtain various permits and licenses. Use this website to aid in your search. The tool can help determine if there are federal, territorial, municipal, and provincial permits that you need.
If you have a federally incorporated business, see here. The link can provide further information on advertising, import permits, measurement requirements, export permits, environmental regulations, health and safety regulations, and more.
At this point, your business should be registered. However, your work is not done. You still need to know the taxes and duties you’ll have to pay. Use this website to learn about corporate income tax, GST/HST, customs duties, excise taxes, tariffs, and more.
There are likely exceptions to what eCommerce stores and other online businesses have to pay, so it’s important to keep an eye out for requirements.
Here, you can find specific information about eCommerce stores in Canada. The laws state that even if your business operates solely online, you still have to report the income you and your sites earn.
Depending on how you’ve registered your business—corporation or proprietorship or partnership—you’ll have different requirements. Furthermore, you can find information specific to GST/HST for eCommerce stores here.
Regardless of what your online business will need to pay, it’s important to be aware of what taxes are in effect in other industries. If you ever consider opening a brick-and-mortar store, you’ll likely have different taxes to pay. If you begin shipping products from overseas and keeping a warehouse of goods, you’ll also have different taxes and tariffs to pay.
Now that you’re fully registered and complete with the necessary permits (if any) and aware of the taxes you’ll pay, you’re ready to move forward with business operations. Create your website, build your brand, establish an audience, and start selling goods or providing services!
The Bottom Line
Canada makes it easy for an online business to register and operate which encourages entrepreneurs to join the online business industry and contribute to the economy. To register a business in Canada you only need to make a couple of key decisions—such as the name of your business and the type of business you want to have.
Beyond that, you just need to follow the steps above to ensure you’re 100% compliant with everything the Canadian government—including provincial governments—requires.