Want to start business in Canada? Well, the idea of starting business in Canada seems to be overwhelming and appealing to a lot of people. “How can I start business in Canada easily” if is the question pops up in you mind!! then here is the exact and detailed answer which can clear all your doubts.
There are several things to consider when starting a business. It is easy to come up with a business idea, but not easy to launch it. It is estimated that 80% of businesses fail in the first year. So, before planning to start business in Canada, make sure to assess the readiness of your business and its outcome. Evaluate the possible options and prepare a business plan based on the data.
This guide “How to start business in Canada” will help you turn your dream of becoming an entrepreneur into reality. This guide will provide you detailed steps, which you need to follow strictly (if you want to start business in Canada and operate it successfully).
Before we go into details, let’s have a look at the business opportunities in Canada….
Business opportunities in Canada
There is a continuous growth of business opportunities in Canada, as the Canadian business community promotes economic growth and favors innovation. Canada is considered as leading promoter of business investment in the world. If you are dreaming of expanding your business or starting a new business, Canada is the best fit. Here are some of the best business opportunities in Canada that help you transform your dream into reality.
- Artisan food – Artisan food are considered the best in terms of quality. Most of these businesses start as small cottage industries that sell at farmers’ market. If you are a food artist, you must turn it into a business.
- Bike service – Bike service is another best business opportunity in Canada. As new models are evolving in the market, you can start a bike sales or rental business that will run successfully for years.
- Heathy Snacks – Sales of healthy snacks has grown significantly in the recent years. There are plenty of options for healthy restaurants and bakeries.
- Hot dog café – Canine café restaurant is a unique concept with nice convivial atmosphere. The main objective of this business is to create a space where people can enjoy good meal in company of their pet.
- Microbreweries – You might have heard of the popularity of microbreweries in Canada. It is estimated that the number of breweries grew in Canada by 70% with an annual sales growth of $20 billion.
- Self-storage units – storage units are highly in demand across North America because of the downsizing of homeowners. There is a general trend for businesses to reduce storefront. Similarly, people seek storage units to accumulate more and more possessions.
- Senior care – Catering to seniors is the best small business opportunity in Canada. If you prefer not to start business from scratch, you can opt for franchise option. Senior citizens need several modifications to their living space to cope up with diminished hearing and eyesight.
In today’s competitive business world, it is crucial for entrepreneurs to learn about business opportunities in Canada and choose the best model that fit their criteria.
Step by step procedure to start business in Canada
There are several things to consider before starting business in Canada. You must come up with a proper business plan and know about the regulations and licenses that are applicable to the type of your business. If you are a permanent resident of Canada or new Canadian, these steps will provide some basic requirements of starting business in Canada.
- Prepare a business plan
Business plan is document that describes the objective and strategies of your business, goals, outcome, external funding and financial forecast. Prepare a business plan by assessing the readiness and choosing the business structure. Conduct some market research, before turning your idea into a profitable business. Think about the kind of business you want to start. If you want to partner with someone, you should complete all the formalities. This document helps you for the growth and progress of your business in Canada.
- Choose type of ownership
The next step is to choose the structure of your business or type of ownership. The most common types of ownership are – Corporation, general partnership, sole proprietorship and cooperative.
- The Corporation– It is easier to raise capital from financial institutions for this type of ownership. The owners are not responsible for obligations or company debts. The income from business can be paid in the form of dividends or salary, allowing business owners to maximize tax situation.
- General partnership –In this type of ownership, the risk and management is shared, as tax reporting is simpler. However, there is risk of conflicts between partners and buyouts can be a bit problematic.
- Sole proprietorship– It is the most cost effective ownership. The owner controls the business solely. However, there is no separate between business and owner and hence it can be hard to raise capital via debt.
- The Cooperative– This type of business is controlled by the members who have limited liability. The decision making process can be a bit slow in this type of ownership.
Once you have selected the type of business ownership, you have to register your business.
- Register your business
To register your business, you need to incorporate your business through provincial incorporation or federal incorporation. Get a federal business name along with income tax account. If you are planning to operate in multiple provinces, you must register as extra Provincial Corporation in those jurisdictions — depending on the location of your business.
Choosing appropriate location is important, as you have to provide address of your company during registration. When reviewing the location of your business, consider the local business environment, taxes and other formalities. In some cases, you may get tax accounts, business numbers and provincial registrations as a part of incorporation process. To register your business, you can even use Business Registration Online (BRO).
- Get business license
The next step is getting business license from municipal, provincial and federal governments. The Municipal Licensing and Standards Division of Canada handle the application process. Your business will get a Number that identifies your business to the government. Your Business Number is the account number that helps the government to identify your business regarding – payroll, import/export, GST/HST and other activities.
Business owners need to visit License & Permit issuing office to apply for business license. You may need to produce additional documents such as lease agreement, Criminal Background Check issued by Canadian Police Service and government issues identification. Certain businesses need PPR (preliminary project review) as well as zonal approval certificate.
- Finance your business
Canada government can help you find the best financing option. There are some programs that are applicable to all the businesses across Canada. Government departments provide finance in the form of subsidies, grants and loan guarantees. Some government financing options are targeted to specific demographic groups and industries. Besides this, your business may be eligible for private sector financing. There are some non-profit organizations that can direct you towards the best finance option.
There may be strong competition and you may have to match the criteria to receive funds. You need to provide detailed business plan, benefits, and background of employees and complete application forms with reference.
- Taxation formalities
You must complete taxation formalities at the same time of registering your business. You may need tax accounts such as – payroll, import/export, GST/HST etc based on the type of your business. If your business is of sole proprietorship or partnership, you should file Form T2125 to report your business income. If your business is incorporate, your business income must be reported on T2 tax return.
If you sell products/services in Canada, you have to pay HST (Harmonized Sales Tax). You are required to register and remit ETH (Employer Heath Tax), if your business has annual payroll of more than $450,000. Your business number will help you in dealing with federal government regarding taxes, import/export and other activities.
|Type of business||Income Tax Return you need for your business|
|Sole proprietorship||T1 personal income tax|
|Incorporated||T2 corporate income tax|
- Hiring employees
Advertise the job position and hire an employee. The job posting process can be frustrating for Canadian employers. Some of the popular job search sites where you can give employment notice include – http://www.canadastop100.com/
Make an agreement that clarifies job details, work hours, salary, benefits and probationary period. Have the employee fill out tax information and TD1 form. Canadian labor law is the body that regulates employee and worker rights in Canada.
The standard hours of work are 8 hours per day, which is around 40 hours per week. Any hours worked in excess are charged at a pay rate of 1.5 times the hourly wage. The maximum number of working hours is 48 per week. The employment standards are likely to be covered by federal or provincial standards.
How Local people/outsiders can start business?
To start business in Canada, you need to hire a local agent who has registered office in Canada. You need to contact Provincial registry of the province you want to do business in. If you wish to do business in more than one province, you need to register your business separately with each territory or province.
If you are non-Canadian, there are several ways to open business in Canada. You can either immigrate to Canada or set up a partnership or corporation with one or more Canadian citizens. You can team up with few Canadians to run your business. If you want to expand your exiting business, you need to register your business as extra Provincial Corporation.
Anyone can apply for work permit before entering Canada. There are two types of work permits – employer specific work permit and open work permit. Canadian citizens do not need any work permit, as they are permanent residents of Canada.
What is the success rate to start a business in Canada?
Businesses are backbone of Canada’s economy. According to The statistics of Science and Economic Development Canada, thousands of businesses exist in Canada every year. Here are some statistics that show the success rate of startups in Canada –
- 80% of businesses fail in the first year due to inexperienced management, poor planning, lack of proper goals etc.
- 75% of businesses depend on personal savings for funding their business
- 27% of businesses in Canada fail due to cash flow problems
- 30% of startups in Canada become successful. However, the rate of successful businesses in Canada is going high and it is good to see that many entrepreneurs are setting up their companies in Canada.
Starting a business is like planting a tree. Many companies fail at solving the problems they face. That’s the reason why business owners should do a business plan that safeguards them against business failure. Before starting business, it is must to figure out how much money is needed to run the business and how to overcome financial crisis.
There are thousands of businesses coming up every year in Canada. However, 90% of the businesses do not make any sense and fail in the first year. 10% of the companies have to face the competition, and at last only 5% will survive and make it large.
What are the benefits we get on starting business in Canada?
Canada is the best country for doing business in 2018. There are many benefits of starting business or expanding business into Canada. Some of the competitive advantages of doing business in Canada are –
- Lowest corporate tax rates
Canada is one of those countries with lowest corporate tax rates. The local tax rate is currently 15%, which is very less compared to other developed countries. Canadian officials are going to lower these rates even more.
- Familiar guidelines and regulations
Canada shares many traditions with US and surrounding countries, which makes it easier for business owners to begin operations in Canada. The demographics of Canada are similar to the US, and they share a close statistics in terms of ethnicity and religion.
- Skilled workforce
Canada is one of those countries with high quality education. It has a great pool of highly educated people and skilled workforce. You will find that the highly skilled workforce makes majority of its population. Canada ranks first in terms of college and university education.
- Stable economy
The economy of Canada is highly stable, and is ranked by Forbes as one of the best countries for business. Due to its trade freedom, low corporate tax rates, minimal corruption, low red tape and investor protection – Canada earned its top spot. Canada is a perfect fit for businesses in renewable energy, digital media and financial services.
Every entrepreneur’s journey is different and represents his dedication towards work that leads to success. Follow the above guide to start business in Canada and maintain a strong focus on your financial goals. Surround yourself with a supportive Canadian team to help you achieve your goals and achieve success in future.
Once you have started business in Canada, you will have covered all the bases. Use your business plan to increase your chances of success. Explore as many as ideas to promote your business and attract customers.
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