Launching a business means knowing the rules. Many businesses get into serious trouble - and even fail - simply because of the penalties and interest charges levied for failing to comply with government regulations. Here are the facts that you need to know before your business opens its doors and that you need to keep in mind even when your company is thriving.
A Formula for Success |
The more you know, the better. You may even consider taking an aptitude test to find out if you have an entrepreneurial spirit.
As a business owner, you will have to take on the roles of salesperson, market analyst, human resources manager, bookkeeper or accountant - and last but certainly not least, president. Consider what you are good at, what you currently have the skills for, what you can be trained in, and what should be outsourced.
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Part of planning a new business is establishing the "dream." Here are some questions to answer:
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Once you decide to go into business, the paperwork starts. Generally, one of your first major decisions is deciding on a form of business (sole proprietorship, partnership or corporation) and either registering the business or incorporating the company.
An incorporation can be prepared at most lawyers offices for a fee or a do-it-yourself incorporation kit is available at most bookstores. (Caution: Do-it-yourself kits may not save you money in the long run.)
Unincorporated businesses should be registered at the Provincial Government Agents office. Once the business is registered or incorporated, a business licence should be obtained for every jurisdiction in which the business plans to operate.
During this start-up period, any financing that is required for operations should be obtained. Financing can be obtained from banks, family members, friends and sometimes the government. As part of the financing plan, the business owner should research any government grants or assistance that may be available. This could be essentially "free" money.
While you are in the bank attending to financing, a company bank account should be opened. It is likely that the bank offering you financing will also want you to keep a current business account with them. An affordable service charge package may be negotiated at the same time as the loan terms.
A suitable location must be secured for the business operation. Many business owners opt to start their businesses in their homes until there are sufficient profits to warrant moving to larger, more commercial surroundings. In either case, there may be renovations required to allow the business to operate. You probably need special equipment, including computers. These renovations, along with the connection of utilities, should be completed before you open for business.
As a business operating in Canada, some of the government imposed issues you may need to deal with include:
- Federal and provincial sales taxes.
- Corporate tax.
- GST/HST.
- Payroll Source Deductions.
- Workers' Compensation.
Whether you must register with various governmental bodies depends on your company's circumstances. But keep in mind that these circumstances may change over time. For instance, you may start with no employees other than yourself. Later, you may hire employees as needed.
Before your business opens, however, a trip to your tax adviser or accountant is in order to help complete the planning. Your accountant will be able to give you important information, including which government bodies you need to be registered with. This depends on whether your business has sales that are subject to tax, employees on the payroll, import-export issues, and the potential of early period profits.
