Starting a business is many people’s way of chasing after their dream of accumulating wealth. But to be successful, it is crucial to understand the legal aspects of starting and running a business in Canada. These include incorporating your business, registering your business name, getting the necessary licenses, and understanding taxation. Knowing what this entail can help avoid any legal trouble down the road.

Registering Your Business Name

This means registering your company with the federal or provincial government. Doing so will give your business a legal identity and allow you to open a business bank account, hire employees, and enter into contracts. You will also need to choose a corporate structure, such as a sole proprietorship, partnership, or corporation.

Here are a few differences between the following business structures:

  • A sole proprietorship is a business owned and operated by one person. You are personally liable for all debts and obligations of the business.
  • A partnership is a business jointly owned and operated by two or more people. Each partner is equally responsible for the debts and obligations of the company.
  • A corporation is a business incorporated, which means it has legal status as a separate entity from its owners. The shareholders are not liable for the debts and obligations of the company.

Incorporating Your Business

In case you choose to incorporate the business, you can enjoy limited liability protection, which means that you are not personally liable for the debts and obligations of your business. Incorporating can give your business a professional image and make it easier to raise money by selling shares.

Two ways to incorporate your business are through the provincial or federal government. If your business operates only in one province, you would incorporate provincially. But if your plan is to run in more than one province or even internationally, you must include your brand federally.

To incorporate federally, you must file articles of incorporation with Corporations Canada. You will also need to have a registered office in the province or territory of your business location and designate an agent for the service of documents in Canada. You will need a business number from the Canada Revenue Agency (CRA), which you will use for tax purposes.

You can incorporate your business provincially through the Registrar of Companies in the province or territory where you will operate. The process and requirements vary from one region to another, so it’s best to check with the registrar in your area. You will also need to get a business number from the CRA.

Getting a Business License

Depending on the type of business you are running and its location, you may also need to get a business license from the federal, provincial, or municipal government. A business license is an official permission to operate a business within certain limits. It is often a requirement for companies such as restaurants, bars, retail stores, and professional services such as hair salons and daycare centers.

Let’s say you’re opening a food and beverage manufacturing. Your business must comply with the Food and Drug Administration (FDA) food safety regulations, which are under the federal government. You may also need to acquire a CRN, which is your Canadian registration number. This is because you will be handling food products crossing provincial borders and using piping systems requiring registration, testing, and maintenance.

You can find a reliable professional with years of experience who knows how to get a CRN number for you. They know precisely what you need to acquire a CRN, making the process easier. This will ensure you get the best quality services and avoid problems down the road.

Hiring Employees

If you plan on hiring employees for your business, there are a few things you need to do to ensure that you’re compliant with the law.

First, you will need to obtain a business number from the CRA. This number is for tax purposes and will allow you to register for payroll deductions.

You will also need to obtain a Provincial Sales Tax (PST) number from the province where your business is at. You will use this number when you charge PST on the goods and services you sell.

If you plan on hiring employees, you will need to register for Employment Insurance (EI). This program provides temporary financial assistance to unemployed workers. You will also need to register for the Canada Pension Plan (CPP), a retirement savings plan.

You must also obtain a Workers’ Compensation Board (WCB) number. This is a program that provides insurance to workers who are injured on the job.

This is just a basic overview of the legal steps you need to take when starting and running a business in Canada. This shows that making sure to do your research to comply with all the applicable laws and regulations. Non-compliance can result in fines, penalties, and even jail time.