Starting a business in Canada is more straightforward than most people expect. The process is well-documented, the fees are low, and the government offers significant support for new entrepreneurs. What trips people up is not knowing the sequence.
Step 1: Choose Your Business Structure
Canada has three main business structures:
- Sole Proprietorship — Simplest and cheapest. You and the business are the same legal entity. Income flows to your personal tax return. No liability protection.
- Partnership — Two or more people sharing a business. Can be general (shared liability) or limited. Formalize with a partnership agreement.
- Corporation — A separate legal entity. Offers liability protection and tax advantages (especially the Small Business Deduction on the first $500,000 of active income). Higher setup cost (~$1,000-$2,000 for federal/provincial incorporation).
Most small businesses start as sole proprietorships and incorporate once revenues are consistent enough to justify the accounting overhead.
Step 2: Register Your Business Name
If you’re operating under any name other than your own legal name, you need to register it. In Ontario, this costs $60 for a business name registration through the Ontario Business Registry (OBR) at ontario.ca/businessregistry. For federal incorporation, use Corporations Canada at corporationscanada.ic.gc.ca.
Before registering, search NUANS (Newly Upgraded Automated Name Search) to ensure your name isn’t already taken.
Step 3: Get a Business Number from CRA
Once your business exists, register with the Canada Revenue Agency for a Business Number (BN). This is your account identifier for all tax dealings. You’ll use it for:
- GST/HST registration (required once revenues exceed $30,000/year)
- Payroll deductions (if you have employees)
- Corporate income tax (if incorporated)
- Import/export accounts
Register at canada.ca/en/revenue-agency or by phone at 1-800-959-5525.
Step 4: Open a Business Bank Account
Keep business and personal finances completely separate from day one. Most major Canadian banks (RBC, TD, Scotiabank, BMO, CIBC) offer small business accounts. Online banks like Tangerine and Neo Financial offer lower-fee options for businesses with simpler needs.
Step 5: Understand Your Tax Obligations
- HST/GST: Collect and remit 13% HST on goods and services in Ontario once you pass the $30,000 threshold (or voluntarily before)
- Quarterly installments: If you expect to owe more than $3,000 in tax, CRA expects quarterly installment payments
- Bookkeeping: Track every expense and invoice from the start. Software like QuickBooks or Wave (free) makes this manageable
Free Resources for New Canadian Business Owners
- BDC (Business Development Bank of Canada) — Free advisory services and low-interest loans
- Futurpreneur Canada — Mentorship and financing for entrepreneurs under 40
- Ontario Small Business Support — ontario.ca/smallbusiness
- Local SBEC (Small Business Enterprise Centres) — Free one-on-one consulting available in most GTA municipalities
Starting a business in Canada is not the hard part. Building one that lasts requires understanding your market, managing cash flow, and serving your customers well. The paperwork is the easy part — start there.
