Business Types in Canada
| Structure | Liability | Tax | Cost to Start | Best For |
|---|---|---|---|---|
| Sole proprietorship | Unlimited personal | Personal tax rates | $60-130 | Freelancers, side hustles |
| Partnership | Unlimited | Personal tax rates | $60-150 | Joint ventures |
| Corporation | Limited | Corporate + dividend | $200-500 | Higher income businesses |
Startup Financial Checklist
Legal & Registration
| Task | Cost | Where |
|---|---|---|
| Register business name | $60-130 | Provincial registry |
| Federal incorporation (optional) | $200 | corporations.ic.gc.ca |
| Provincial incorporation (optional) | $300-500 | Provincial registry |
| Business number (BN) | Free | CRA |
| GST/HST registration (if needed) | Free | CRA |
| Municipal business licence | $100-300 | Your city/municipality |
Banking & Finances
| Task | Details |
|---|---|
| Open business bank account | Keep personal and business finances separate |
| Get business credit card | Build business credit, track expenses |
| Set up accounting system | QuickBooks, Wave, FreshBooks |
| Establish bookkeeping process | Weekly reconciliation minimum |
| Set aside tax money | 25-30% of revenue for income/GST |
Insurance
| Insurance Type | Who Needs It |
|---|---|
| Commercial general liability | Most businesses |
| Professional liability (E&O) | Consultants, professionals |
| Commercial property | If you have physical assets |
| Cyber liability | Businesses handling customer data |
| Workers’ compensation | If you have employees |
GST/HST Registration
| Registration | Threshold |
|---|---|
| Mandatory | Revenue exceeds $30,000 in 4 consecutive quarters |
| Voluntary | Can register anytime to claim input tax credits |
| Province | GST/HST Rate |
|---|---|
| Alberta, Territories | 5% GST |
| BC, Manitoba, Saskatchewan | 5% GST (+ PST separate) |
| Ontario | 13% HST |
| Quebec | 5% GST + 9.975% QST |
| Atlantic provinces | 15% HST |
Tax Deductions Sole Proprietors Can Claim
| Expense | Deductible |
|---|---|
| Home office | Portion of rent/mortgage, utilities |
| Vehicle | Business use percentage |
| Phone & internet | Business portion |
| Office supplies | 100% if for business |
| Professional development | Courses, books related to business |
| Marketing & advertising | 100% |
| Professional fees | Accountant, lawyer, bookkeeping |
| Business insurance | 100% |
Funding Options
| Source | Best For | Cost |
|---|---|---|
| Personal savings | Starting capital | $0 |
| Business credit cards | Short-term cash flow | 19-22% interest |
| Line of credit | Flexible borrowing | Prime + 1-3% |
| BDC loans | Small business loans | Competitive rates |
| CEBA (if available) | COVID-era emergency | β |
| Crowdfunding | Consumer products | Platform fees |
| Angel investors | High-growth startups | Equity |
Record-Keeping Requirements
| Document | Keep For |
|---|---|
| Income records | 6 years |
| Expense receipts | 6 years |
| Bank statements | 6 years |
| Tax returns | 6 years |
| Corporate minutes | Permanent |
| Contracts | Duration + 6 years |
First Year Financial Goals
| Milestone | Target |
|---|---|
| Separate finances | Day 1 |
| Bookkeeping system | Week 1 |
| First profitable month | Month 3-6 |
| Emergency fund (3 months expenses) | Year 1 |
| Positive cash flow | Year 1 |
| Accountant relationship | Before first tax filing |