Eight Things You Need to Do When Starting a Business
Canada is powered by entrepreneurs. The Government of Canada’s Innovation, Science and Economic Development Canada branch reports that as of June 2016, 97.9 per cent of employers in Canada were small business owners (1-99 employees), 1.8 per cent were medium-sized companies (100-499 employees) and just 0.3 per cent were large corporations (500+ employees). Alberta itself proudly claims 165,792 innovative small businesses. There has never been a better time in Canada to start your own small business.
However, no business – even if your idea is a stroke of genius – survives without a game plan. The trick is to start your business off properly, and to do that, you need these eight things:
A Legal Identity:
Your legal identity is not your name. It is how CRA will look at your business income. Decide if your business will be a sole proprietorship (owned and run by you where you are liable for the business), a partnership (owned and run by two or more individuals that share the business’ liabilities) or a corporation (the business legally becomes its own entity with rights and protections; owners are not personally liable).
A Business Number:
You don’t have to be a corporation to get a business number. Having a business number makes all your reporting to CRA much easier, shows your clients that you are a legitimate business, and helps keep your business and personal income separate. For more information please visit the CRA Website.
A GST Number:
Some Canadian goods and services are exempt from GST, but if you sell taxable products, are a large supplier and/or exceed profits of $30,000 in one year, you must collect and remit GST. You do not want to leave this important step for the year you make the threshold. You must have your GST collection and remittance structure in place before it becomes mandatory for your business. You can join the voluntary remittance program at any time – and you should. With your GST number and your collection/remittance in place, you won’t be fined or have to pay retroactively if you unexpectedly profit $30,000+ in a year.
A Tax Instalment Account:
When you work for an employer, your taxes are deducted and you get a handy form at tax time. Nice and simple! When you work for yourself, that paperwork – and big tax payment – is all on you. Every month, check out this calculator to get an estimate of the taxes owed on your earnings. Remember, as a small business owner, you pay 100 per cent of the CPP contribution, not the 50 per cent that is deducted from employee paychecks. Next, set up an installment account with CRA that links to your online banking bill payment account. Every month, pay the taxes you owe into that account. It goes right to CRA and in April, you won’t be surprised with a $15,000+ tax bill. You would have already paid off most, if not all of your taxes.
Health Care Benefits:
Salaried employees are often provided with an employer sponsored benefit package that helps them pay for the high cost of health and dental treatments. You still have medical expenses if you work for yourself, but money may be tight when you are just starting out. Learning that your child needs braces, having to pay for a year of costly prescription medication, or needing physio thanks to a car accident can quickly sink you into debt. You don’t need that stress when your business is just getting off the ground. Speak to one of our team members today about benefit options for new business owners, email firstname.lastname@example.org.
You could save money by doing everything yourself, but that’s also the perfect way to burn out, waste time on things you are not good at, and ultimately present the business as unprofessional and distracted. Save your sanity by enlisting the services of accountants, web designers, brand specialists, etc. There are many professional firms that have plans for emerging businesses, and you will ultimately save money and be more competitive as a business when your accounting is in order, your website attracts customers, and your business cards don’t look like you did them yourself on perforated cardstock. We have a large network of the top business professionals in every field and would love to connect you with the right solutions, please email us for recommendations at email@example.com or visit our website.
Just as the right service providers save you time and money, so do the plethora of digital services at your fingertips. Take advantage of the free or very low cost apps that will keep you organized and connected to your clients. OneDrive, Dropbox, Color Notes, Basecamp, Asana, GSuite – all of these, and more, have been designed for small businesses and they are lifesavers during those busy, hectic years of starting out.
Entrepreneurs know that when you work for yourself, you’ll work harder than ever before. You are the business and the business is you, so there is no stepping away from the office and letting it all go for the day. Your phone rings around the clock, you can’t resist a peek at your emails at 3 am and you don’t know how you are going to make it to that important client meeting when your daycare provider just bailed on you. Entrepreneurship is rewarding, but is also very stressful. Even if it’s just for an hour or two a week, have a time and place where you can recharge. Your back porch with a glass of wine, a coffee shop with a friend, on the couch with Netflix, in the gym – without this time, you cannot run your company efficiently. Make a date with downtime and don’t cancel. Check out our previous blog titled, What About Stress for more ideas on ways to unwind and information on how stress affects your health.
FFG Solutions works with businesses of all sizes and we’ve seen how having a good foundation in place before you start a business is vital for success. Contact us today to see how our business, health and individual solutions will help your dreams of business ownership come true.