Canada is home to millions of businesses across the country. If it's been your dream to start your own company, navigating the licensing requirements can be tricky. For example, depending on what kind of business you want to operate, your business type in terms of structure, what province or territory you live in, and more.
To help you start your new business on the right foot and for additional information about regulatory requirements for new businesses in Canada, keep reading.
What is a business licence?
A business licence is a term that refers to any type of permit or other types of licensing requirements needed to operate a business in a specific proposed location. The type of licence a business requires depends not only on your local government at the municipal level but also on provincial and federal government levels.
Before you are able to legally conduct business activities, you, as a business owner, will need to get a business licence and register your business for tax purposes.
Types of business licences in Canada
In Canada, there are numerous types of business licences available. Here's a closer look at some of the ones you may need:
Industry permits
Depending on what type of business you're planning to operate, you'll need to look up the necessary licences for your industry. For instance, electrical, law, medicine, childcare, and more have necessary permits.
Special licences
If you have a physical location, you'll need to apply for special business licences. This includes building permits, health permits, a zoning permit, licences for planning, and more.
Operating licence
Lastly, depending on your business structure, you will need to register and obtain a licence as well. Once you have collected your required documents and filed your application form, you'll then be able to go ahead and start getting your business up and running in no time!
Do you need a licence to start a business in Canada?
Yes, you will need to obtain a business license to start a business in Canada. This license is a necessary requirement to legally operate your business and ensures compliance with local regulations and standards. Depending on the nature and location of your business, additional permits may also be needed to meet specific industry or municipal requirements. It is essential to research the particular licensing needs for your business type and area to ensure a smooth and lawful startup process.
How to get a business licence in Canada
To obtain a business licence in Canada, you need to take a couple of steps before sending in your application form. Here's what you need to do:
1. Choose your business entity and business name
First things first- you need to determine what type of business entity and business name you want. Choose a name that represents what you do as a business! There are plenty of names out there for you to choose from. You can check existing trademarks from businesses using online government tools to ensure you don't have the same one as any current businesses out there. Using the same name as other businesses can be confusing for your customers and, in some cases, be illegal. Now, it's time to select a structure for your business:
Sole proprietorship
If you plan to own and operate your business yourself, a sole proprietorship may be your best option, as you do not need to file any additional paperwork for this structure. Sole proprietorships are responsible for their business debts and typically conduct activities under their name or "doing business as (DBA)." Sole proprietors will also need to file their business taxes under their self-employment income portion.
General partnership
General partnerships and a sole proprietorship are similar in terms of taxes. However, each partner in the business divides liability. Any individual assets that each partner has will not be separate from the business. Again, partnerships can operate as doing business, with each last name used.
Limited liability company
A limited liability company, also known as an LLC, is another type of business entity where any profits made by the business or losses in terms of revenue are connected to those with ownership in the business. However, the individual assets of each owner are protected from the business and can not be used as collateral.
Corporation
With a corporation, the business is considered a separate legal entity from those who own it, similar to a limited liability company. Businesses that operate as corporations typically have directors and stakeholders. The corporation will pay taxes separately from stakeholders and may be paid dividends as profits are made.
Non-profit organization
Non-profit organizations are similar to corporations in terms of structure. However, unlike corporations, any assets made by non-profit organizations cannot be redistributed to those who own and operate them.
When it comes to choosing a structure for your business, there really isn't a one-size-fits-all answer. The best thing you can do is evaluate your individual needs, the industry you plan on operating in, and your goals for future growth. You may also want to look at the pros and cons of each before choosing which one to go with.
2. Apply for a business number with the Canada Revenue Agency
Now that you've chosen a business entity, it's time to register for a business number with the CRA. You can do so by calling their business line directly to talk with an agent or using their online tool. To receive a tax number, you will need to fill out an application form. Once approved, you will have a tax number that you will need to file under moving forward.
3. Determine what type of business licence you need
Okay, so you've chosen a structure and gotten a tax number; the next thing you'll need to do is search for and confirm which permits and licences you need. The different permits you need will depend on the local, provincial, and federal government requirements and which industry you are operating in. To find the specifics of each permit needed, you can find this information online or call your local city hall office to speak with someone.
4. Apply for financing
Once you register your business and have your permit and licences in place, you can then go ahead and apply for any financing. Whether it be a small business loan or a government grant, there are numerous options available to owners to help with the process of starting a successful business venture.
How long does it take to get a business licence in Canada?
Getting a business licence in Canada shouldn't take long. Most processes can be completed online through government websites in an effort to streamline processes, which in most cases can take 1 to 3 days. If you are, however, registering for a permit or zoning application, you may be dealing with more of a wait time.
Protect your business with business insurance
No matter what type of business you operate, all business owners require some type of coverage as a part of their risk management. There are many types of business liabilities and business claims scenarios that your company can face without even realizing it. Luckily, with the right coverage in place, you can focus on growing your business to new heights. Here are some insurance policies to think about:
Get affordable business insurance with BrokerLink today!
Are you thinking, "How can I find the right insurance policy for my business?" Are you looking for ways to improve employee well-being? What about how to make your small business accessible?
If these are the types of questions weighing on your mind as a business owner, you've come to the right place. BrokerLink is a leading and experienced brokerage in Canada with years of experience helping Canadian business owners just like you.
If you're interested in getting a business insurance policy for your company, come on in and visit us at one of our locations across Canada. If we're not in your neighbourhood, feel free to give us a call and speak with a team member at any time.
Are you in a rush? No problem! Use BrokerLink's free online quote tool to get a competitive business insurance quote from the comfort of your own home--or wherever you are!
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FAQs: On obtaining a business license
How much is small business licensing in Ontario?
If you have a small business idea and live in Ontario, you may be wondering how much a business licence is going to cost you. If we're being honest, the cost of business licensing in Ontario can vary and is based mainly on the type of business structure you want to operate under. For instance, a business licence for a sole proprietorship in Ontario is $60. On the other hand, corporations will need to pay $300.
What business structure is best for a small business?
The type of structure that is best for your small business really depends on your goals and proposed business activities. For example, if you plan on operating a home-based business without any employees, a sole proprietorship may be best. On the other hand, if you plan on owning your business with others, a limited liability company or general partnership may be a better option. We recommend taking a look at the pros and cons of each business structure and comparing them to the unique needs of your business venture before choosing the one you think is best.
Can I start a business in Canada without a licence?
Yes, you can if you operate as a sole proprietorship. However, any other type of business requires permits and licences in Canada and is mandated, regardless of what industry your business operates in or the types of services it provides. Should you choose to conduct business without the right business licensing, you could face expensive monetary fines and have your business shut down, which can have a negative impact on your reputation.
Is my business protected against employee dishonesty?
So, when it comes to employee dishonesty, is your business covered? In most cases, yes, your business will be covered by your insurance coverage against numerous dishonest acts, including the misuse of money, misappropriation of inventory, misappropriation of other assets, corruption, financial fraud, and more, depending on the specifics of your coverage. Keep in mind, however, that this type of insurance coverage is often not included in a basic plan, meaning you will have to pay extra for this type of protection. For more information about this insurance and how it can protect your business, reach out to a broker or an insurance agent.
Do I need a licence to sell online?
Regardless of whether you choose to sell your products in person or online, the permits and licence you require will depend on the type of business structure you have, where you're located in Canada, and what products you sell.
Is there a difference between a licence and a permit?
Sometimes, the terms licence and permit can be used interchangeably, which can be quite confusing. Essentially, a business licence is going to give you the ability to operate as a business. On the other hand, a permit provides business owners with certain authorizations to conduct different types of activities.
Do I need a licence for my home-based business?
Whether or not you need a licence for the business you plan on operating out of your home will depend on the industry in which you are operating. For example, if you create art and sell it on an online marketplace, you'll likely need an e-commerce permit that allows you to do so. Now, if you're working as a freelancer, you likely won't need to file for a licence if you do your business as a sole proprietor. When in doubt, we suggest calling the Canada Revenue Agency (CRA) for more information.
If you have any questions, contact one of our local branches.
