Small Business 101 : Registering your Business, Insuring It & Keeping Track of your Expenses
Today, we are getting down to business! You feel ready to start selling your products and services, but you’re a little bit lost in your navigation through all the legal aspects, and you don’t want to forget anything either. Business registration, taxes, insurance, you name it! Today, I am here to shed some light on those subjects.
When do you need to register your business?
You are legally responsible for registering your business as soon as you start operating under a different name than your own. However, if you decide to solely operate under your own name, there is no obligation to register your business immediately.
How much does it cost to register your business?
The cost for business registration varies depending on your location. In Quebec, it costs $36 to register your business (for sole proprietorships and partnerships). Here is the link to register your business in Quebec:
In Ontario, it starts at around $60. Follow these steps to register your business in Ontario:
https://www.ontario.ca/page/business/start/register-your-business-online
Registering your business can benefit you in several ways, including legal security and privacy, but also in establishing your brand’s credibility, and of course, for collecting and remitting taxes. It is better to register your business as soon as possible.
Do you need to collect and remit taxes?
In Canada, if you expect to make over $30,000 a year, you need to register for a GST/HST account, which requires you to have a registered business. You will then be responsible for collecting and remitting taxes on all your business sales after the $30,000 threshold. Most online sales platforms typically provide a financial summary with the information on the amount you have collected for GST and HST, making it a lot easier to remit.
Do you need insurance for your business?
In today’s economy, I would strongly recommend you get insurance for your business. Some insurance companies will cover your sole proprietorship business for as low as $450 per year (Zensurance). Insurance provides peace of mind and a certain level of financial security in case of a lawsuit against your business. Potential legal disputes are yet again, another reason why you should register your business and separate your personal identity from your business identity. Realistically, depending on the type of business you want to operate as well as its scale, it may not be necessary to seek insurance right at the start of your activities. For an emerging business focused on selling to friends and family, it may not be a necessity right from the beginning.
My advice
I’d suggest starting small and operating under your own name. If you notice a growing flow in your business, then consider registering your business and insuring it. The process of registering a business can be quite confusing. Therefore, consider collecting the necessary funds to hire a professional to help you. I hired an accountant to register my business, and not only did it save me a lot of time, it gave me the peace of mind that everything would be done in compliance with the federal and regional revenue agencies!
How to keep track of your business expenses?
Any invoices or bills related to business expenses must not be lost. That can include many things from office supplies to the gas you paid to go to the post office to ship out some orders[1]! You will declare them in your tax forms at the end of the year, so it is very important that you do not lose them. Keep them in a folder at home and follow the same procedure for online invoices. Additionally, I’d recommend opening a separate bank account to manage your business funds and budget. The initial stages of your business journey can be overwhelming when you don’t know what to expect. Not everything will be perfect the first time, but you will eventually get there! Make sure to separate your business expenses from your personal expenses, that is one of the keys to successful financial management.
Hopefully, you now feel a bit more comfortable and less lost in your new business process. Staying organized and honest will help you maintain your legitimacy. Once again, don’t be afraid to reach out to professionals to help you in establishing yourself. Believe in your project and officially get started now that we have navigated the legal landscape together.
“Our lives improve only when we take chances - and the first and most difficult risk we can take is to be honest with ourselves.” - Walter Anderson.
Zensurance. “Small Business Insurance Ontario.” Zensurance, www.zensurance.com/ontario-business-liability-insurance#:~:text=How%20much%20does%20business%20insurance.
[1] For expenses such as gas, or your phone, you will only be allowed to declare a certain percentage of those on your tax declaration. Managing those expenses in tax declarations requires, in my opinion, the help of an accountant or expert.