How to Operate a Business in Canada
Operating a business in Canada requires you to comply with the laws, rules and regulations developed by the Canadian government to maintain a fair and competitive marketplace. Every business in Canada is required by law to report earnings and losses as well as information about employees to the Canada Revenue Agency. Before operating a business in Canada, you must understand the process of registering a business, obtaining the required licenses, hiring procedures and filing taxes.
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Things You'll Need
- Canadian new business application
- Employee Social Insurances Numbers
- T1 Income Tax return (sole-proprietorship and partnership businesses)
- T2 Tax Return (for corporations)
Instructions
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Research the different business structures available to you. In Canada, there are three types of businesses that can be registered: sole-proprietorship, partnership and corporation. The setup and operation of sole-proprietorship businesses are similar. However, if you are incorporating your business, the setup process is slightly different.
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Register your business with your provincial government. Partnerships and sole-proprietorship business registrations follow the same process. You must register your business on your provincial website by completing the new business application and paying the required fee. You must provide them with personal information such as your Social Insurance number as well a Canadian address for your business. In most provinces, if you register a corporation, you must complete a new business application as well as provide supporting documents such as an Articles of Incorporation document. In each province, the incorporation registration fee is slightly higher than a sole-proprietorship or partnership application.
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Acquire Canadian Federal Business Number. This number acts as your company's identification when paying taxes, registering employees and making payroll deductions. Applications are available on the Canada Revenue Agency Business Number (BN) Registration website.
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Complete the Canadian tax and payroll registration for your employees. When hiring new employees, you are required to see their SIN card and record the number on their employee record. You must have new employees complete a Canada Revenue Agency TD1 form. A TD1 form is used to determine the amount of tax deducted from an employee's income. Download TD1 forms from the Canada Revenue Agency website. Submit the completed TD1 form the Canada Revenue Agency.
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File your business income tax on time with the Canada Revenue Agency. Sole proprietorship and partnership businesses in Canada must file taxes by completing the business portion (form T2125) on their T1 Personal Income Tax return. The deadline to submit taxes is April 30 of each year. Corporations however, must complete a separate return for their business. Corporations must submit a T2 business tax return and complete a separate personal income tax return as well. All tax forms can be downloaded form the Canada Revenue Agency website.
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Tips & Warnings
Most business licenses and permits do not self-renew. It is the responsibility of the business owner to renew licenses and permits prior to expiration. You must file for extensions and renewals a few weeks prior to expiration to allow time for processing and adjustments.
References
Resources
- Photo Credit business colleagues preparing for business meeting image by Vladimir Melnik from Fotolia.com
