Business licensing in Alberta has proven to be an area of confusion and frustration for many Alberta entrepreneurs. We provide the following information to assist with your understanding of the Alberta business licensing process. In this post we will discuss business licenses. We will cover permits and regulations in future posts.
Municipal Licenses
Unless you are operating your business out of a “cabin in the woods”, a municipal business license is to be expected. There are typically two forms of a municipal business license. One designed for home-based businesses, the other for commercial/industrial operations.
The business license requirement can become complex when municipalities have a schedule of annual fees, based on business activity. Distributions can range from approximately $100 to over $5,000 but most business can expect to pay an amount under $200 per year.
Provincial Licenses
Provincial licensing can be a bit more straightforward as requirements typically align to specific activities. If you plan to operate a business in an industry specifically identified by the provincial government, you will require a provincial business license. There are usually few surprises here, as most are self explanatory or to be expected.
In Alberta, expect provincial licensing to be a requirement for the following activities:
- Automotive (sales, leasing, repair),
- Direct sales (door to door),
- Employment agencies,
- Fund-raising,
- Funerals,
- Gaming,
- Housing (inspection, sales, prepaid contractors),
- Insurance, and
- Lending (providing or collecting).
The latest provincial list can be viewed here.
Federal Licenses
Licenses required at the Federal level are few, as businesses need to be more concerned with Federal Regulations. We will cover this in upcoming posts on Regulations.
The most common Federal license is commonly known as a Business Number. If you plan to report GST/HST, have employees, file corporate income tax or require an import/export account, you will need a Business Number.
Less commonly known are licenses for the following:
- Agreement to Implement Employment Equity, and
- Sound Licenses
Rarely applicable to a new business, the Agreement to Implement Employment Equity is required when there are 100 or more employees, or the business will bid on Federal contracts greater than $1 million.
If your business plans to use background music or recorded music to accompany live events, a dance or physical activities, you are expected to have two (Re:Sound & SOCAN) performing rights licenses.
Our observations
Entrepreneurship can be an isolated experience. Many feel their experiences (good and bad) occur in isolation. We offer the following with the hope that shared experiences will lighten the burden.
Frustrations are common
Entrepreneurs we’ve helped described the process of business licensing to be confusing and frustrating. From our observations, a cause of this confusion is often due to the interchangeable use of the terms “License”, “Permits” and “Regulations.” Ask a random individual the difference between these terms and I’d wager you’d be hard pressed to find someone who could differentiate the three. Now try using these terms synonymously at your local government office and see what happens.
Not that we would ever advocate for more regulation, but annual renewals often mean recalling or relearning the steps performed in previous periods. It’s unlikely you will find many sympathetic to those who complain about having to recall processes from a year ago but when this process involves having to navigate through a newly updated government website, the associated frustrations can increase exponentially. To be clear, we are not trying to overplay this frustration, but rather we want to highlight how these steps can combine to become a larger time draw than what would normally be expected.
A simple explanation?
A rule of thumb we use is to consider Permits a requirement of municipal governments, Licenses as a Provincial requirement and Regulations being directed from a Federal level. Use this rule of thumb with caution, as there are often no simple explanations when attempting to generalize government requirements. Therefore we recommend you perform thorough research, or speak to someone familiar with the process, to determine the requirements for your business.
The buck stops with you!
The only absolute you will find in this process is the responsibility of correct licensing and permitting ultimately lies with you, the business owner. Fortunately, if something is missing or incorrect, it typically will only require the proper paperwork to be completed and filed. Only in extreme cases, and usually after multiple warnings, would serious action occur.
That said, this responsibility does create added stress for owners as they attempt to secure definitive answers to their licensing requirements, without every answer being prefaced with the disclaimer – “Well, it depends…”
If you would like to talk about your licensing requirements, reach out via phone (403 361-1754) or email (david@finaccity.com). We would be more than happy to answer any questions.