Starting a business requires multiple steps. Individually they are straightforward, but collectively they can seem daunting. With that in mind we offer our Red Tape service which can assist with the steps you need to take. Here is a business start-up checklist to take you from concept to operating
Planning
While not a regulatory requirement, a business plan provides an opportunity to thoroughly examine your idea prior to investing capital. Working through a business plan often has the benefit of raising questions you may not have yet considered. From what we have observed, it is much better to think about these questions prior to being asked by a lender.
Consider your plan a working document. Numerous templates are available, although it seems many are designed for established businesses and not for an early stage start-up. Therefore, think of your business plan as a working document to be updated as your business grows.
Focus on the following: what you plan to sell; how and where you intend to sell these products; existing and potential competition; operating plans (how you will make your products); start-up expenses & capital equipment requirements and a financial plan, which at this stage should be focused on expected sales and cash flow.
As your company grows, add details to the plan as they become relevant.
The Business Development Bank of Canada has a kit which can be accessed here.
Funding
From our experience any entrepreneur seeking start-up funding can expect to be asked how much they have personally contributed. Lenders typically suggest you look to your own assets first (savings, mortgaging/selling properties, etc.) before they contribute capital. It may sound harsh, but it is better to know this before you stare blankly at you banker when they ask.
Depending on your circumstances there may be opportunities to receive government funding. We would be happy to speak with you to explore these opportunities.
Business Structure
When you resister your business you will need to decide on a business structure. The differing types available are listed below.
Sole proprietorship/Trade Name
This structure is relatively easy to register and benefits from a lighter regulatory burden. Additionally, you can deduct any losses from your personal income. The downside is the risk of unlimited liability – you, and you alone, are responsible for all debts. Any income earned is taxed at your marginal rate – so if you are working full-time, this can be significant. Additionally, the ability to raise external capital can be limited.
Partnership
Think of a partnership as a sole proprietorship of multiple people. As above, registration is relatively straightforward. Costs are shared among the partners and losses can be used to reduce individual taxes. Risks include personal responsibility for your share of losses, including unlimited liability, and disputes among partners. There are various forms of partnerships available and we highly recommend speaking to a lawyer to consider your options as well as drafting comprehensive partnership agreements.
Incorporation
Incorporation offers the benefits of limited liability, operating as a separate legal entity, transfer of ownership, raising capital can be easier and there may be tax advantages available. On the downside, corporations require additional reporting requirements, are more expensive to set up, and there can be limitations on residency. Depending on where you intend to operate you will want to consider Federal, Provincial or in the west, North West Trade incorporation options.
Business Name
While the naming procedure can be fairly straightforward, it is worth the effort to consider possible names for your business in conjunction with available website domains.
Many believe you need a unique business name to start any business, but this is not true if you plan to operate as a sole proprietor or partnership. Only when you plan to incorporate do you need a unique name, for which you will require a business name search. With an acronym that could only come out of the bowels of a government office, you will require a NUANS (Newly Updated Automatic Name Search) report for incorporation. Alternatively, you can also incorporate under a numbered company such as 1234567 Alberta Inc.
We offer guidance on searching for unregistered domains as well as performing name searches.
Registering
Once you have decided on a business structure and business name, you will need to register your business with a provincial registry. In Alberta, these are known as a Corporate Registries. Chances are you already know one as business registration can be completed at most registries where you renew your vehicle registration.
Business Licenses and Permits
Licensing and permits can be straightforward from an occupational perspective but can quickly become complex when considering the services you plan to offer. As each circumstance is unique, we offer examples of the types of licenses and permits you can expect to require at various levels of government.
We recommend you talk to someone experienced in this area as the downside of not having a required permit can be considerable to a new business.
Municipal
If you plan to operate out of your home or have signage, most municipalities require permits for these activities. Construction activities will require municipal permits.
Provincial
In addition to provincial registration of your business, you may require licensing, depending on the type of services you offer. If you plan to operate in the Automotive, Funerals, Gambling, Real Estate or Insurance sectors within Alberta, additional licensing will be required.
Federal
You will need to register federally to acquire a business number (required for GST and payroll deductions). Pay particular attention to business activity regulations as they can catch some people off guard. As an example you may need to consider advertising, measurement accuracy, import & export, privacy, labeling, human resource, health & safety, environmental and intellectual property regulations. Fortunately business sector regulations are much easier to anticipate.
Business Number
You will need a business number if you incorporate or plan to register for any CRA programs such as GST, payroll deductions, corporate income tax or if you import/export goods.
If you have any questions about these services, give us a call or send us an email and we will get back to you right away.