Colours of Business Law

BY MONICA BEFFA FOUNDER, BEFFA LAW PC

ATTENTION CREATIVE ENTREPRENEURS

11 must-read steps for opening your first business:

1. Select Your Business Structure

2. Find A Business Name

3. Check If the Business Name Is Available

4. Register Your Business Name

5. Register for Permits and Licences

6. Open a GST/HST Account With CRA

7. Open a Bank Account for Your Business

8. Get Business Insurance

9. Sign a Commercial Lease

10. Get Your Terms and Conditions and Privacy Policy

11. Start Your Sole!

1. Select your business structure

Before you start your new venture, ensure that the chosen business structure is right for you. You need to ask yourself some questions: is the Sole Proprietorship appropriate for me or should I start another type of business? Choosing the right entity is the key to your future Startup’s success. The business’s legal structure impacts everything starting with the registration, daily management, taxes, and risk distribution.

Opening a sole proprietorship is the simplest and straightforward way to start a business. If the company has a single owner, the sole proprietorship is the recommended legal structure.

If you are operating under your own personal name i.e. John Smith, as a single business owner you are not required to register the sole proprietorship.

2. Find a business name

If you have decided to start a sole proprietorship, you will need to choose a name for it. Opt for a distinctive name that describes your business and shows the type of brand that you want to build.

The right business name will differentiate your company by describing the activities that your business carries out. In the long haul, your business name will become a significant asset. This brings appreciation, loyalty from clients, and valuable goodwill.

The name chosen for your small business cannot suggest other types of entities, such as corporations or partnerships. It cannot be composed of the following endings: Incorporated, Corporation, Limited, Inc., Ltd., or Corp.

3. Check if the business name is available

Before you register the selected business name, you have to determine if the name is not used by another organization. You can use the Enhanced Business Name Search to check online if someone else is already using the elected name.

To register the name of your company, you should carry out a name search by using the NUANS (Newly Upgraded Automated Name Search) tool which lets you search business names across Canada to see if your name opinions are already taken by other organizations.

NUANS databank lists sole proprietorships, partnerships, corporations, and trademarks within several provinces, including Ontario.

In general, you should avoid a business name that is similar or indistinguishable from your selected name. While identical names are not prohibited under the legislation in Ontario, you may get into legal disputes.

Keep in mind that the business name does not offer you name protection. If the protection of your sole proprietorship name is essential for you, you may consider incorporating your business.

You must register the business name if the name is different from your legal name or if your business name expired and cannot be renewed.

4. Register your business name

You can register your business name online, by email, or in person. You will be required to provide the following information: name of business; business address; business mailing address; the legal name of the owner; address of the owner; business activity (a brief description of the activity being carried out).

You can search, register, or renew a business name online using the Integrated Business Services Application tool.

You can also search, register, or renew a business by mail or in person. If you mail the form, you can send it to the Ministry of Government and Consumer Services, Central Production and Verification Services, 393 University Avenue, Suite 200, Toronto, ON M5G 2M2.

Further, you can submit your application in person at 375 University Avenue, 2nd Floor, Toronto, ON M5G 2M2.

You must renew your business name every 5 years and you need to do it before the expiration date. There is a renewal fee payable.

If there is a change to your business registration such as address or activity, you must notify Service Ontario.

Once your business is registered, you will receive a Business Identification Number (BIN). This number shows that your business is registered in Ontario. You can use your BIN number to open a bank account, and to engage in any business relationships.

5. Register for permits and licences

You will have to operate your business under Ontario’s provincial regulations. That may require you to collect HST for your business, so you will need to open a GST/HST account with Canada Revenue Agency (CRA). You may also need to register for Workers’ Compensation Insurance. Although you are only operating as a sole proprietor, you should find out if you require any other licenses or certificates to legally operate in Ontario. The fines for not having the right license or permit can be daunting for your new startup. Make sure you apply for the correct federal or provincial licenses or permits. Some examples of permits and licenses needed in Ontario are as follows: • Food or liquor license • A health and safety license • Home occupation permits • Sales tax permits • Zoning permits • Environmental permits. • Police and fire permits; and, • Signage permits.

6. Open a GST/HST account with CRA

When you start your business as a sole proprietor, you may need to set up a tax account. If your business will earn $30,000.00 or more within the first year, you may wish to set up the GST/HST account right from the start.

Payroll is only required when you have at least one employee working for you. You do not need to set up a payroll for yourself. Also, WSIB is mandatory only if you have employees working for you who could become physically injured while working.

7. Open a bank account for your business

In Ontario, there are many banks to choose from when it comes to opening your business bank account. To make sure you get the right banking solutions, you can set up a meeting with the banks’ small business advisor who can help you in choosing the right banking options for your unique business.

When you go to your local branch to open a bank account, you need to bring your Master’s Business Licence and your driver’s license. Your bank may request further documents or information, depending on the bank and banking services required.

8. Get business insurance

It is important to recognize that owning and operating a small business in Ontario puts you at risk of being sued. Another factor to consider as a sole proprietor is that the business’s liability falls solely on you, as an owner. Unlike corporations which are separate legal entities from their shareholders, as a Sole Proprietor, you have no personal protection from your company. It is recommended that you secure business insurance to protect your personal assets.

9. Sign a commercial lease

As a new business owner, you may need a space to run your business. If you rent a space for your business, you may choose to enter into a commercial lease agreement with a commercial landlord. Office rent could be the largest expense your Startup incurs. Making sure you have the best negotiated commercial lease may save you money that you can use for other initial expenses.

There is no standard commercial lease as businesses are diverse. Most commercial leases will include the following terms: rent, deposit, insurance, repair and maintenance obligations, renewal or end the lease, length and type of tenancy, and other details. It is strongly recommended that you speak with a lawyer about how to prepare and negotiate a commercial lease for your particular business.

10. Get your terms of use and privacy policy

The terms of use establish the terms and conditions for using your website by the public. Your privacy policy is the legal statement on your website that confirms the ways you receive and deal with the personal information collected from users of your website and how such data will be collected, stored, and released to third parties.

11. Start your Sole Proprietorship business

Keep in mind that you can get legal advice from a corporate lawyer to help to go through each step of opening your Sole Proprietorship.

You are ready to start your business now! GOOD LUCK!

***This article is written from a Canadian perspective, please consult a professional in your own country for specific steps to opening a business.