How to start a business in Canada
June 2022 – 15 min read
Setting up a business can be a rewarding and exciting time, and careful planning in the early stages can help set your new venture up for success.
Things to think about include how you’ll structure the business ownership, where you’ll operate, how many employees you’ll have, and an exit strategy.
Choosing the right business insurance can also help protect your company from the start.
Creating a business plan
To get started, you’ll need to draw up a business plan.
Not only will this be required if you plan on taking out a loan or asking investors for money to help get your business up and running, but it can also help you answer some key questions, such as:
What’s the supply and demand in your local market as well as the wider online marketplace?
Is your business solving an existing problem/gap in the market, or are you creating something new and innovative?
How do you plan to market your business and reach customers?
What’s involved in terms of logistics?
Will you need a physical location, such as a storefront, office, or warehouse, or is your business online or mobile?
Do you need employees, or will you work solo?
A key part of your business plan will include how you plan to finance your business, through sources such as your own capital, loans, small business programs, investors, as well as government grants and resourcesOpens a new website in a new window - Opens in a new window.
There are 3 ways to structure a business in Canada – forming a corporationOpens in a new window (also known as incorporating your business), forming a partnershipOpens in a new window, or setting up as a sole proprietorOpens in a new window. The structure that’s right for your business will depend on a number of factors, so it’s important to think about which will work best for you before it’s time to register.
Other things to think about include whether you’re starting the business from scratch, or if you plan to take over an existing business. And while it may seem a long way off, figuring out how you’ll leave the business should be a part of your plan as well. You may want to eventually leave the business for several reasons, such as:
You plan to return to full-time employment
You plan to start another business
The business simply hasn’t worked out as you’d hoped
Succession planningOpens in a new window can help you answer important questions about what happens to your business if you choose to sell it, close it, or leave it to someone else such as a business partner or family.
Protecting your business
Before you start operating your business it’s a good idea to think about how you’ll protect it in the event something should happen to you.
There are many types of business insurance available, and which will be the best fit for your company will depend on your specific needs and requirements:
Business-owned life insurance
If you, your business partner, or a key employee dies, life insuranceOpens in a new window can provide your company with a one-time payout which can be used to cover debts or running costs.
Business-owned critical illness insurance
Critical illness insuranceOpens in a new window can provide your business with a tax-free payment if you or a key employee is diagnosed with a serious illness.
Business-owned disability insurance
This insuranceOpens in a new window can provide a monthly income to help your business running should you suffer an illness or injury.
Putting an insurance policy in place can help protect the business you’re starting or you’ve worked so hard to build up, and with flexible options available to provide both short- and long-term coverage, you have options when it comes to finding something that works for your business.
The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.