Starting your own business: the guide

Where to start when starting your own business

Before tackling any paperwork, validate your idea and business model, then make three fundamental decisions: your legal structure, your tax regime, and how you will manage your accounts. These choices will determine your taxes, your personal liability, and your administration for years to come. It's best to make the right decisions from day one.

1. Validate the idea and the model : market, price, initial prospects, preliminary forecasts.
2. Choose the legal structure : sole proprietorship, partnership or corporation.
3. Reserve and register the name , then register the company (in France, the Registraire des entreprises).
4. Obtain the numbers : Business Number (BN) from the IRS, tax, payroll or import accounts as needed.
5. Register for GST/HST if you exceed the $30,000 threshold over four consecutive quarters.
6. Open a separate business bank account from your personal finances.
7. Set up bookkeeping : software, document classification, deadline calendar.

A common mistake is doing everything out of order: incorporating before checking its tax implications, or invoicing clients without registering for taxes. Consulting an accountant beforehand saves you time and avoids retroactive adjustments.

Which legal structure should I choose?

At Canada There are three main business structures: sole proprietorship (auto-entrepreneur), partnership, and corporation (société par actions). The right choice depends on your risk tolerance, expected income, number of partners, and growth plans. Each structure has its own specific tax and legal implications.

• Sole proprietorship: unlimited liability (personal assets exposed), income in your personal tax return (T1/TP1), simple and inexpensive start-up.
• Partnership: unlimited and joint liability, share distributed among partners, partnership agreement recommended.
• Public limited company (incorporated): liability limited to invested capital, company taxed separately (T2/CO-17), heavier formalities, stronger credibility with banks.

A sole proprietorship is often suitable for starting a business: minimal paperwork and a quick start. Its drawback is unlimited liability: your personal assets are liable for the business's debts. A limited company creates a separate legal entity, protects your assets, and offers tax planning options, in exchange for more rigorous accounting and recurring expenses.

Should I incorporate or remain a self-employed individual?

Incorporating becomes advantageous when your profits exceed your living expenses, when your business carries a risk of being sued, or when you wish to partner with others or raise capital. Below these thresholds, a sole proprietorship remains simpler and less expensive. There is no universal threshold: it's a case-by-case decision.

• Limited liability: the company is a separate legal entity, which in principle protects your personal assets.
• Tax deferral: profits left in the company are taxed at the corporate rate, often lower than your personal marginal rate.
• Flexible compensation: salary, dividends or a mix, according to a strategy that your accountant optimizes.

But setting up a business comes at a cost and involves administrative burdens: incorporation fees, annual company tax returns (T2 and CO-17), financial statements, and register updates. If your income is low or irregular, these costs can outweigh any tax savings. Rather than guessing, work with an accountant to analyze the figures. Bankeo isn't a firm: get matched with an accountant who will model your situation for free.

Federal or state incorporation: which to choose

At Canada You can incorporate federally or provincially (in Quebec, the Business Corporations Act). The federal constitution protects your name across the country and facilitates interprovincial business. Provincial incorporation is often simpler if you operate in only one province. Both federal and provincial incorporations remain subject to taxation.

• Federal incorporation: protection of the name throughout the Canada , national field, federal constitution plus registration in each province of activity, federal T2 plus provincial declaration.
• Provincial incorporation (Quebec): protection of the name in the province, province-centric, registration with the Registrar of Enterprises, federal T2 plus Quebec CO-17.

Important point: even a federally incorporated company must register in each province where it operates, including Quebec. And regardless of the option chosen, every company pays federal (T2) tax and provincial tax in the province where it has a physical establishment. An accountant or legal advisor can help you decide based on your growth plan.

The steps to join his company

Starting a business involves a series of specific steps: choosing the level (federal or provincial), reserving a name or opting for a business registration number, drafting the articles of incorporation, appointing directors, paying the fees, and obtaining the certificate of incorporation. Next come registration, obtaining tax identification numbers, and setting up accounting.

1. Choose the level of constitution : federal or cantonal, depending on your area of ​​activity.
2. Decide on the name : distinctive name (with availability search) or numbered company.
3. Drafting the articles of incorporation : share capital, share classes, registered office.
4. Appoint the administrators and compile the minutes book.
5. Submit the application and pay the fees to the Federal Registry or the Quebec Enterprise Registrar.
6. Obtain the certificate of incorporation , then register the company in each department of activity.
7. Request the business number (BN) from the IRS and open the accounts: VAT, DAS, corporate tax.
8. Open a business bank account in the company's name.
9. Set up the accounting system : chart of accounts, software, filing schedule.

The classic mistake when starting a business is to structure the share capital carelessly. A poor allocation of shares then complicates income splitting, bringing in a partner, or selling the company. This is when the advice of an accountant, and sometimes a tax specialist, proves invaluable.

VAT, VAT and taxes: when to register

At Canada You must register for GST (5%) and, in Quebec, for QST (9.975%) as soon as your taxable income reaches $30,000 over four consecutive calendar quarters. Below this threshold, registration is optional but often advantageous for recovering taxes paid on your purchases. Once registered, you collect the taxes, declare them, and remit the balance.

• The $30,000 threshold is calculated over four consecutive quarters, not per calendar year.
• Voluntary registration below the threshold allows you to claim CTI and RTI, therefore to recover the VAT paid on your expenses.
• You collect and then remit : you charge the taxes, deduct those paid on your purchases, and remit the difference.
• Keep taxes separate : the money from taxes collected is not your income.

Many entrepreneurs neglect deposits and the mechanics of rebates, then end up with a balance and interest. An accountant sets up your enrollment, frequency, and follow-up to ensure everything runs smoothly.

The accounting obligations of a new company

From the outset, a business must maintain reliable records, keep supporting documents, file tax returns, and meet the deadlines set by the CRA and Revenu Québec. An incorporated company has additional obligations: filing a corporate return (T2/CO-17), preparing financial statements, and updating its corporate register.

• Bookkeeping: record all transactions, ideally in software, and reconcile your accounts regularly.
• Document retention: keep invoices, receipts and supporting documents for at least six years.
• Tax returns: produce and submit VAT returns according to your frequency.
• Tax returns: T1/TP1 for a self-employed person, T2/CO-17 for a company.
• Advance payments: if your tax exceeds the thresholds.
• Payroll and DAS: if you hire, open a withholding account and submit according to the schedule.

The guiding principle: separate your personal and business finances from the very first dollar. Separate bank account, separate card, clearly categorized expenses.

When should you hire an accountant when starting out?

The best time to consult an accountant is before incorporating, not after. They can help you choose the right structure, calculate the benefits of incorporation, structure your share capital, register correctly for taxes, and establish proper bookkeeping. With the right guidance from the start, you'll avoid costly mistakes to correct later.

• Before incorporation , to validate the structure and model the actual tax savings.
• When structuring the share capital , to keep the options for splitting and growth open.
• When registering for taxes , to choose the right frequency and the right treatment.
• When setting up accounting , to start with the right software and the right accounting plan.

Bankeo isn't an accounting firm: we provide free support with audited accountants from our network, tailored to your specific situation and industry. You describe your project, we present you with the right match—as many accountants as needed to find the perfect fit—and you choose. And we're always there to support you: if the relationship isn't working out, even after six months, we'll find you a replacement at no cost. Our network includes over 1,500 accountants, and we've received more than 15,000 requests since 2023, with a 4.7/5 rating based on over 180 Google reviews.

What is the cost of starting a business? Canada ?

The cost depends on your business structure. A sole proprietorship only requires modest registration fees. Incorporation adds formation fees, sometimes a name search fee, and professional fees if you use an accountant. An accountant will provide you with a detailed estimate based on your specific situation, with no surprises.

Should you integrate from the very beginning of your business?

Not necessarily. Incorporation becomes advantageous when your profits exceed your personal needs, when your business involves risk, or when you wish to partner with others or finance growth. In these circumstances, a sole proprietorship remains simpler. An accountant can calculate the tipping point in your situation.

When do I need to register for VAT?

As soon as your taxable income reaches $30,000 over four consecutive calendar quarters, registration becomes mandatory. Canada and in Quebec. The VAT is 5% and the VAT is 9.975%. Below this threshold, registration is optional but often useful for recovering the VAT paid on your business purchases.

What is the difference between federal and state incorporation?

The federal constitution protects your name throughout the Canada It facilitates interstate activity, but requires registration in each state where you operate. Provincial incorporation, in Quebec through the Registrar of Enterprises, is often sufficient if you operate locally. Both remain subject to federal and provincial taxation.

Do I need an accountant to start my business?

It's not mandatory, but it's highly recommended before registering for business or taxes. An accountant helps you avoid costly structural errors and establishes a solid accounting foundation. With Bankeo, you can be matched with a certified accountant for free, usually within 48 hours.

How long does it take to start a business?

The incorporation itself can be quick, often just a few days once the articles of association are ready. What takes time is the thorough preparation beforehand: choosing the tax bracket, structuring the share capital, and finding a company name. Professional guidance speeds up the process and avoids the hassle of re-incorporation.