Starting a Business in Canada – Portion two of two

This article is ongoing from Jenny’s very first article, “Starting a Business in Canada – Portion one of two”.

Making ready System B: WHAT IF IT FAILS?

A frequent trigger of private economic issues is the failure of a business and the attendant business-associated liabilities individually owed by the company owner. Below are some simple tips to preemptively protect your private property in the event the business fails:

one. As we prompt in the former part, think about incorporating the business. Incorporation will provide you with a stage of creditor protection. So prolonged as you’ve been existing on having to pay your statutory liabilities (outlined in the former part) and individuals lenders for which you gave a private warranty, you are going to be individually guarded from your other business debts.

two. Take into consideration transferring private property to a spouse’s name or a relatives have faith in. Just after the transfer, these property no for a longer period owned by you and are thus not issue to statements of your private lenders.

3. If you are putting absent cash for retirement, think about investing in RRSPs that are exempt from the statements of your private lenders for case in point, segregated cash. The difference concerning segregated cash and mutual cash is that segregated cash are insurance plan contracts. The Ontario Insurance Act delivers that:

“where the beneficiary of the insurance plan deal is a spouse, kid, grandchild or dad or mum of a individual whose existence is insured… the legal rights and passions of the insured in the insurance plan cash and in the deal are exempt from execution or seizure…”

Hence, insurance plan products and solutions held in RRSPs will be exempt from seizure by your private lenders.

A pretty important point: you should really make these preparations in advance of you get into private economic hassle, not right after you’ve turn into uncovered to private debts. If you ended up to say, transfer your home to your spouse when the lender is striving to acquire on the private warranty you gave to them, these preparations will not function. There are legislation that can set apart transfers of property where the intent is to conceal your property from your lenders as they are striving to acquire their debts.

Hence, make preparations to protect you individually with these suggestions in advance of you open up the doors to your business, not right after you’ve shut them!

Placing UP YOUR Small business

Getting a spot

Several business people start out their companies from home. If that suits you, then study no more.

Nonetheless, if you have to have genuine business premises, you should really think about the pursuing factors:

* How will your consumers get to you? Is it conveniently located by public transportation? Is there free parking?
* How much place will you have to have to run?
* What is the popularity of the landlord? Do they on a regular basis preserve the repairs of the building premises? You don’t want to flip off likely consumers for the reason that they consider your spot appears to be like like a slum.
* How are the sights and lights? You don’t want rent a spot with a check out of the wall from the next building. You want to make a nice function surroundings for your workers so they are happy and effective.
* Will you be able to get the landlord to waive a private warranty for the lease?

Just after taking into consideration these factors, overview the price for each square foot and negotiate a mutually agreeable arrangement with landlord. For case in point, you may be able to get at handful of months free rent as element of the last lease arrangement.

Interviewing and selecting workers

Having folks to submit resumes is always simple. Using the services of the suitable individual out of that stack of resumes is not.

It is really been reported that the very first thirty seconds of a occupation interview will finally ascertain if the applicant receives the occupation or not. You either like an individual or you don’t. Nonetheless, even however you may possibly “click on” with the applicant, it would be a error to hire an individual devoid of accomplishing a extensive background check.

It is important that you confirm a candidate’s employment record and references as very well as their educational background. Even if their former occupation knowledge and educational background have no bearing whatsoever on the posture that they are applying for, it is essential that you affirm that they are becoming truthful to you. If not, then this is a considerable character flaw – if they can lie to you so very easily, they can just as very easily steal from you.

You should really also think about accomplishing a credit history record lookup and prison background check. It is not strange to fulfill occupation candidates who filed bankruptcy or who’ve been convicted of a prison offence. Absolutely everyone has built issues in their existence and you should really not necessarily hold this towards the applicant. The trustworthy types will usually inform you up entrance about their past in advance of you even conduct these a background check. That becoming reported, it is a variable for you to think about in making your last selecting conclusion.

Promoting your enterprise

No matter whether you market utilizing “regular” techniques like print media and television, or “contemporary” techniques these as net advertising depends on your viewers.

If for case in point, you are targeting an more mature demographic (say above fifty five decades), then regular advertising may be the way to go. On average, this demographic tends to invest extra time looking at newspapers and watching television than youthful folks.

On the other hand, if you are targeting a youthful demographic, then net advertising may be the way to go. It is not stunning that regular print media like newspaper corporations and television stations are in significant economic hassle. Their viewers (and advertising revenue) is shrinking for the reason that extra folks are receiving their information and enjoyment through the net.

Promoting in print media like the Yellow Web pages or in newspapers can be pretty high priced (specifically in a market place like Toronto). From our private knowledge, we’ve located that advertising on the net is the most productive and price effective way to attain out to our viewers.

There are a lot of freelancers who can assist you layout and spot a web page on the net. Nonetheless, you also want folks to discover your web page when a potential shopper sorts in a lookup term into a lookup motor like Google or Yahoo! For this, you’d have to have to hire a Lookup Motor Optimization advisor (Search engine optimization).

An Search engine optimization will primarily make your web page extra “searchable” by lookup engines. This is usually carried out by, amongst other points, integrating selected keywords into the text of your web site, building “backlinks” to your web site from other sites, generating “price for each click on” web advertising campaigns with Google Adwords or Yahoo Lookup Marketing, and listing your business in Google’s Community Business directory



* If you provide a excellent or service in Canada and your yearly revenue will exceed $thirty,000, you might be demanded to sign-up your business and acquire GST
* If you might be operating as a sole proprietor or you are the director of a company, you are going to be individually liable if you don’t acquire and/or remit.


* If you sell products to “finish-consumer” shoppers (as opposed to reselling to yet another business), you might be demanded to acquire and remit provincial revenue tax
* If you might be operating as a sole proprietor or you are the director of a company, you are going to be individually liable if you don’t acquire and/or remit.

Payroll tax

* You are demanded to deduct profits tax, CPP and EI withholdings from your employees’ wages and remit these withholdings to the Canada Earnings Company just about every spend period
* You are also demanded to spend CPP and EI premiums, calculated as a proportion of your employees’ wages
* If you might be operating as a sole proprietor or you are the director of a company, you are going to be individually liable for failure to remit withholdings and/or premiums to the Canada Earnings Company

Corporate Income Tax

* The federal company tax charge is 38 per cent of internet profits
* If you might be operating as a Canadian Managed Non-public Company (primarily a company integrated in Canada whose shares are privately owned by a Canadian resident), this charge is lessened to 28 per cent
* For the very first $five hundred,000 of internet profits earned by a CCPC, there is a more reduction to 11 per cent
* In Ontario, the provincial company tax charge for a CCPC is fourteen per cent of internet profits. The very first $five hundred,000 of internet profits earned is taxed at five.five per cent
* The merged federal and provincial company tax charge in Ontario on internet profits beneath $five hundred,000 is sixteen.five per cent
* There is no director liability for non-payment of company profits tax.



* Employers lead to WSIB, which is a provincial insurance plan fund.
* The volume of quality payable is dependent on the sizing of your payroll and the accident knowledge in your marketplace. For case in point, a mining company will spend a higher quality for its workers than an accounting company
* Wounded workers are compensated by the WSIB on a “no fault” basis that is, compensation is compensated no issue who is at fault, the employer, the staff or an individual else. In return for automated compensation, the employer is shielded from any other liability. An staff are not able to sue your company for carelessness if that carelessness causes a function-associated harm
* The major concentrate of the WSIB method is to get the hurt staff back to function as before long as doable. If hurt staff are not able to conduct his or her frequent function, your company may provide suitable modified function that the employee can conduct devoid of aggravating the harm. If the function is, in point, suitable the hurt employee must settle for it.
* There is no director liability for unpaid WSIB premiums of a company

Wages and getaway spend

In Ontario, your obligations to your workers are ruled by the Ontario Employment Criteria Act. You are demanded to give your workers:

* Two weeks getaway
* Termination spend, which improves with the length of employment
* Severance spend where: (one) an staff has worked at your company for at minimum five decades and (two) your yearly payroll is $two.five million or extra. The volume payable improves with the length of employment
* If you might be operating as a company, a director of the company is individually liable for up to 6 months’ unpaid wages and getaway spend


Segregation of duties

The fundamental concept is this: the individual dependable for the recording of property coming in and heading out of your company should really not be the exact individual who handles individuals property. For case in point:

* The individual who approves invoices for payment should really not be dependable for crafting and signing cheques. He has an option to defraud the business by making payments to fictitious corporations
* If the purchaser orders and receives the products, he can spot an purchase for extra than is desired and continue to keep the relaxation.
* If the individual who writes the checks handles the lender reconciliation, no one particular will know if he writes checks to himself or kin.

When beginning out your business, this usually will not likely be an problem as you will be the only staff alongside with most likely a handful of workers. Nonetheless, as your company grows and you hire extra workers, inner regulate through segregation of duties becomes incredibly important.

Periodic Money Statements

This would include things like a equilibrium sheet, financial gain & reduction statement and hard cash-stream statement. It is essential that you on a regular basis check your businesses’ economic effectiveness on a periodic basis. This is specially important all through the very first handful of decades of business – you have to have to know if you are making cash or dropping cash, and when to phone it quits if you might be operating at a reduction.

Ideally, you should really put together economic statements on a month to month basis, so you can make the essential changes to your business functions if you ascertain that you might be expending much too much in selected locations or regardless of whether your revenue targets are becoming achieved. If you hold out till the finish of your business 12 months to put together the financials, you may not comprehend the challenge locations in your business functions till it is really much too late.


As a experienced accountant in Toronto, Canada, the country’s premier city and economic and business cash, I have appear throughout a lot of weak souls who’ve misplaced every thing right after owning failed in business. This article was written to guide the reader in keeping away from the pitfalls that hinder a lot of business people. Nonetheless, it is an overview relatively than a entire analysis of challenges facing a potential Canadian entrepreneur. In advance of applying any of these tips, consult your experienced advisor. If you reside in Toronto and are hunting for a Toronto accountant, you should make contact with the author specifically.

© Copyright Jenny Lin, CGA 2009.