3 Steps to Legalize Your Small Business


3 Steps to Legalize Your Small Business | Thoughtfully Handmade

Calling all creatives! Did you just start a small business or want to start one soon? I've been in your shoes. That's why today's blog post will explain how I legalized Thoughtfully Handmade in three easy steps.

If you'd like to learn, keep scrolling!

1. Register your business name

The first step is to register your business name with your province or territory. Since I live in Ontario, I can only talk about the process here. However, you can find more information for every province here. When you register your business name in Ontario, you receive a Master Business License. It’s $60 to get one and you need to renew it every 5 years.

To register your business, head to the Ontario Government’s website and follow the instructions there. As part of your registration, you need to pick a business model. The most likely one you, as a creative, will be is a sole proprietorship. That means you are the only person responsible for the business. Another common type would be a partnership if you want to register the business under two people’s names. Both names listed on the registration are responsible for the business.

2. Get a business number

Now, you need to register your business with the federal government. If you live in BC, Manitoba, Nova Scotia, Ontario or Saskatchewan, you’ll automatically receive a federal business number when you register in your province. But, if you don’t live in one of those provinces or territories, then you need to register with the federal government by yourself. You need this to file taxes, so it’s an important step! You can find more information on the Canadian Government’s website and follow the steps there to register. 

3. Open a business bank account

This is not as important if you’re just starting your business, but I highly recommend getting a separate account when your business grows. Your business is a separate entity under the law. For example, if a business is sued for something, the business is responsible for dealing with it. You as an individual aren’t sued, but since you own the business, it’s your responsibility to deal with the lawsuit. Because of that, your finances and your business’ finances should be separate too!

This business bank account from BMO is great because there are no monthly or minimum fees and you can make online purchases with the business debit card. If you want a business credit card, you have to apply for that separately. Oh! Make sure to do steps 1 and 2 first because you need a business licence and/or number to open an account.

Optional: Open a GST/HST account

If you’re just starting out and make under $30,000 annually, you don’t need to apply for a GST account. The Canadian Government has a table to help you decide what category you fall under. If you make more than $30,000 then you MUST have a GST number and charge taxes. If you don’t have a business number, you shouldn’t charge taxes on your products! Head to the government website for more details. 

 

I hope this helped you understand how to legalize your small business! Please do more research for yourself if you’re uncertain about any of the steps. There are some services that can do all of this for you for a fee. However, it’s totally possible to do this yourself- that’s what I did!

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