In Canada, starting a business can be a highly lucrative way to earn a living. With the right planning and financing on your side, you could make a respectable profit while fulfilling your goal of becoming a business owner. Then again, getting your business up and running can be rather expensive, time-consuming, and complicated.
In fact, these issues cause many new entrepreneurs to overlook certain aspects of the business start-up process, particularly when it comes to the permits and licenses that are necessary to operate on municipal, provincial, or federal level.
What Is A Business License?
A business license is a special document that you can apply for through the federal, provincial, territorial, or municipal government that, when approved, gives you permission to run your enterprise within a designated area. Various government bodies will use your business license to:
- Identify your enterprise and its owners for liability purposes
- Record its financial details and makes sure it’s paying taxes
- Maintain public health and safety standards
Actually, there are several types of business licenses available in Canada, each of which serves a specific purpose. Depending on what kind of business you own, you may need to apply for the following licenses and permits:
- General Business
- Home Occupation
- Health & Safety
- Sales Tax
- DBA (Doing Business As)
- Fire & Police
Essentially, without the proper permits, your business can’t operate legally or collect taxable income. Before you start applying, keep in mind that different rules apply in every part of Canada. If you want to establish your business Canada-wide, you’ll have to acquire the documents to operate on a federal level. However, other documentation is required if you want to restrict your business to select provinces, territories, or municipalities.
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Which Businesses Must Have Licenses?
The licenses and permits you need will also vary according to what kind of business you’re running, as well as its precise location. For instance:
- A business that’s located in an industrial or commercial district must account for many zoning requirements, environmental guidelines, and bylaws. More documentation may be necessary for copyrighting, importations or exportations, patents, and trademarks.
- You may not need a license if you’re a freelancer, certified professional, or sole proprietor of a business that’s based from your home or another residential property. However, you must have a permit if your business involves any health, safety, or environmental concerns, or if it earns more than $30,000 annually.
- If your business is based in one province, territory, or municipality, but has service points outside of that area, you must also comply with that government’s particular regulations. Even districts that are located within the same metropolitan area or province might have different licensing procedures from one another.
All this to say that it’s extremely important to speak with an advisor before you acquire any business licenses or permits in Canada. That way, you won’t overlook anything when applying and can get your operation started without a hitch.
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What Types Of Business Licenses Are Most Common?
Earlier, we mentioned some of the business licenses that you might have to apply for in various parts of Canada. Overall, it seems that the larger and more profitable your business is, the more paperwork you’ll have to fill out due to all the regulations involved.
Although you may not need every license or permit on this list, it’s still essential to study them so you can determine which is best for you:
General Business License
The first form of permission you’ll need is a general business license from the governing body in the area where you wish to operate. While conditions and costs will vary, the average general business license is valid for several years and must be renewed consistently in order to comply with local and/or federal laws.
Every district in Canada also has different zoning requirements. If you don’t obtain the right permits, your business may not be allowed to operate within a particular area, so be sure to check with your City Hall to find out if you’re eligible.
Home Occupation Permit
As its name suggests, this license is exclusive to business owners who operate from home. Typically, any home-based business that earns over $30,000 yearly must be registered with the federal government. In addition, any adjustments to the property must conform to residential bylaws, meaning you won’t be allowed to post signage or make any alterations that would indicate your home is a business.
Health & Safety Permits
Things will get more complicated if your business involves any health or safety liabilities. For instance, under the SFCR (Safe Food for Canadians Regulations), most food & beverage services must obtain permission to safely handle and sell the products they offer, any of which could require a separate license (liquor, food, etc.).
Sales Tax Permit(s)
If your business sells various goods and/or services, you must get a permit to charge your clients one or a combination of the following sales taxes:
- Goods & Services Tax (GST)
- Harmonized Sales Tax (HST)
- Provincial Sales Tax (PST)
Once again, the necessary sales tax permits will vary according to which province or territory your business operates out of. There are even some taxes that you will only see in one or two select areas, such as QST (Quebec) or RST (Ontario & Manitoba).
“Doing Business As” License (DBA)
In certain areas, you must register for a DBA License in order to get a business number, if your enterprise is under a fabricated name. However, you’ll first have to submit a request with the Registrar of Companies to make sure that name isn’t already taken. Luckily, you might not need a DBA License if your business is a sole proprietorship or partnership that’s under your (or your partner’s) legal name.
Speaking of company names, any business that displays signs, billboards, or other advertisements must have a license to do so. Most cities even have bylaws to limit any advertising that’s considered offensive, that takes up too much space, or is otherwise concerning to the general public.
Under the Canadian Environmental Protection Act, businesses that handle chemicals and other contaminants must get permission from the Environment and Climate Change Canada to operate within designated areas for specific time periods. Your business may not qualify if there is too much risk of it impacting the humans, water, terrain, or wildlife in the vicinity.
Fire & Police Permits
Businesses with health and safety risks might also need permits from the fire and/or police department in their area. In fact, most commercial businesses receive annual inspections from the local authorities to make sure their building is up to code. Even some home-based businesses must have these permits to operate legally.
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How Do I Know Which License(s) I Need?
Being that regulations can vary greatly in different parts of Canada, it can be challenging to figure out exactly which licenses and permits you’ll need to truly make your enterprise legitimate. Thankfully, there several ways to pinpoint the appropriate documents, including but not limited to:
Contact Your Local City Hall (Or Other Governing Entity)
One of the easiest ways to get information is to speak with a government representative near you, which can usually be done by phone, email, or appointment. If you’re clear about what kind of business you’d like to license, they might be able to provide the forms on-site.
You can also ask for a referral to any fire, police, or health services in the area that requires your business to have a permit. However, the reach of the local authorities may only extend to the municipality they govern.
Contact Your Provincial/Territorial Business Service Outlet
If you’d like to register your business in one or more major cities, provinces, or territories, there should be a service centre nearby where you can apply for any documents you need. For instance, you’ll have to visit Service Alberta to register your business province-wide or in a large metropolitan area like Edmonton, where zoning requirements are much tighter than in a small town like Red Deer.
Visit The Government Of Canada Website
If you plan to expand your business cross-country, you can check out the Government of Canada web portal, where you can enter your information into their permits and licenses directory for guidance to the necessary licensing forms (this also works when registering your business provincially or territorially).
On the same website, you’ll also find a link to BizPal; another government-endorsed online search engine that can help you narrow down the appropriate licenses and permits using basic information about your business and industry.
How Do I Apply For a Business License?
- Formulate your business plan – Before applying, make sure to draw up a good strategy so your business has the best chance of success. Don’t forget to speak with an advisor, get your finances and credit report in order, and find a solid source of funding.
- Search for the appropriate licenses – Determine the right branch of government to apply with (municipal, provincial/territorial, First Nations, federal) then speak with a representative or use their search engine to discover the relevant documents.
- Register four business – The next step is to register your business’s name with the Canadian Government. If it hasn’t been taken already, you’ll be assigned a business number. You’ll also have to state where the business is located and whether it will be a sole proprietorship, partnership, or corporation.
- Apply for licensing – Once your business is registered, you can start applying. Although you may only need a general business license, other permits could be required if your business is large enough. Keep in mind that it could take several business days for each kind of license to be processed.
- Register for tax permits – While this step may be done at the same time as your basic licensing, you’ll generally have to contact the Canada Revenue Agency (CRA) to properly register for HST, GST, or other types of tax permits.
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Ready To Start Your Canadian Business?
Getting the right business license can be a costly and time-consuming task. But, staying organized and have a comprehensive understanding of the necessary licenses will make the process as smooth as possible.