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How to start a small business in Canada

Editorial Team

5 min read
Two women packaging retail merchandise

With nearly 40 million residents  and a GDP of $1.6 trillion, Canada is a great market for aspiring entrepreneurs. This is especially true if launching a venture online, since you can literally access a world of potential customers.


However, starting a business in Canada involves a fair amount of research and prep. This article explains the most important steps for getting your entrepreneurial dreams off the ground.

What do you need to start a business in Canada?

Although the exact steps vary from province to province (and town to town), below are some of the most common requirements for starting a business in the country.

1. Research potential business ideas

Businesses exist to solve problems. This is as true for the B2C crowd as it is for the B2B crowd. For your venture to succeed, you must offer some type of solution for which customers are willing to pay. If there is no ready market for what you plan on selling, you’ll struggle to make that first sale.

This is why you should solicit as much feedback as possible from friends, co-workers, and family members before moving to the next step.

2. Write a business plan

Many entrepreneurs dread business plan writing, but it’s critical you create one since:

  • Business plans are basically required when seeking outside funding from investors, banks, friends, and family members.
  • Even if you finance your venture with a bootstrap budget, having a written business plan can help you better manage and prioritize limited resources – especially in the early days.

3. Choose a name for your business

Most jurisdictions prevent two or more businesses from sharing the same name. This restriction is particularly important when both businesses occupy the same niche or industry.

Make sure your target name isn’t already taken by using the Canadian government’s name availability database and business registries database. If the name is still available, you can now begin choosing colour palettes, logos, domain names, and other branded aspects of your business.

4. Choose a business structure

The next step involves choosing a business structure – one that offers the ideal balance of liability protection and setup ease for your unique situation. Below are the four most common business registration options:

  • Sole proprietorships are the easiest to create. You don’t even have to file a separate tax return. However, this legal structure doesn’t provide much separation between your personal and business assets, which opens you to potential lawsuits.
  • Partnerships are ideal when there are two or more owners involved. The risks, costs, and management are shared, but so are all debts and liabilities.
  • Corporations are complex legal structures that require substantial setup and maintenance costs. As such, this legal structure is most often used by more established or larger companies.
  • Cooperatives are collectives of individual members who each share a proportional stake in the venture. The beauty of this legal structure is that expenses are spread, and the liability protection is fairly strong.

5. Choose a business location

If selling in-person, you’ll need to buy or rent a physical space in your area in which to conduct business. The exact cost will depend on the type, size, and location of the space. You’ll need to factor this into your financial planning.

If selling online, you’ll need a domain name and website through which to sell your products and services.

6. Set up finances, insurance, and grants

The next step involves securing the funding necessary to launch. In addition to outside financing from investors and friends, the Canadian government offers small business grant opportunities. Depending on the business you start, you may need to use various types of insurance as well.

7. Acquire appropriate business licenses

Because certain industries are regulated, you might require a business license for your startup. These requirements apply to professional occupations (such as doctors and hairstylists). There are also zoning and environmental permits that apply in some situations.

8. Register for the GST/HST

If you want to stay legal, you’ll need to register for the goods and services tax (GST) and harmonized sales tax (HST), which are value-added sales taxes that apply to most goods and services throughout the country.

9. Register for provincial taxes

Because not every province has harmonized its sales taxes with the federal GST, you may need to register for provincial taxes as well. This rule applies to Québec, Saskatchewan, Manitoba, Alberta, and British Columbia.

10. Prepare your business to accept payments

Although it’s possible to sustain a “cash only” business, long-term growth will require that you accept other payment options such as credit cards and debit cards. For this, you’ll need a merchant account – coupled with a payment gateway (for online sales) or a POS terminal for in-person transactions.

At Clover, we specialize in streamlined payment solutions for small business owners.

11. Hire employees (if needed)

If you ever reach a point where you need to hire additional help, you’re probably doing something right. Bringing on employees introduces certain responsibilities, such as payroll deductions, employment insurance, and worker’s compensation.

Fortunately, our payment solutions come with built-in employee management tools to help automate many of these time-consuming tasks.

12. Market, launch, and sell

The final steps when starting a business in Canada involve launching your startup and marketing your venture using social media campaigns and other advertising channels. If using Clover’s payment solutions, you can also use loyalty programs and other customer engagement tools in the Clover App Market to keep those first-timers coming back for more.

Now that you know how to start a small business, we wish you the best of luck on your entrepreneurial journey. Whenever you’re ready to make that first sale, we can help you design the right type of payment environment for your venture.

To get started, schedule a free demo with a Clover Specialist today.

Disclaimer: The information provided above is for educational purposes only and does not constitute business, legal, or financial advice.

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