Amazing! Gem of a Canadian you are! Putting this information up here like this, I wish they taught this in high school instead of line dancing. LoL! Honestly tho, you really broke it down into an digestable communication style. Which I as an Albertan really appreciate, if you write a book can you add pictures in crayon for me. Haha jk! Im looking to contract myself out as a medical provider and it really seems like going the incorporated route is a no brainer. This is going to be my first buisness and I really appreciate kind souls like you out there, just creating content to guide people like me on this journey. I hope to use the wisdom I gained in your set of videos, to provide increased patient care to Canadians and hopefully abroad. Thank you. Taxes look like they suck, gonna be saving every, single molecule of a reciept.
Hi Shao and thank you for your warm response. I'm glad I could help you even a bit. Good luck with your business, which seems as a very positive and helpful for the community. Feel free to ask any questions you might have.
What does it mean to be a Sole Proprietor? Starting and operating a business as a private individual has its benefits and drawbacks. While providing a simple and straight-forward business structure, which does not require any complicated registrations or administration, operating as a Sole Proprietor also exposes the business owner to personal liabilities for the operations of the business. It will also limit future growth and development of the business in many ways. In this video we will overview the process of starting a business as a Sole Proprietor, registrations that are necessary or advised for business operations and an option of using a separate name for a business. We will overview and summarize which types of business are fit for Sole Proprietorship to make the decision-making process as simple as possible.
Yeah it would be nice if at at least some of the links on gov't of canada's website actually worked. shows how important the Liberals think small businesses are.
I've recently started a business and I find the best way is go through your city hall ask questions and contact trusted sources to get the right information hope that's helpful
Great video, thank you for sharing. My question to you are as the follows, I’m a Canadian and file my income tax in British Columbia. 1. I work for a business that writes my pay cheque in my personal name, and takes taxes, cpp, ei, etc off my check. 2. Ive just received my registered sole proprietorship in February, 2019. (Which I applied for in 2018) 3. Should the Company I work for, still issue my pay check in my name or the sole proprietor name? 4. Do I have to open a business bank account, and deposit my pay check into that account and then pay myself from those funds and also pay my expenses, or can I do it through a regular personal bank account. 5. Ive purchased around $50,000.00 in tools to do my job in 2018 and going forward. 6. Since my sole proprietor ship did not come into effect until February, 2019, am I able to deduct my tools and other Expenses in my 2018 tax year? 7. I have all my receipts to backup everything for 2018. 8. Do I file my 2018 income tax as a personal tax and then deduct my expenses for 2018? 9. Do you know if revenue Canada has a guide booklet to follow for your sole proprietor ship taxes. Thank you, I hope you are able to answer my questions above. Thank you so much. Have a wonderful day.
Or by reference or simply trying until you find someone that you are comfortable with. Essentially, the accountant should understand business taxation, tax planning and business development. Ask some questions about capital gains and exemptions, difference between a partnership and a corporation etc. - if you see that the accountant is not there - look for someone else.
Hi, Thank you for sharing all this interesting info, very useful! I have a question, what if as a Sole Proprietor I buy an E&O insurance, is that useful to cover the risk ? Thank you!
MD, the best option would be an incorporation - both from the perspective of liabilities and tax planning. Importing products always implies certain liabilities, working with multiple stores as well. Also, once you make more than 60K profit per year, tax planning with a corporation becomes more effective.
Yes, absolutely. In many cases this makes sense to save on incorporation fees to see if the business will take off. But keep in mind the issues of legal liabilities, sometimes even selling small you can expose yourself to significant claims. Then, as a sole proprietor, all your personal assets will be exposed. The idea is not to wait too long to incorporate.
@@Rio-uv1gs Rio, there are no official steps. What you should do is to incorporate and start operating your business through the corporation. Make it 1st day of a month, so everything that you've earned before that date will be reported as your personal income, and from that point on - corporate. Additionally, if you have equipment that you use for your business- discuss with your accountant how to "transfer" it to the corporation, this might save you some taxes in the future. Good luck.
Overall, if you use your money to invest and generate additional income, it is not a question of "can" but rather a "must". There are special rules of taxation for this type of income, but it definitely must be reported. Additional consideration - if you have a regular operating business + investment income, it might be the time to consider whether to incorporate in order to manage your tax liabilities more efficiently.
Not necessarily - you can operate a business from your personal account by adding the MBL to it with the bank. If you are not incorporated, then opening a second business account under your name might be a bit of an overkill, unless your business is growing big, but then i would question why not to incorporate...
Tony, overall "yes", this is possible. I prepare a video on this topic as we speak. What you should pay attention to is the taxation and legal consequences of the transition. Especially if you do it after "years" of operations, you should get a proper understanding of the transfer of assets from one person (you individually) to another (the legal person of your corporation), and the taxation of this process. So the longer you wait, the more severe could be the consequences or more complicated the process to avoid them...
@@businessincanada-doitright1822 thanks for the quick response! Can't wait to see your next video. I discovered your channel today and watched most of them. A lot of my questions are answered, thank you very much for making these informative videos. Cheers from Edmonton AB
Dear Rap God, Your question could be split into two separate issues, and I will be able to answer only one of them. From the general perspective of Sole Proprietorship, it applies to all Canadian residents for tax purpose. So if you are living in Canada for longer than 6 months a year - it applies to you as well. At the end of each year (and by the end of April) you have to file your tax return where you indicate all your income, including business income and business expenses, and then you pay tax (or get refund). What I cannot tell you is how this will be perceived by Immigration Canada and their rules with regards to foreign students' ability to work or operate their own business while on a student permit. Please let me know if you have any further questions, and good luck with your business ideas.
@@businessincanada-doitright1822 Hey, I got the information that international student can do self employed work, here is the link, mobile.twitter.com/CitImmCanada/status/1009818269421883394
I've been buying and selling land in novascotia with some success, I'm trying to look into which would be the best to have if i plan to sell more and get loans from somewheres based on the profit
Stephanie, there are actually 3 questions there: 1. You should discuss the plan with your accountant and see what would be the most effective way from the tax perspective. 2. When borrowing funds for business, it is always better to work through a corporation, although you should keep in mind that most institutional lenders (banks, credit unions etc) will ask for personal guarantees. 3. As the business grows, and especially if you are engaged in land development and construction, then it is absolutely necessary to incorporate to protect yourself and your personal assets. 4. I would also take a look at the local provincial and municipal licensing rules to make sure that you operate in compliance with the laws. In this case look at the bigger players - most construction and land development business are not just incorporated, they have a separate corporation for each building project they operate - they do so to protect the assets of one project from the liabilities of another....
Hi, I'm an Indian. I want to start my own Cosmetic company in Canada. For foreign citizens how much minimum amount is mandatory to start Canadian ltd company? Please suggest 🤔🤔 or Can I start sole proprietorship ?
Hi Eugene. This question is for e-commerce, online affiliate marketing income originating in Canada. Do you need a tax code/number for sales in the US? What about other foreign countries you receive payment from? How can you keep track of this combined online income for income tax purposes? So far, sole proprietor status. Also, a list of business tax deductions would be most helpful. Thank you.
Hi, e-commerce is a bit complicated from this perspective since you do not really know where the service was provided. In my opinion, unless there is a clear law in a country that requires you to register, you can try and define your services as being provided in Canada, this way you do not need to run around the world and register in every country. You can take a look at the new Canadian law for online businesses and the need to register for HST (search for the CRA site for it) - it provides a good explanation and demonstrates how the system might work elsewhere...
Every video I hear about SP, they say you can just operate under you name, meaning the business is you. So if I were a Cleaning Company, I would just be "(my name)" not "(my name) cleaning company"? That's where I'm slightly confused. If I'm just using my legal name as a business, how will people know what services I offer?
I will have to investigate it. Seems as a not so simple process that might require registration with the ministry of health, but I will have to review it separately.
As a international student in Canada and allowed to work 20 hours per week. Can I become sole proprietor while studying and how the 20 hours rule apply on international students sole proprietor? Thanks
Hi, I think that I've answered this question at least a dozen times... Essentially, in my opinion, you cannot operate a SP while on work permit or student visa - both imply you being "employed" by an employer. SP is not a situation of an employment. BUT! If you incorporate (which is allowed since you only own shares in a corporation and that is not forbidden by the visa), your corporation, as a separate "person", then should be allowed to "employ" you as one of its employees. This is not just semantics - essentially, a legal entity will be paid by its clients, not you directly. Then you will be employed by the same legal entity... Please make sure you discuss it with your immigration consultant since the whole thing might affect your future application for PR...
useful information about the sole propertiship Question : can a Sole propertiship import and export goods from other part of the countries ? if so what are the requirements
Thank you for this very helpful video. I registered and operated a cleaning service business ( Sole Proprietor - have HST number ) for just a few months and had to stopped due to covid and also needed to take some time for personal matters. I am now thinking of operating it again and I have few questions for which answers will be greatly appreciated. What kind or which insurance do I need so I never have to worry? ( If an employee/s get hurt or injured. If a client's things get damaged or broken by employees. Even if an employee ( not so nice one ) steals from a client ) I want to operate a business that is good, kind and safe atmosphere for everybody clients, employees and also myself. I rather make less doing all the rights and have a peace of mind. I am open to any tips or advices you have regarding cleaning service business. Thank you again for your informative channel.
Kelly, as you can see from my other videos, I generally prefer to operate any business through a corporation, especially when you have multiple clients and employees. Commercial insurance in Canada is being sold only through insurance brokers, not directly, so you should discuss insurance needs of your business with a broker (who actually works for you not for an insurance company). Any damages caused to third parties (clients) are generally covered by a Commercial General Liability Insurance (CGL), while employee's injuries are covered by WSIB (in Ontario).
@@businessincanada-doitright1822 Thank you so much for your answers. As of now, it's just me one person show which I am visualizing to grow and have good reliable people to grow with. I am planning to max immunized the business from the beginning when laying one brick at time onto building a high tower. I have all the ideas and visualizations that I am going to turn into tangible results. With your knowledge and expertise which insurance in your experience, do you think would be a good one for what I am looking for?
@@kellyc9234 Kelly, you will definitely need a CGL for starters. As you proceed with this coverage, I am sure a broker will advise additional coverages as needed. Please let me knnow if you would like me to refer you to one of my contacts.
If I want to close my online business, do I somehow lose money? I stopped my career and sole proprietor work due to having kids , but I also did not sell much in general. I lost alot of money. If I just keep my business number without any business income will I get fined or will there be some type of fee if I don't close my business number. I may want to do something a few years from now and still have a business number, but not certain how this works.
Can I take the cleaning contract from my employer if he received his 30 day cancellation fee on his contract. I just got my Quebec business licence and the commercial company offered me the contract
Kev, This is a complicated question that would be best answered by a local lawyer with the knowledge of Quebec employment laws and your personal employment agreement (if you have one) - and as a professional consultation rather than a public dialogue. In general, your question refers to the situation where an employee wants to continue his/her own business and compete or in some situations solicit the clients of the former employer. This situation is very common and causes many legal conflicts between former employers and their "new competitors". First of all, the law (Employment standards act of Ontario) does not prevent competition or even solicitation of the clients and employees by former employees of a company. There are some additional rules in the Common Law (which does not apply at all in Quebec), that prevent certain employees, usually executives, from doing so. And then there is a personal employment agreement that might limit employee's right to compete (almost unenforceable) or to solicit clients and employees (enforceable) from their former employers. An unfortunately, I will have to say the phrase that many hate (and I don't like to use frequently), but this is a question that depends on every particular situation and facts and should be answered to each person separately...
Can you report business expenses of equipment that you purchased before registering the business name with the government? Expenses under the new business name buy equipment purchased before the name was registered. For example equipment purchased under your name 2 weeks before you register the business with a new business name rather than your name.
S O, if your question refers to the situation of a sole proprietor, then registering a name does not create anything new, so such expenses are absolutely claimable. With incorporation a story is a bit different - usually you will be able to recognize some expenses going backwards prior to the incorporation but for a limited time (a couple of months). For both situations, it is best to consult your accountant and get a bit more professional answer.
Hello, First of all, thank you for the information. I want to open a snow plowing company. Should i open Sole or incorporated company? Thanks in advance!
there is no answer to this question. For some of my clients I would say that incorporating is an overkill, for others that they had to incorporate years ago. There are even some that might benefit from a partnership - it is all personal and the "best option" should be decided on the scope of your business operations or a business plan.
Hello, should I go as a sole proprietor or partnership if I want to start a food delivery business in a small town but might hire contract drivers? What are my options? thank you. Your channel is so helpful.
I have a question that im hoping you can answer. For example, if im the sole proprietor and my name is "John Robert Smith", can I call my business "Robert Smith" without applying for a business license. Assuming my middle name is on my birth certificate, would I be on legal grounds? In Canada it middle names count as first names, so I feel it would be ok, but im still unsure.
Hi, I'm retiring Jul 01 but my company wants to hire me back as a contractor. A 3rd party HR firm is handling the contract on behalf of the company hiring me. Should I set up a sole proprietorship or just work as a part time employee for the HR firm who then will sell my service back to the company that wants to hire me. I'm confused?
It is always better not to be self employed for various tax reasons. I would strongly suggest discussing with your accountant "personal service business" - a status that CRA can apply to you and charge you taxes at the highest rate of personal income tax. Speak with the accountant that files your annual taxes, they usually have the knowldge for your situation.
No, there is no cap. The problem is not with the cap, but with the taxes that you will pay. If you make 1Mil profit per year as a SP, you will pay more than $500K income tax. If you make the same profit as a corporation, you will pay $125K (one fourth) of the taxes. You still will pay personal taxes when you take money out of the corporation, but there are many planning tax strategies to reduce the tax burden and save you hundreds of thousands of dollars....
@@businessincanada-doitright1822 Thank you for this feedback. I have been doing landscaping work as a sole proprietor and am thinking of registering my business in the spring. I work on my own so I do not have any employees atm. Would you recommend registering as a sole proprietor or as a corporation?
@@dougienaus2084 It boils down to two questions: 1. Will you make more than 50K-60K annually. If yes - then incorporate, it will allow better tax planning. 2. Will you have partners or employees in your business (whether now or in the future), if yes - then incorporate. 🙂
Eben, it is not completely clear to me. Since SP is based on your social insurance number and as a work permit holder you have one - you should be able to operate a SP. That being said, I am not sure that this will not be contrary to your work permit (since it implies that you are working for someone). In this case, I would strongly consider incorporating, this way the business operations would be conducted by a corporation, not you personally and probably will conflict less with your work permit.
The answer is both yes and "probably no". Yes - if you have an overseas LLC, you can register it to operate in Canada. Overall, you cannot register a Canadian LLC since this type of business entity is not recognized in Canada. "Probably no" is because you should review the tax implications and see if just incorporating a local LTD is a better way forward.
So if you started a business as a contractor . ( sole proprietor) what does this mean for your work vehicle? Deemed as personal or commercial ( if you only have one vehicle)
Hi, the recognition of the vehicle expenses is not related to the SP or corporation, only to the question whether the vehicle is used to generate your business income. As a sole proprietor you will be able to deduct vehicle expenses (or at least a portion of them_) from your income in the same way as corporations do. Speak to an accountant to understand the system a bit better, but overall this is definitely not a big issue.
Hi Cole, I've answered this question a couple of days ago in another video. Here is the answer: This is a very important and frequently asked question. Overall, the transition is possible and I even sometimes advise people to move forward this way exactly. But! you have to pay close attention to the pace of your business development and sales increase. First, the tax benefits of a corporation could be more attractive. Second - the transition of a business from sole proprietorship might also trigger taxable consequences - you transfer assets from you personally to a business and might generate income. So the transition is best done before the business has grown significantly. Good luck.
Hi, I'm starting a RUclips channel and would like to know for tax purposes and any other income potential. What would you recommend Sole Proprietorship or Incorporation?
Yes, you MUST give receipts to your clients. Once the receipt is higher than $200CAD (or so), you must also include your busienss number on the receipt.
Kalakar, I do not work in QC, and do not speak/read french, but their business registration portal is here: www.registreentreprises.gouv.qc.ca/en/. You might want to consult a local QC specialist to see that you do everything right. The legal system in QC is different and could require some special knowledge (I do not know for sure though)...
this was very very helpful for me thank you!! ive had people ask what my hst number is or something like that? what is that for and how do i find out what mine is. It isnt my SIN number they asked for they just wanted to know that number and to see our warehouse to sell some of their products in my car detailing and car audio shop!
Hi Mike, Your question covers two separate issues: general business number (BN) and HST. I'll explain shorty both: In general, every business has its own 9-digit business number. If you operate as a sole proprietor, it would be your SIN, if a corporation - you should receive it from the CRA. If you didn't receive or lost your BN, you can call CRA business phone line here 1-800-959-5525. In addition to the general BN, almost every business that generates more than $30,000 annual sales (not profit!!!) must register for HST (there are certain exemptions, but most of the businesses must). By doing so, you will have to add 13% HST to all your invoices and refund all HST collected to the government. The benefit of this story is that you can collect all HST that you've paid on your business purchases. An important warning - a business that was supposed to register but failed will be penalized by the CRA in a triple form: a. they will assess all your bills as having 13% included (you will lose 13% of all your sales); b. they will add interest to all these amounts X years of failure; c. they will add penalty for not registering for HST. I hope this answers your question.
Hello! I am planning to sell handmade stuff on a website and name the brand other than my name. I have not earned anything yet, do I still need to register my business
Yes, any kind of business operations under a name other than yours require a registration. That being said, please keep in mind that a simple Master Business License registration in ON costs only $60, so not much of an investment. Once your business grows beyond 50K profits, it will make sense to consider incorporating it.
Well, you cannot "convert" yourself (SP) into a corporaiton. What you can is incorporate and continue your business under the new corporation. You must discuss tax implications in case your business is already substantial and has its own assets...
I love your video, very informative. I do have q question. I do have money to start up an Amazon FBA business and when the business starts, I will not have enough money to pay the yearly corporation expenses so I think I should go with the sole proprietorship because it's cheaper for me in the beginning stages. If I go towards sole proprietorship, can business insurance protect me when someone is suing me?
Henry, The insurance can indeed protect you against liabilities, but you should remember two points - one is that insurance has its limits of coverage (if your limit is 1mil and I sue you for 2mil, you are still exposed for 1mil of losses that will not be covered by insurance). Second, most insurers will take your money, but will then look how to avoid your coverage. This is not to say that the insurance is useful and needed, just that you should understand its limitations. Also, please keep in mind that insurance costs money (I do not know about less than 1,500 - 2,000 per year, but I could be wrong). Alternatively, to avoid/save some costs, and yet to start with the corporation, you can incorporate online DIY (it will cost only $200) and once you have generated sales and have more cash on hand, you can come to me and we will make all other organizational arrangements. This will definitely cost less than the insurance converage.
@@businessincanada-doitright1822 I see, thank you for informing me about this. Yes, when my business generate more money, I would like to come to you for help. I live in British Columbia. Thank you for your help again!
Hi, thank you for this information. I am planning to do an online business of selling general merchandise. Please correct me if I'm wrong, you have mentioned that as a sole proprietorship it doesn't matter if I register my business or not as long as I report my additional income to CRA. Is that correct? I am just confuse whether do I need to get a business license in order to do business. I only have a small investment like, let's say CAD 3000 max. Appreciate your response.
Christine, Overall, you are correct. If you plan to operate under your personal name and not to name your business under any other name, you do not need a master business license. On the other hand, it costs only $60, so might want to register a name for your business. Good luck with your business.
Rio, it depends on the volume of sales and future plans. If you are still small and just start your producing, a SP is a good way to start - cheap and simple. Once you start growing, have more clients, engage a team to assist you in production - then you might consider incorporating.
@@businessincanada-doitright1822 Exaclty what I was thinking. Thanks for the confirmation.. Is transitioning for SP to Corp straightforward, what would be the steps?
Caroline, to the best of my knowledge there is no such thing in Canada. You just start your business and resell or wholesell your products. What you probably will need, is a proper agreement with some of the suppliers that allow you the sale of the products in Canada...
Ray, any type of business activity that you undertake not under your personal name requires some sort of registration - either a master business license for a sole proprietorship, or incorporation. Which of these two is better fit for your situation depends on three questions: are you going to generate profits in excess of $50K; will your business generate legal liabilities; are you planning to work with partners and investors...
i want to start online business like selling on amazon and shoppify.is there a difference in registering online business and opening a store. please advice what to do and how to go about the registration process. thank you
Caroline, it doesn't really matter whether you operate your business as a brick and mortar or online. If you plan to sell online, where you will be selling to multiple states/countries, I would suggest to go with the Federal incorporation (it is also cheaper to register). Once you've incorporated, you will have to open a business bank account and if you plan to sell for more than 30K per year in Canada, register for HST as soon as possible. Please keep in mind that by law, your corporation will need Minutes Book (resolutions, by-laws and registries), but if you are short on money now, you can wait until the business starts generating income and order these documents then (at your risk)... Good Luck!
Pinnacle, yes you can. If your business is generally located in one province and you simply mail/ship your products to other provinces, you do not need to register in other provinces. The situation will change once you want to open an actual physical location for your business in other provinces. But by then it will really be a BIG mistake not to incorporate.
Mamadee, the simple answer is "yes". but there are certain issues that you will face as a non-Canadian resident operating a Canadian business. I have recorded a video on this specific topic and will publish it probably next week. I hope it will clarify the issues for you.
Hi Eugene. Im currently in talks with a company in the states that would like to hire me as a contractor. Ill be paid in US dollars and not be considered "employed" by the company. Would sole propriotership be the best course of action to facilitate this?
Zachary, generally speaking, yes it's possible, What you have to keep in mind is the income tax (on a personal level you will be paying much more if you make more tahn 40K - 50k per year). If you can put the funds into a corporation and then withdraw only as much as you need for your personal expenses, it could save 10 - 15K if you make 100K per year...
Hello Eugene. First of all great video, had some great information thanks for posting these. My Question for you today is, While being a sole proprietor (contractor) if I provide services outside of Canada (i.e. Thailand), but the company that is contracting me is resident in Canada, do I have to charge and remit HST? Any information on this subject would be greatly appreciated.
tiinaiiceey , while I am not a tax expert, the basic rule with regards to writing off your expenses is whether the expense was incurred for the purpose of generating an income. If you pay postage fees to deliver your products to the clients or distributors - they should be deductible, if you send letters to your family - not. Most businesses selling online would definitely comply with the recognition of the postal fees as their legitimate business expense..
Olivier, You can (I would even say you should), and it will provide you with certain protection, but you have to keep in mind the following problems, which insurance will not resolve: a. All claims will still be brought against you personally, so if the claim exceeds insurance coverage, or insurer will refuse to cover (read disclaimers and exclusions of your policy), you still will have to pay from your pocket; b. Insurance will cover only damages liability (mainly negligence), and will not cover business debts, breach of law and other types of damages - which again will be imposed on you personally; Otherwise, I strongly believe that every business must have at least a General Liability Insurance policy.
@@businessincanada-doitright1822 the email on your website doesn't seem to work. I tried sending you an email but it came back undelivered because the remote server is misconfigured. Is there another email address?
@Business in Canada, I'm starting a small t-shirt business. I registered as a sole proprietorship, but I'm really worried about the liabilities! I don't want to lose our house! It's just me working at home and drawing my own designs, no one else involved. Do you think just the General liability insurance plus the product insurance is enough to protect our mortgage? I can't think of any way I could be sued for a large sum. Please let me know, I'm worried! Thanks!!
Thank you for the informative video. I am looking to start a tutoring centre out of my home. As I will be working with young children, is it safe to be the sole proprietor of my business?
Well, we incorporate for multiple reasons with only one being limiting your liabilities. working with little children might be one of the major concerns, but in case all you do is a short-time tutoring (30-60 minutes classes), I would not consider it is a high level of potential liabilities. Another reason to consider incorporating is tax planning, hwich becomes important after 50K profits. In case both reasons are present in your case, I would suggest incorporating. If just to limit liabilities, it is not a clear cut and is up to you to decide what makes you feel better - to spend a bit more and incorproate or to pay a bit less and have a minor level of exposure...
Hi Eugene, thank you so much for this information! For a direct service would you suggest a Sole Proprietorship? I am opening an Emcee company where I will personally be hosting weddings and corporate events. Thank you!
Caleb, in order to answer your question, I would look into two considerations: a. The extent of liabilities - by hosting private events and being responsible for the guests, you incur extreme liabilities (a guest slipping, falling and breaking their neck - and the guest being a young highly paid professional, and next thing you know you are sued easily in excess of one million). b. expected revenues (not immediately, but in the future) - if you expect to profit more than $60K a year, the corporation provides with better tax planning and management opportunities. So, my personal preference is to proceed with this type of business as a corporation. This is safer, provides better protection and more efficient financial tool. Good luck
@@businessincanada-doitright1822 Hi Eugene, my apologies I am new to interacting on RUclips and hadn't realized you responded. That being said thank you so much for the time and thought you put into this response. I really appreciate this advice and will be proceeding with this course of action. Thank you so much!
Nica, from the perspective of hiring and the process, Sole proprietorship is no different from a corporation. The answer is yes - SP can hire a foreign worker and shall follow the regular process, which is called LMIA. Once you receive a positive LMIA, a SP can bring the foreign worker to Canada. As a side note, please keep in mind that as an employer of a foreign worker, you must comply with the terms of employment offered to an employee, and Service Canada conducts frequent audits of employers of foreign workers. I hope this answers your question.
Hello how are you? i would like you to help me with some doubts, im in canada with work permit , i came sponsor and i want to work in extra hours and weekends but my permit is just for work with my sponsor, so i found and online job but if i take it i need to receive the comissions i will earn for that job , because the jod is like a franchise so my question is, can i be a sole propiertor work on my own and dont affect my status? thanks
Ambar, while the question is not directly up my valley, I will try to answer. When you have a worker permit limited to one employer, you are generally not allowed to work for anyone else in Canada. Being sole proprietor is operating personally, which means that you will be performing work personally, which might constitute a breach of your worker permit conditions. I would suggest you to talk to your immigration consultant and see how to get out of this situation in a way that will allow you working extra hours and retaining your status as a foreign worker.
Hello there! Thank you for this helpful video! I have a question for you. I am an 18 year old looking to start my own self employed party princess business (dressing up for little kids birthday parties). I was wondering if you could recommend where to start? I’m worried I won’t get the proper licensing for my business and the content I want to put out! Thank you so much!
Makayla, I would follow these steps: 1. Decide whether to incorporate or operate as a sole proprietor. I would tend to SP due to the type of business and expected revenues. 2. Decide on your business name - either as your company name or business license for SP. 3. I do not think there is a license requirement for your type of business (at least in Ontario). Call your municipality and verify, if I'm right - just start doing business. 4. Have a simple but protecting agreement with your clients. Make sure they pay your fees, have proper expectations, do not use your content for other purposes. Important thing - make sure you can use the pictures and videos from such events for your marketing purposes. That's it... Good luck with your new business!!!
First of all, thank you for all the great information. I am a Canadian citizen from BC. I am currently overseas for work. Is it possible to register a sole proprietorship (under a business name) in Canada from overseas? The reason is I would like to base my business in Canada due to future plans to return. Thanks
It is a bit of a problematic question. SP is based on you personally and all its income becomes your personal income. In this case, I am not sure how the fact that you are not a Canadian tax resident will affect the SP and its tax liabilities. From another point of view, you definitely can Incorporate and operate your corporation from abroad while retaining the profits in the corporation until you come back to Canada. With regards to the first part, the easiest way to resolve it would be to call CRA 1800-959-5525 and ask them how they treat SP's of non-resident Canadians
Thanks sir for the information, I am from India, age 49yrs I am planning for a start-up Investment plan in Ontario, Canada as sole proprietor, please guide me
Awesome knowledge you're giving, Eugene! So, I want to be part time self employed while working with my job right now until I can go full time with my business.. Would Sole Proprietorship be the way to go? It sounds very risky if you make a mistake and they plan to sue. Would insurance cover whatever faults you make, and what is the best type of insurance I should get being a Sole Proprietor?
ENCDZ, it makes sense to try and operate as a SP if the expected income will be lower than 40K annually. But you should also consider the risks of your operations. You did not explain what you plan to do, so I cannot help with it. Insurance could be a good solution, but insurance + incorporation will simply increase your defenses. Good luck with your project.
Hi, Can you please guide me what basic steps should I take to buy business in Canada in partnership (my share more than 51%), while staying in my country. I'm a foreigner. I'm buying a running business. What essential points should I keep in mind. Do I have to register the partnership? Also, kindly inbox your charges for helping me in this process.
Yumna, with more than 51% ownership of the corporation you might face certain tax implications since your corporation will not be considered as a CCPC and will not receive tax reduction to 13%. The steps are: 1. incorporate a business in Canada 2. Prepare all the corporate documents to support your operations 3. Negotiate and sign an Asset Purchase Agreement. 4. Make sure your purchase is protected from various legal liabilities. Please send me an email to info@cbes.ca and I will send you the costs of each step.
Great information Eugene. I'm thinking of an "in-home" small mushroom growing business. I want to grow mushrooms at my house and sell at farmer's markets and restaurants. This is a retirement business to keep busy and bring in a bit of income (less than 40K CAD/year). 1.) Would I be best suited to open a SP or just operate under my name? 2.) In the initial year(s) I will probably not make a lot but would still like to be able to "write off" a portion of my home expenses (supplies, equipment, heating, cooling, vehicle etc). Is there a minimum income I need to show to write off these expenses? 3.) Are any licenses required to operate this type of business in Ontario? Thank you!
Sir, i am a foreigner i am planning to buy franchises business in Canada with a Canadian resident. 1. Will i have partnership, or incorporation. 2.After buying business, after how much time should i apply for Work pernit
Dear Syeda, 1. most probably the corporation is the better way to go, but you must be aware of the tax implications - a. if you hold more than 50% controlling shares while you remain non-resident, the corporation will pay significantly higher income tax of 31% (compared to 13% regularly).; b. payment of dividends to you will be subject to 25% source deduction (recoverable, but with certain degree of headache). Both these issues could be resolved through a proper structure of business operations, which I will be able to assist with. While some might say the partnership is better for the tax purpose, I am not sure that this is true since the partnership that operates in Canada with foreign partner will be dealing with significant tax issues in the future. 2. Franchise - please note that Canadian laws are very protective of franchise purchasers - the seller must provide you with financial disclosure and significant support and you must insist on receiving those as a part of the transaciton. 3. You can apply for the work permit almost as soon as your business start operating, but the process of preparing the documents and their review by the government usually takes 6-9 months. Please feel free to contact me at info@cbes.ca should you decide to move forward and will want to retain my services.
I am looking at starting a sole proprietor ship plumbing company . I have taken out liability insurance and was wondering if this offers Sufficient protection ?
Sean, overall a corporation is used for multiple purposes, where only one of them is the separation of business liabilities from personal assets. Another reason could be tax planning and financial structuring for your future growth. So, in most cases an insurance will help, but if you plan to grow your business, have partners, make more than 70k of profits a year, and participate in larger projects - sole proprietorship won't serve your purpose.
Hello I want to register the name of my recruiting company I want to start, most likely will focus on the permanent recruitment side of things, I’m confused on which NAICS code I should put in, there seems to be 2 for my industry - Employment services - 5613 Definition This industry group comprises establishments primarily engaged in:listing employment vacancies and selecting, referring and placing applicants in employment, either on a permanent or temporary basis; and establishments primarily engaged in supplying workers for limited periods of time to supplement the workforce of the client. Employment placement agencies and executive search services - 56131 Definition This industry comprises establishments primarily engaged in listing employment vacancies and selecting, referring and placing applicants in employment, either on a permanent or temporary basis. The individuals placed are not employees of the placement agencies.
The information I was looking for Sole Proprietorship, explained in a very simple way.Thank you!
Thank You so much Eugene, I greatly appreciate this content. This is beautiful
Thank you for your positive support. :-)
Amazing! Gem of a Canadian you are! Putting this information up here like this, I wish they taught this in high school instead of line dancing. LoL! Honestly tho, you really broke it down into an digestable communication style. Which I as an Albertan really appreciate, if you write a book can you add pictures in crayon for me. Haha jk! Im looking to contract myself out as a medical provider and it really seems like going the incorporated route is a no brainer. This is going to be my first buisness and I really appreciate kind souls like you out there, just creating content to guide people like me on this journey. I hope to use the wisdom I gained in your set of videos, to provide increased patient care to Canadians and hopefully abroad. Thank you. Taxes look like they suck, gonna be saving every, single molecule of a reciept.
Thank you! I appreciate your opinion.
Hi Shao and thank you for your warm response. I'm glad I could help you even a bit. Good luck with your business, which seems as a very positive and helpful for the community. Feel free to ask any questions you might have.
What does it mean to be a Sole Proprietor? Starting and operating a business as a private individual has its benefits and drawbacks. While providing a simple and straight-forward business structure, which does not require any complicated registrations or administration, operating as a Sole Proprietor also exposes the business owner to personal liabilities for the operations of the business. It will also limit future growth and development of the business in many ways.
In this video we will overview the process of starting a business as a Sole Proprietor, registrations that are necessary or advised for business operations and an option of using a separate name for a business.
We will overview and summarize which types of business are fit for Sole Proprietorship to make the decision-making process as simple as possible.
awesome content keep it up !!! you are educating more people than you realize. Once again thank you
thanks for this video. I've had trouble finding anything in Canada.
Yeah it would be nice if at at least some of the links on gov't of canada's website actually worked. shows how important the Liberals think small businesses are.
"hard to find information" would be an understatement. IMO there's next to no information or tools easily accessible for us.
Hi My name is Gnana Good Information I need to your help because I plan start Business in Tax my phone number is 647-857-2277 thanks
I've recently started a business and I find the best way is go through your city hall ask questions and contact trusted sources to get the right information hope that's helpful
Thank you cant wait for more videos! Thumbs up and subscribed.
Thank you Paul. Our pleasure to help!
Great video, thank you for sharing.
My question to you are as the follows, I’m a Canadian and file my income tax in British Columbia.
1. I work for a business that writes my pay cheque in my personal name, and takes taxes, cpp, ei, etc off my check.
2. Ive just received my registered sole proprietorship in February, 2019. (Which I applied for in 2018)
3. Should the Company I work for, still issue my pay check in my name or the sole proprietor name?
4. Do I have to open a business bank account, and deposit my pay check into that account and then pay myself from those funds and
also pay my expenses, or can I do it through a regular personal bank account.
5. Ive purchased around $50,000.00 in tools to do my job in 2018 and going forward.
6. Since my sole proprietor ship did not come into effect until February, 2019, am I able to deduct my tools and other
Expenses in my 2018 tax year?
7. I have all my receipts to backup everything for 2018.
8. Do I file my 2018 income tax as a personal tax and then deduct my expenses for 2018?
9. Do you know if revenue Canada has a guide booklet to follow for your sole proprietor ship taxes.
Thank you, I hope you are able to answer my questions above. Thank you so much.
Have a wonderful day.
Thanks very much. Your videos are very well explained and easy to understand. Excellent
very good information! learnt a lot from it! thanks for the support . keep it up!
Very helpful! Going to watch your video on registering a corporation now 👍
I hope you'll enjoy. Let me know if I can help with anything.
Thank you for the video. How would one go about finding a good business accountant
Or by reference or simply trying until you find someone that you are comfortable with. Essentially, the accountant should understand business taxation, tax planning and business development. Ask some questions about capital gains and exemptions, difference between a partnership and a corporation etc. - if you see that the accountant is not there - look for someone else.
@@businessincanada-doitright1822 great advice thank you
Where do I go to register my business in Ontario ?
Hi Eugene, thanks for the video. Looking to start my logistics/transition busines . God bless 🙌 🙏
Thank you, easy to follow and informative
Hi, Thank you for sharing all this interesting info, very useful! I have a question, what if as a Sole Proprietor I buy an E&O insurance, is that useful to cover the risk ? Thank you!
What is the best for online store including importing product plus multivendor stores as well ? Thanks
MD, the best option would be an incorporation - both from the perspective of liabilities and tax planning. Importing products always implies certain liabilities, working with multiple stores as well. Also, once you make more than 60K profit per year, tax planning with a corporation becomes more effective.
can we do travel business deduction under sole proprietor ?
Can you start off as a sole proprietor and then incorporate federally as your business grows?
Yes, absolutely. In many cases this makes sense to save on incorporation fees to see if the business will take off. But keep in mind the issues of legal liabilities, sometimes even selling small you can expose yourself to significant claims. Then, as a sole proprietor, all your personal assets will be exposed.
The idea is not to wait too long to incorporate.
Business in Canada - Do it Right! Thank you!
@@businessincanada-doitright1822 What are the steps to transition from a sole proprietor to a corporation?
@@Rio-uv1gs Rio, there are no official steps. What you should do is to incorporate and start operating your business through the corporation. Make it 1st day of a month, so everything that you've earned before that date will be reported as your personal income, and from that point on - corporate.
Additionally, if you have equipment that you use for your business- discuss with your accountant how to "transfer" it to the corporation, this might save you some taxes in the future.
Good luck.
Very well explained! Thank you..
Very interesting, good job and thanks for sharing!
Can I expense a computer, desk and office chair if I'm working from home as a sole proprietor?
I see business with Co at the end whats that
On top of a sole proprietorship for my normal business activities can I also claim any taxable investment gains under the proprietorship?
Overall, if you use your money to invest and generate additional income, it is not a question of "can" but rather a "must". There are special rules of taxation for this type of income, but it definitely must be reported.
Additional consideration - if you have a regular operating business + investment income, it might be the time to consider whether to incorporate in order to manage your tax liabilities more efficiently.
HI
I want to know how can i get tax of my customer with sole proprietor service?
Thank you for the explanation! What you will advise for truck driver with one truck on lease -sole proprietor or corporation?
So just to confirm. If you decide to get a Master Business License, then you must geta 'business account'?
Not necessarily - you can operate a business from your personal account by adding the MBL to it with the bank. If you are not incorporated, then opening a second business account under your name might be a bit of an overkill, unless your business is growing big, but then i would question why not to incorporate...
Is it possible to start as sole proprietor, and years later if business pickup and make sense to expend, change to Inc?
Tony, overall "yes", this is possible. I prepare a video on this topic as we speak. What you should pay attention to is the taxation and legal consequences of the transition. Especially if you do it after "years" of operations, you should get a proper understanding of the transfer of assets from one person (you individually) to another (the legal person of your corporation), and the taxation of this process.
So the longer you wait, the more severe could be the consequences or more complicated the process to avoid them...
@@businessincanada-doitright1822 thanks for the quick response! Can't wait to see your next video.
I discovered your channel today and watched most of them. A lot of my questions are answered, thank you very much for making these informative videos.
Cheers from Edmonton AB
Can I start in Canada even tho I live in USA and home business will be on-line??
Does all this information applies to non-residents like students on a study permit?
Dear Rap God,
Your question could be split into two separate issues, and I will be able to answer only one of them.
From the general perspective of Sole Proprietorship, it applies to all Canadian residents for tax purpose. So if you are living in Canada for longer than 6 months a year - it applies to you as well. At the end of each year (and by the end of April) you have to file your tax return where you indicate all your income, including business income and business expenses, and then you pay tax (or get refund).
What I cannot tell you is how this will be perceived by Immigration Canada and their rules with regards to foreign students' ability to work or operate their own business while on a student permit.
Please let me know if you have any further questions, and good luck with your business ideas.
@@businessincanada-doitright1822 Hey, I got the information that international student can do self employed work, here is the link, mobile.twitter.com/CitImmCanada/status/1009818269421883394
I've been buying and selling land in novascotia with some success, I'm trying to look into which would be the best to have if i plan to sell more and get loans from somewheres based on the profit
Stephanie, there are actually 3 questions there:
1. You should discuss the plan with your accountant and see what would be the most effective way from the tax perspective.
2. When borrowing funds for business, it is always better to work through a corporation, although you should keep in mind that most institutional lenders (banks, credit unions etc) will ask for personal guarantees.
3. As the business grows, and especially if you are engaged in land development and construction, then it is absolutely necessary to incorporate to protect yourself and your personal assets.
4. I would also take a look at the local provincial and municipal licensing rules to make sure that you operate in compliance with the laws.
In this case look at the bigger players - most construction and land development business are not just incorporated, they have a separate corporation for each building project they operate - they do so to protect the assets of one project from the liabilities of another....
Hi, I'm an Indian. I want to start my own Cosmetic company in Canada. For foreign citizens how much minimum amount is mandatory to start Canadian ltd company?
Please suggest 🤔🤔 or Can I start sole proprietorship ?
Hi Eugene. This question is for e-commerce, online affiliate marketing income originating in Canada. Do you need a tax code/number for sales in the US? What about other foreign countries you receive payment from? How can you keep track of this combined online income for income tax purposes? So far, sole proprietor status. Also, a list of business tax deductions would be most helpful. Thank you.
Hi, e-commerce is a bit complicated from this perspective since you do not really know where the service was provided. In my opinion, unless there is a clear law in a country that requires you to register, you can try and define your services as being provided in Canada, this way you do not need to run around the world and register in every country.
You can take a look at the new Canadian law for online businesses and the need to register for HST (search for the CRA site for it) - it provides a good explanation and demonstrates how the system might work elsewhere...
Every video I hear about SP, they say you can just operate under you name, meaning the business is you. So if I were a Cleaning Company, I would just be "(my name)" not "(my name) cleaning company"? That's where I'm slightly confused. If I'm just using my legal name as a business, how will people know what services I offer?
Do you have services for incorporation?
How to start a home care company in Ontario?
I will have to investigate it. Seems as a not so simple process that might require registration with the ministry of health, but I will have to review it separately.
As a international student in Canada and allowed to work 20 hours per week. Can I become sole proprietor while studying and how the 20 hours rule apply on international students sole proprietor? Thanks
Same question
Hi, I think that I've answered this question at least a dozen times... Essentially, in my opinion, you cannot operate a SP while on work permit or student visa - both imply you being "employed" by an employer. SP is not a situation of an employment.
BUT! If you incorporate (which is allowed since you only own shares in a corporation and that is not forbidden by the visa), your corporation, as a separate "person", then should be allowed to "employ" you as one of its employees.
This is not just semantics - essentially, a legal entity will be paid by its clients, not you directly. Then you will be employed by the same legal entity...
Please make sure you discuss it with your immigration consultant since the whole thing might affect your future application for PR...
useful information about the sole propertiship
Question : can a Sole propertiship import and export goods from other part of the countries ? if so what are the requirements
Thank you for this very helpful video. I registered and operated a cleaning service business ( Sole Proprietor - have HST number ) for just a few months and had to stopped due to covid and also needed to take some time for personal matters. I am now thinking of operating it again and I have few questions for which answers will be greatly appreciated. What kind or which insurance do I need so I never have to worry? ( If an employee/s get hurt or injured. If a client's things get damaged or broken by employees.
Even if an employee ( not so nice one ) steals from a client ) I want to operate a business that is good, kind and safe atmosphere for everybody clients, employees and also myself. I rather make less doing all the rights and have a peace of mind. I am open to any tips or advices you have regarding cleaning service business. Thank you again for your informative channel.
Kelly, as you can see from my other videos, I generally prefer to operate any business through a corporation, especially when you have multiple clients and employees.
Commercial insurance in Canada is being sold only through insurance brokers, not directly, so you should discuss insurance needs of your business with a broker (who actually works for you not for an insurance company).
Any damages caused to third parties (clients) are generally covered by a Commercial General Liability Insurance (CGL), while employee's injuries are covered by WSIB (in Ontario).
@@businessincanada-doitright1822 Thank you so much for your answers. As of now, it's just me one person show which I am visualizing to grow and have good reliable people to grow with. I am planning to max immunized the business from the beginning when laying one brick at time onto building a high tower. I have all the ideas and visualizations that I am going to turn into tangible results. With your knowledge and expertise which insurance in your experience, do you think would be a good one for what I am looking for?
@@kellyc9234 Kelly, you will definitely need a CGL for starters. As you proceed with this coverage, I am sure a broker will advise additional coverages as needed.
Please let me knnow if you would like me to refer you to one of my contacts.
@@businessincanada-doitright1822 Hi so sorry for my late reply. I don't know what CGL stands for?
@@kellyc9234 Commercial General Liability... This is the default insurance coverage that every business should have.
If I want to close my online business, do I somehow lose money? I stopped my career and sole proprietor work due to having kids , but I also did not sell much in general. I lost alot of money. If I just keep my business number without any business income will I get fined or will there be some type of fee if I don't close my business number. I may want to do something a few years from now and still have a business number, but not certain how this works.
Anne, I think i answered the question in email...
@@businessincanada-doitright1822 yes, thank you very much, I just read it 😊
Can I take the cleaning contract from my employer if he received his 30 day cancellation fee on his contract. I just got my Quebec business licence and the commercial company offered me the contract
Kev,
This is a complicated question that would be best answered by a local lawyer with the knowledge of Quebec employment laws and your personal employment agreement (if you have one) - and as a professional consultation rather than a public dialogue.
In general, your question refers to the situation where an employee wants to continue his/her own business and compete or in some situations solicit the clients of the former employer. This situation is very common and causes many legal conflicts between former employers and their "new competitors".
First of all, the law (Employment standards act of Ontario) does not prevent competition or even solicitation of the clients and employees by former employees of a company.
There are some additional rules in the Common Law (which does not apply at all in Quebec), that prevent certain employees, usually executives, from doing so.
And then there is a personal employment agreement that might limit employee's right to compete (almost unenforceable) or to solicit clients and employees (enforceable) from their former employers.
An unfortunately, I will have to say the phrase that many hate (and I don't like to use frequently), but this is a question that depends on every particular situation and facts and should be answered to each person separately...
Is a sole proprietorship ok if I plan to do subcontracting work for larger companies or would it be better for a liability issue to be incorporated?
Can you report business expenses of equipment that you purchased before registering the business name with the government?
Expenses under the new business name buy equipment purchased before the name was registered.
For example equipment purchased under your name 2 weeks before you register the business with a new business name rather than your name.
S O, if your question refers to the situation of a sole proprietor, then registering a name does not create anything new, so such expenses are absolutely claimable.
With incorporation a story is a bit different - usually you will be able to recognize some expenses going backwards prior to the incorporation but for a limited time (a couple of months).
For both situations, it is best to consult your accountant and get a bit more professional answer.
Hello,
First of all, thank you for the information. I want to open a snow plowing company.
Should i open Sole or incorporated company? Thanks in advance!
Whats is the best option to pick when registering business
there is no answer to this question. For some of my clients I would say that incorporating is an overkill, for others that they had to incorporate years ago. There are even some that might benefit from a partnership - it is all personal and the "best option" should be decided on the scope of your business operations or a business plan.
Hello, should I go as a sole proprietor or partnership if I want to start a food delivery business in a small town but might hire contract drivers? What are my options? thank you. Your channel is so helpful.
Thank you for this video!
very helpful information, thanks
I have a question that im hoping you can answer. For example, if im the sole proprietor and my name is "John Robert Smith", can I call my business "Robert Smith" without applying for a business license. Assuming my middle name is on my birth certificate, would I be on legal grounds? In Canada it middle names count as first names, so I feel it would be ok, but im still unsure.
I am not an expert on the laws relating to personal names, but in my opinion Robert Smith will not require name registration.
Great information, thank you.
Hi, I'm retiring Jul 01 but my company wants to hire me back as a contractor. A 3rd party HR firm is handling the contract on behalf of the company hiring me. Should I set up a sole proprietorship or just work as a part time employee for the HR firm who then will sell my service back to the company that wants to hire me. I'm confused?
It is always better not to be self employed for various tax reasons. I would strongly suggest discussing with your accountant "personal service business" - a status that CRA can apply to you and charge you taxes at the highest rate of personal income tax. Speak with the accountant that files your annual taxes, they usually have the knowldge for your situation.
Is there a cap to the amount of income I can earn as a sole proprietor?
No, there is no cap. The problem is not with the cap, but with the taxes that you will pay. If you make 1Mil profit per year as a SP, you will pay more than $500K income tax. If you make the same profit as a corporation, you will pay $125K (one fourth) of the taxes.
You still will pay personal taxes when you take money out of the corporation, but there are many planning tax strategies to reduce the tax burden and save you hundreds of thousands of dollars....
@@businessincanada-doitright1822 Thank you for this feedback. I have been doing landscaping work as a sole proprietor and am thinking of registering my business in the spring. I work on my own so I do not have any employees atm. Would you recommend registering as a sole proprietor or as a corporation?
@@dougienaus2084 It boils down to two questions: 1. Will you make more than 50K-60K annually. If yes - then incorporate, it will allow better tax planning. 2. Will you have partners or employees in your business (whether now or in the future), if yes - then incorporate. 🙂
@@businessincanada-doitright1822 Thank you for your feedback 👍
Hi, Does a person with only work permit can register for sole proprietorship Business in Canada.
Eben, it is not completely clear to me. Since SP is based on your social insurance number and as a work permit holder you have one - you should be able to operate a SP. That being said, I am not sure that this will not be contrary to your work permit (since it implies that you are working for someone). In this case, I would strongly consider incorporating, this way the business operations would be conducted by a corporation, not you personally and probably will conflict less with your work permit.
@@businessincanada-doitright1822 Thank you for your kind Reply
Can a Canadian use a LLC in Canada?
The answer is both yes and "probably no". Yes - if you have an overseas LLC, you can register it to operate in Canada. Overall, you cannot register a Canadian LLC since this type of business entity is not recognized in Canada. "Probably no" is because you should review the tax implications and see if just incorporating a local LTD is a better way forward.
As a sole propreitor can i claim capital gains for investments and do business deduction from my total income (Salary + 50% of Business capital gains?
So if you started a business as a contractor . ( sole proprietor) what does this mean for your work vehicle? Deemed as personal or commercial ( if you only have one vehicle)
Hi, the recognition of the vehicle expenses is not related to the SP or corporation, only to the question whether the vehicle is used to generate your business income. As a sole proprietor you will be able to deduct vehicle expenses (or at least a portion of them_) from your income in the same way as corporations do. Speak to an accountant to understand the system a bit better, but overall this is definitely not a big issue.
Can you convert a sole proprietor ship into a corporation?
Hi Cole,
I've answered this question a couple of days ago in another video.
Here is the answer:
This is a very important and frequently asked question. Overall, the transition is possible and I even sometimes advise people to move forward this way exactly.
But! you have to pay close attention to the pace of your business development and sales increase. First, the tax benefits of a corporation could be more attractive. Second - the transition of a business from sole proprietorship might also trigger taxable consequences - you transfer assets from you personally to a business and might generate income. So the transition is best done before the business has grown significantly.
Good luck.
Hi, I'm starting a RUclips channel and would like to know for tax purposes and any other income potential. What would you recommend Sole Proprietorship or Incorporation?
Do I need to give receipts to clients?
Yes, you MUST give receipts to your clients. Once the receipt is higher than $200CAD (or so), you must also include your busienss number on the receipt.
@@businessincanada-doitright1822 Solo Proprietors also need a business number?
HI Eugene, how I can register my ship chandler business I living in Quebec province
Kalakar, I do not work in QC, and do not speak/read french, but their business registration portal is here: www.registreentreprises.gouv.qc.ca/en/.
You might want to consult a local QC specialist to see that you do everything right. The legal system in QC is different and could require some special knowledge (I do not know for sure though)...
this was very very helpful for me thank you!! ive had people ask what my hst number is or something like that? what is that for and how do i find out what mine is. It isnt my SIN number they asked for they just wanted to know that number and to see our warehouse to
sell some of their products in my car detailing and car audio shop!
Hi Mike,
Your question covers two separate issues: general business number (BN) and HST. I'll explain shorty both:
In general, every business has its own 9-digit business number. If you operate as a sole proprietor, it would be your SIN, if a corporation - you should receive it from the CRA. If you didn't receive or lost your BN, you can call CRA business phone line here 1-800-959-5525.
In addition to the general BN, almost every business that generates more than $30,000 annual sales (not profit!!!) must register for HST (there are certain exemptions, but most of the businesses must). By doing so, you will have to add 13% HST to all your invoices and refund all HST collected to the government. The benefit of this story is that you can collect all HST that you've paid on your business purchases.
An important warning - a business that was supposed to register but failed will be penalized by the CRA in a triple form: a. they will assess all your bills as having 13% included (you will lose 13% of all your sales); b. they will add interest to all these amounts X years of failure; c. they will add penalty for not registering for HST.
I hope this answers your question.
Hello! I am planning to sell handmade stuff on a website and name the brand other than my name. I have not earned anything yet, do I still need to register my business
Yes, any kind of business operations under a name other than yours require a registration. That being said, please keep in mind that a simple Master Business License registration in ON costs only $60, so not much of an investment.
Once your business grows beyond 50K profits, it will make sense to consider incorporating it.
Can we convert Sole proprietorship to coorporation?
Well, you cannot "convert" yourself (SP) into a corporaiton. What you can is incorporate and continue your business under the new corporation. You must discuss tax implications in case your business is already substantial and has its own assets...
Thank you
Hi Eugene I just have a question that can a international student register a sole proprietorship in Canada ?
you got an answer bro?
I love your video, very informative. I do have q question. I do have money to start up an Amazon FBA business and when the business starts, I will not have enough money to pay the yearly corporation expenses so I think I should go with the sole proprietorship because it's cheaper for me in the beginning stages. If I go towards sole proprietorship, can business insurance protect me when someone is suing me?
Henry,
The insurance can indeed protect you against liabilities, but you should remember two points - one is that insurance has its limits of coverage (if your limit is 1mil and I sue you for 2mil, you are still exposed for 1mil of losses that will not be covered by insurance). Second, most insurers will take your money, but will then look how to avoid your coverage. This is not to say that the insurance is useful and needed, just that you should understand its limitations. Also, please keep in mind that insurance costs money (I do not know about less than 1,500 - 2,000 per year, but I could be wrong).
Alternatively, to avoid/save some costs, and yet to start with the corporation, you can incorporate online DIY (it will cost only $200) and once you have generated sales and have more cash on hand, you can come to me and we will make all other organizational arrangements. This will definitely cost less than the insurance converage.
@@businessincanada-doitright1822 I see, thank you for informing me about this. Yes, when my business generate more money, I would like to come to you for help. I live in British Columbia. Thank you for your help again!
Hi, thank you for this information.
I am planning to do an online business of selling general merchandise. Please correct me if I'm wrong, you have mentioned that as a sole proprietorship it doesn't matter if I register my business or not as long as I report my additional income to CRA. Is that correct?
I am just confuse whether do I need to get a business license in order to do business. I only have a small investment like, let's say CAD 3000 max.
Appreciate your response.
Christine,
Overall, you are correct.
If you plan to operate under your personal name and not to name your business under any other name, you do not need a master business license. On the other hand, it costs only $60, so might want to register a name for your business.
Good luck with your business.
@@businessincanada-doitright1822 thank you very much!
Thanks so much
I produce music at home and sell music, would registering ones business as a sole proprietor be the best thing?
Rio, it depends on the volume of sales and future plans. If you are still small and just start your producing, a SP is a good way to start - cheap and simple. Once you start growing, have more clients, engage a team to assist you in production - then you might consider incorporating.
@@businessincanada-doitright1822 Exaclty what I was thinking. Thanks for the confirmation.. Is transitioning for SP to Corp straightforward, what would be the steps?
Good day, please can you advice on how yo get reseller or wholesale license in Canada.
Caroline, to the best of my knowledge there is no such thing in Canada. You just start your business and resell or wholesell your products. What you probably will need, is a proper agreement with some of the suppliers that allow you the sale of the products in Canada...
Hi.
I wanna start selling product in Amazon. Do I need to register a business?
Ray, any type of business activity that you undertake not under your personal name requires some sort of registration - either a master business license for a sole proprietorship, or incorporation. Which of these two is better fit for your situation depends on three questions:
are you going to generate profits in excess of $50K;
will your business generate legal liabilities;
are you planning to work with partners and investors...
i want to start online business like selling on amazon and shoppify.is there a difference in registering online business and opening a store. please advice what to do and how to go about the registration process. thank you
Caroline, it doesn't really matter whether you operate your business as a brick and mortar or online. If you plan to sell online, where you will be selling to multiple states/countries, I would suggest to go with the Federal incorporation (it is also cheaper to register).
Once you've incorporated, you will have to open a business bank account and if you plan to sell for more than 30K per year in Canada, register for HST as soon as possible.
Please keep in mind that by law, your corporation will need Minutes Book (resolutions, by-laws and registries), but if you are short on money now, you can wait until the business starts generating income and order these documents then (at your risk)...
Good Luck!
can you sell across canada as a sole proprietor? Eg. owning an ecom business and getting sales across canada? Thanks for in advance for the content
Pinnacle, yes you can. If your business is generally located in one province and you simply mail/ship your products to other provinces, you do not need to register in other provinces. The situation will change once you want to open an actual physical location for your business in other provinces. But by then it will really be a BIG mistake not to incorporate.
can a none pR holder regester for a Federal Incorporation in canada?
Mamadee, the simple answer is "yes". but there are certain issues that you will face as a non-Canadian resident operating a Canadian business. I have recorded a video on this specific topic and will publish it probably next week. I hope it will clarify the issues for you.
Hi Eugene. Im currently in talks with a company in the states that would like to hire me as a contractor. Ill be paid in US dollars and not be considered "employed" by the company. Would sole propriotership be the best course of action to facilitate this?
Zachary, generally speaking, yes it's possible, What you have to keep in mind is the income tax (on a personal level you will be paying much more if you make more tahn 40K - 50k per year). If you can put the funds into a corporation and then withdraw only as much as you need for your personal expenses, it could save 10 - 15K if you make 100K per year...
Hello Eugene.
First of all great video, had some great information thanks for posting these.
My Question for you today is, While being a sole proprietor (contractor) if I provide services outside of Canada (i.e. Thailand), but the company that is contracting me is resident in Canada, do I have to charge and remit HST?
Any information on this subject would be greatly appreciated.
ASK CRA NOT ALL INTERNET ADVICE IS RIGHT
Can i write off postage fees in my taxes? I am a small business buying and selling from home with a registered business
tiinaiiceey
, while I am not a tax expert, the basic rule with regards to writing off your expenses is whether the expense was incurred for the purpose of generating an income. If you pay postage fees to deliver your products to the clients or distributors - they should be deductible, if you send letters to your family - not.
Most businesses selling online would definitely comply with the recognition of the postal fees as their legitimate business expense..
@@businessincanada-doitright1822 thank you!
For the liability aspect of sole proprietorship, can't you just get general liability insurance?
Olivier,
You can (I would even say you should), and it will provide you with certain protection, but you have to keep in mind the following problems, which insurance will not resolve:
a. All claims will still be brought against you personally, so if the claim exceeds insurance coverage, or insurer will refuse to cover (read disclaimers and exclusions of your policy), you still will have to pay from your pocket;
b. Insurance will cover only damages liability (mainly negligence), and will not cover business debts, breach of law and other types of damages - which again will be imposed on you personally;
Otherwise, I strongly believe that every business must have at least a General Liability Insurance policy.
@@businessincanada-doitright1822 Thank you!
@@businessincanada-doitright1822 the email on your website doesn't seem to work. I tried sending you an email but it came back undelivered because the remote server is misconfigured. Is there another email address?
@Business in Canada, I'm starting a small t-shirt business. I registered as a sole proprietorship, but I'm really worried about the liabilities! I don't want to lose our house! It's just me working at home and drawing my own designs, no one else involved. Do you think just the General liability insurance plus the product insurance is enough to protect our mortgage? I can't think of any way I could be sued for a large sum. Please let me know, I'm worried! Thanks!!
i will like to have the oportunity to translate this in spanish, let me know. big market. im bilingual
Thank you for the informative video. I am looking to start a tutoring centre out of my home. As I will be working with young children, is it safe to be the sole proprietor of my business?
Well, we incorporate for multiple reasons with only one being limiting your liabilities. working with little children might be one of the major concerns, but in case all you do is a short-time tutoring (30-60 minutes classes), I would not consider it is a high level of potential liabilities.
Another reason to consider incorporating is tax planning, hwich becomes important after 50K profits.
In case both reasons are present in your case, I would suggest incorporating. If just to limit liabilities, it is not a clear cut and is up to you to decide what makes you feel better - to spend a bit more and incorproate or to pay a bit less and have a minor level of exposure...
Hi Eugene, thank you so much for this information! For a direct service would you suggest a Sole Proprietorship? I am opening an Emcee company where I will personally be hosting weddings and corporate events. Thank you!
Caleb, in order to answer your question, I would look into two considerations:
a. The extent of liabilities - by hosting private events and being responsible for the guests, you incur extreme liabilities (a guest slipping, falling and breaking their neck - and the guest being a young highly paid professional, and next thing you know you are sued easily in excess of one million).
b. expected revenues (not immediately, but in the future) - if you expect to profit more than $60K a year, the corporation provides with better tax planning and management opportunities.
So, my personal preference is to proceed with this type of business as a corporation. This is safer, provides better protection and more efficient financial tool.
Good luck
@@businessincanada-doitright1822
Hi Eugene, my apologies I am new to interacting on RUclips and hadn't realized you responded. That being said thank you so much for the time and thought you put into this response. I really appreciate this advice and will be proceeding with this course of action. Thank you so much!
Will a Canadian Sole Proprietor be able to hire a foreign worker ??? can somebody tell me?
Nica, from the perspective of hiring and the process, Sole proprietorship is no different from a corporation. The answer is yes - SP can hire a foreign worker and shall follow the regular process, which is called LMIA. Once you receive a positive LMIA, a SP can bring the foreign worker to Canada.
As a side note, please keep in mind that as an employer of a foreign worker, you must comply with the terms of employment offered to an employee, and Service Canada conducts frequent audits of employers of foreign workers.
I hope this answers your question.
Hello how are you? i would like you to help me with some doubts, im in canada with work permit , i came sponsor and i want to work in extra hours and weekends but my permit is just for work with my sponsor, so i found and online job but if i take it i need to receive the comissions i will earn for that job , because the jod is like a franchise so my question is, can i be a sole propiertor work on my own and dont affect my status? thanks
Ambar, while the question is not directly up my valley, I will try to answer. When you have a worker permit limited to one employer, you are generally not allowed to work for anyone else in Canada. Being sole proprietor is operating personally, which means that you will be performing work personally, which might constitute a breach of your worker permit conditions.
I would suggest you to talk to your immigration consultant and see how to get out of this situation in a way that will allow you working extra hours and retaining your status as a foreign worker.
Hello there! Thank you for this helpful video! I have a question for you. I am an 18 year old looking to start my own self employed party princess business (dressing up for little kids birthday parties). I was wondering if you could recommend where to start? I’m worried I won’t get the proper licensing for my business and the content I want to put out! Thank you so much!
Makayla, I would follow these steps:
1. Decide whether to incorporate or operate as a sole proprietor. I would tend to SP due to the type of business and expected revenues.
2. Decide on your business name - either as your company name or business license for SP.
3. I do not think there is a license requirement for your type of business (at least in Ontario). Call your municipality and verify, if I'm right - just start doing business.
4. Have a simple but protecting agreement with your clients. Make sure they pay your fees, have proper expectations, do not use your content for other purposes. Important thing - make sure you can use the pictures and videos from such events for your marketing purposes.
That's it... Good luck with your new business!!!
Business in Canada - Do it Right! Thank you so very much!
First of all, thank you for all the great information.
I am a Canadian citizen from BC. I am currently overseas for work. Is it possible to register a sole proprietorship (under a business name) in Canada from overseas? The reason is I would like to base my business in Canada due to future plans to return.
Thanks
It is a bit of a problematic question. SP is based on you personally and all its income becomes your personal income. In this case, I am not sure how the fact that you are not a Canadian tax resident will affect the SP and its tax liabilities.
From another point of view, you definitely can Incorporate and operate your corporation from abroad while retaining the profits in the corporation until you come back to Canada.
With regards to the first part, the easiest way to resolve it would be to call CRA 1800-959-5525 and ask them how they treat SP's of non-resident Canadians
Thanks sir for the information, I am from India, age 49yrs I am planning for a start-up Investment plan in Ontario, Canada as sole proprietor, please guide me
Dear Mohsin, please email me to info@cbes.ca and I will provide more information.
Awesome knowledge you're giving, Eugene! So, I want to be part time self employed while working with my job right now until I can go full time with my business..
Would Sole Proprietorship be the way to go? It sounds very risky if you make a mistake and they plan to sue. Would insurance cover whatever faults you make, and what is the best type of insurance I should get being a Sole Proprietor?
ENCDZ, it makes sense to try and operate as a SP if the expected income will be lower than 40K annually.
But you should also consider the risks of your operations. You did not explain what you plan to do, so I cannot help with it. Insurance could be a good solution, but insurance + incorporation will simply increase your defenses.
Good luck with your project.
@@businessincanada-doitright1822 hi yes I registered as SP for Junk Removal business. Am going to apply for commercial insurance and business licence.
Hi,
Can you please guide me what basic steps should I take to buy business in Canada in partnership (my share more than 51%), while staying in my country. I'm a foreigner.
I'm buying a running business. What essential points should I keep in mind. Do I have to register the partnership?
Also, kindly inbox your charges for helping me in this process.
Yumna,
with more than 51% ownership of the corporation you might face certain tax implications since your corporation will not be considered as a CCPC and will not receive tax reduction to 13%.
The steps are:
1. incorporate a business in Canada
2. Prepare all the corporate documents to support your operations
3. Negotiate and sign an Asset Purchase Agreement.
4. Make sure your purchase is protected from various legal liabilities.
Please send me an email to info@cbes.ca and I will send you the costs of each step.
Great information Eugene. I'm thinking of an "in-home" small mushroom growing business. I want to grow mushrooms at my house and sell at farmer's markets and restaurants. This is a retirement business to keep busy and bring in a bit of income (less than 40K CAD/year).
1.) Would I be best suited to open a SP or just operate under my name?
2.) In the initial year(s) I will probably not make a lot but would still like to be able to "write off" a portion of my home expenses (supplies, equipment, heating, cooling, vehicle etc). Is there a minimum income I need to show to write off these expenses?
3.) Are any licenses required to operate this type of business in Ontario?
Thank you!
Sir, i am a foreigner i am planning to buy franchises business in Canada with a Canadian resident.
1. Will i have partnership, or incorporation.
2.After buying business, after how much time should i apply for Work pernit
Dear Syeda,
1. most probably the corporation is the better way to go, but you must be aware of the tax implications - a. if you hold more than 50% controlling shares while you remain non-resident, the corporation will pay significantly higher income tax of 31% (compared to 13% regularly).; b. payment of dividends to you will be subject to 25% source deduction (recoverable, but with certain degree of headache).
Both these issues could be resolved through a proper structure of business operations, which I will be able to assist with.
While some might say the partnership is better for the tax purpose, I am not sure that this is true since the partnership that operates in Canada with foreign partner will be dealing with significant tax issues in the future.
2. Franchise - please note that Canadian laws are very protective of franchise purchasers - the seller must provide you with financial disclosure and significant support and you must insist on receiving those as a part of the transaciton.
3. You can apply for the work permit almost as soon as your business start operating, but the process of preparing the documents and their review by the government usually takes 6-9 months.
Please feel free to contact me at info@cbes.ca should you decide to move forward and will want to retain my services.
I am looking at starting a sole proprietor ship plumbing company . I have taken out liability insurance and was wondering if this offers Sufficient protection ?
Sean, overall a corporation is used for multiple purposes, where only one of them is the separation of business liabilities from personal assets. Another reason could be tax planning and financial structuring for your future growth.
So, in most cases an insurance will help, but if you plan to grow your business, have partners, make more than 70k of profits a year, and participate in larger projects - sole proprietorship won't serve your purpose.
Hello I want to register the name of my recruiting company I want to start, most likely will focus on the permanent recruitment side of things, I’m confused on which NAICS code I should put in, there seems to be 2 for my industry -
Employment services - 5613
Definition
This industry group comprises establishments primarily engaged in:listing employment vacancies and selecting, referring and placing applicants in employment, either on a permanent or temporary basis; and establishments primarily engaged in supplying workers for limited periods of time to supplement the workforce of the client.
Employment placement agencies and executive search services - 56131
Definition
This industry comprises establishments primarily engaged in listing employment vacancies and selecting, referring and placing applicants in employment, either on a permanent or temporary basis. The individuals placed are not employees of the placement agencies.
great information. Im trying to get all my taxes sorted for my small youtube channel. sub'd
Thank you! Very good information! I wish you put your email to ask some questions!
Hi See Zee,
The email is info@cbes.ca, it should be in the description area....
Anyway - feel free to reach out should you have any questions.
@@businessincanada-doitright1822 I appreciate!
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