There is no easy answer. The cost to start a business in Canada depends on several different factors, including the type of business startup, how much you want to invest, what the goods and/or services are that you are providing and what your goals are for the business start.
The Main Types of Business Set Ups
There are two main types of business setups available –
Registering or Incorporating A Business
A small business licence is referred to in Ontario as a Master Business Licence or MBL. In other jurisdictions, as a business registration or Business Licence, it is typically registered for a smaller business with less investment, liability or reach to the population. The other choice is an incorporated business, which is typically completed when the business requires a higher investment and liability risk and a larger reach to the population. One isn’t better than the other, and what works for one person doesn’t always work for another. We recommend researching the differences between these two types of business setups to decide what works best for you. A great FAQ section is available on our website to help compare the main differences between a small business registration and an Incorporation. We have summarized the main differences below.
Master Business Licence / MBL and Registered Businesses / Canadian Small Businesses
A Master Business License, MBL or Business Registration is a great starting point for someone who is just starting with their business. There is the option to register either a Sole Proprietorship or General Partnership as Canadian small businesses. These registrations are simple to register, maintain and cancel and they have the lowest setup fees. A registered business is a great option, but they do come with certain disadvantages and limitations, that include:
- No name protection. Anyone can open a business licence or incorporation in the same business name as yours.
- No Liability Protection. You are personally reliable for business damages, debts and obligations.
- Need to renew. The registrations usually expire and require renewal with additional fees every 3 to 5 years typically.
- Limited changes or amendments. Although you can change the business’s physical address, mailing address and individual address, you cannot change the business name or transfer the business licence into someone else’s name and require a new registration in these circumstances.
- Personally taxed. You are taxed through your personal income tax, which is both an advantage and disadvantage. You do not have to file a separate tax return for your business, as the registration is taxed within your personal income tax return. If your business earns more than you require personally, you could be paying substantial additional tax dollars for this setup.
If you have decided that you are ready to officially start and register your small business, the startup cost is minimal, and each province comes with their own fees.
Ontario Small Business Startup
Starts at – $134 +tax
Alberta Small Business
Starts at – $113.14 +tax
BC Small Business
Starts at – $168.98 +tax
Manitoba Small Business
Starts at – $203.99
Saskatchewan Small Business
Starts at – $225.93
Incorporate Your Business
Incorporated businesses have a higher business startup cost, but they also offer certain perks that are not available with a Master Business Licence, MBL or registered business. These perks include:
- No renewal requirements, management or fees. A corporation doesn’t expire. As long as you keep your filings current, the corporation will exist until you dissolve/close it.
- Possible tax advantages. Corporate taxes are separate from your personal income tax return and lower tax rates than personal tax.
- Limited personal liability. The corporation is liable for most damages, debts and obligations, and therefore, your personal liability for the business may be limited.
- Name protection. Federally incorporated businesses have name protection nationwide, whereas provincially incorporated businesses have name protection within the province or territory they are incorporated in.
- Flexibility. You can update the business’s physical location, mailing address, and individual address and change the business’s name and owners’ names. You can also change the structure of the corporation as it grows if the business becomes more complex over time. It is also much easier to sell a business as an incorporated company. These filings do have additional fees associated with them.
Once deciding to incorporate, the next steps are to decide whether you want to incorporate Federally or Provincially and if you want a named or numbered corporation. Each one comes with its own fees.
Federally Incorporation / Canada Corporation
– Named Incorporation starts at $443.91 + tax.
– Numbered Incorporation starts at $389.92 + tax
– Named Incorporation starts at $518.94 + tax
– Numbered Incorporation starts at $468.94 + tax
– Named Incorporation starts at $472.94 + tax.
– Numbered Incorporation starts at $522.93 + tax
– Named Incorporation starts at $469.94 + tax.
– Numbered Incorporation starts at $531.44 + tax
– Named Incorporation starts at $469.94 + tax.
– Numbered Incorporation starts at $564.94 + tax
– Named Incorporation starts at $389.94 + tax.
– Numbered Incorporation starts at $491.88 + tax
How do you decide what type of business setup to register?
The chances are that if you have thought about starting your own business, you have also thought about what your goals are for the business, both short-term and long term. Some things to think about are: are you turning a hobby into a side business to try and generate some extra income? Or are you making this new business venture your full-time job. The type of business setup may be determined by several different factors, including those listed in this article. At any time, you can change your business from a registered business to an incorporation or an incorporated business to a registered business. Don’t feel like you are locked into either one of the setup options indefinitely.
Cost of Initial Investment
The cost of the initial investment to start your own business is going to be different for everyone. Besides the registration fees for the business licence or incorporation, there will be additional expenses concerning products/inventories.
Whether you are selling products or offering services, this is an added expense that a lot of people do not consider. How much money you spend depends on the products or services you are offering and what you are comfortable with. For example, someone who is selling hand-painted wooden signs has to decide how much paint to buy and keep in inventory and how much wood. Is the wood going to be purchased pre-cut, or are they going to cut it themselves, and if so, do they need to invest in the necessary equipment? Whereas someone who is offering IT services from home will have to worry about whether they have the required equipment (i.e., computer/software).
Funding for your business for new immigrants to Canada
If you are looking for some assistance from the government to help you make your dreams a reality, here is an article related to assisting those new to Canada who wish to take an opportunity to become an entrepreneur.
Ontario Business Central has created some great business guides, highlighting some great tools to help you become a successful entrepreneur. See some of the many listed below:
If you have done any research at all on opening a business, you have most likely come across the concept of completing a business plan. Although for many, a business plan seems like a boring exercise, it will really assist you to put the focus on your business startup, your strength, expenses to open and operate, competitors, and many more points that will assist you not only in starting your business but also should provide you with a template or direction of rolling out your business with the idea of growth and success.
12 amazing Apps for your business (to help you get your business up and running with planning and organization)
Low-Cost Business Startup Ideas
Home-based businesses have become on trend since the beginning of the pandemic. Whether you are artsy, have a skill set such as writing, editing, social media, and so many more things, having a business run from your home has never been more accessible and rewarding.
Ecommerce businesses have blown up with a huge increase in demand since 2020. With the ability to quickly set up a website with eCommerce plugins, you can be selling something unique through your own platform and control within a short time.
Whether you decide to register your business and start to register a Master Business Licence or Incorporate your business, Ontario Business Central is with you every step of the way. Our goal is to make opening a business as simple as possible for you. Our knowledgeable agents are available to answer any questions you may have. All you have to do is fill out and submit our online registration form, and our agents take it from there. They are trained to review your registration orders for accuracy before submission and reach out if they have any questions or concerns.
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Ontario Business Central Inc. is not a law firm and cannot provide a legal opinion or advice. This information is to assist you in understanding the requirements of registration within the chosen jurisdiction. When you have legal or accounting questions, it is always recommended that you speak to a qualified professional.