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  1. #1
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    Default What are the steps needed to start my small business?

    wow, I find this all very confusing! I am starting a very small business, to do on the side. Without giving up all the details yet, it is basically a party rental business. I'm purchasing an item (valued at about $2,000) and then renting it out to various people, events etc...

    From what I see from researching, I don't have to register for a business number because my yearly income from the business will be under $30,000..is that correct? Wouldn't I still have to pay GST though? Can I do that without a business number?

    I *think* all I need to do is register as a business (is this a Master Business License?) and then I'm good to go? I won't have any staff or any costs (aside from the initial purchase & insurance).

    Realistically, how quickly can I get his up and runnning?

    wow..so many questions..thanks in advanceA!!

  2. #2
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    strongmommy's Avatar
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    Hi Laurel,

    There have been a few questions lately from different people on how and what to do to start a business .... so I'll use your post to summarize what you MUST do and what you can OPT to do which hopefully answers your specific question along with the questions of others.

    What you MUST do:

    1. Under the Business Names Act of Ontario, all businesses must register their name ... except if you're only using your own name (e.g. John Smith) to carry on business then you don't have to register the name until such time as you add any other word (e.g. John Smith Crafts). Depending on how you intend to advertise and market your product you may or may not need to register -- it's a personal choice. You can do this through Service Canada (on their website or in person)

    2. Consider if the goods or services you're offering are subject to PST (technically it's called Ontario Retail sales tax or ORST for short so don't get confused if you see these terms instead of PST on government websites etc). Most items and services are subject to PST with certain exceptions --- here is a link that discusses whether rental items would be subject to PST in your particular situation:

    Rentals or Leases

    Note there is no minimum amount of sales required for your business before you must register (if the good or service is subject to PST). PST is administered under the Ministry of Finance in Ontario --- going to the Ontario website will direct you to any other questions you may have about it.

    3. Track the total income your earn and the expenses you pay to report on your personal income tax return each year (on form T2125). As a proprietor (a home based business not yet incorporated) you claim the income personally. All of your income must be reported (even if you only sell $1.00 worth of goods or services in a year). Sometimes people get confused thinking that earning less than $30,000 each year means they don't have to claim the income --- this is NOT the case --- the $30,000 number only relates to GST (discussed below).

    Tracking what the income and expenses are each calender year can be done in a fancy accounting program or on a piece of paper --- whatever you're most comfortable with so long as you get the numbers at the end of the year you'll need to record on your income tax form. Here's a link to the form itself which will give you an idea of the kinds of expenses to track (in Part 5 of the form):

    http://www.cra-arc.gc.ca/E/pbg/tf/t2125/t2125-08e.pdf

    What you may OPT to do:

    4. Register for GST. You must do this when you're sales exceed $30,000 over a calender year. You can voluntarily register if your sales are less than $30,000 a year but this rarely makes sense unless you're selling certain types of goods. Note that some activities are exempt from GST no matter how much you earn (child care services).

    Here's a link that provides some of the basic info on when and how to register:

    RC4022 - General Information for GST/HST Registrants

    5. Register for a business number with Canada Revenue Agency. This is only required if you need to charge GST or have payroll or are planning on exporting or importing goods or services --- otherwise as a proprietor your SIN will suffice. It doesn't cost anything to register for a business number and can be done on this form:

    http://www.cra-arc.gc.ca/E/pbg/tf/rc1/rc1-09e.pdf

    Starting your own business is so exciting ... how quickly you get things up and running really depends on the type of business and what's needed to attract customers and produce the goods or services. There are so many variables that it's hard to say without knowing all the specifics but it sure sounds like you've got the basics down and are ready to go!!

    Good luck to you and please don't hesitate to ask away on anything else!

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