Most people assume when taking the plunge into self-employment by starting their own small business that there are going to be a million forms to sign and government entities that need to be registered with before you are cleared by the CRA to begin working.
But that is not the case at all.
The following breakdown will hopefully clarify just how simple it is (from a tax perspective, because let’s be honest becoming successfully self-employed is no easy feat!!!) to get your new business tax ready in BC.
Trading under your personal name
The quickest way to get your business up and running is to trade under your own name (eg. Teya Mali trading as Teya Mali).
From the CRA’s perspective when you trade under your own name you can begin trading immediately and no business registration is necessary.
All the CRA cares about in this instance is that you are honest come tax time and declare all of your income and expenses correctly.
Trading Under A Business Name
Trading under a name other than your own isn’t quite as simple and does require some paperwork. However, it is still not as overwhelming as you may think.
You can have your business up and running in four easy steps.
- Firstly you need to register your business name. This can be done for a cost of $30 through the BC Registry One Stop BC service.
- Determine your business structure. Do you want to be a sole proprietor, partnership, or incorporation? (If you are a solo entrepreneur working from home, I would highly recommend that you start off as a sole proprietor to keep things simple. You can always incorporate later. There are MANY rules (that are governed by penalties) that you need to comply with once you become incorporated. So again, I recommend that you hold off until your business has expanded).You can register your sole proprietorship for $40 through the BC Registry One Stop BC service
- Determine if you need to charge sales tax. If you are selling retail products, you will need to register for PST. Homeroom can do this on your behalf or you can register yourself on the BC Government site. (Please note: until you have incurred SALES of $30000 in a calendar year, you ARE NOT REQUIRED TO REGISTER FOR GST so save your money and wait)
- Apply for a business licence. The application fee is $50 with an annual fee that varies depending on your location.
Although getting your business set up correctly with the CRA is a relatively simple process you must remember that your paperwork doesn’t necessarily end there and that you still need to consider your insurance needs, budgets, inventory tracking, invoicing and of course bookkeeping.
We recommend checking out Small Business BC Website which is a great online resource with a lot of helpful information on how to start a small business.
Additionally we recommend that you begin keeping all of your business related receipts from the moment you decide to venture out on your own. Even if you haven’t started making sales, you can still write-off business expenses as you develop your idea . That said, you should note that you can only write of an expense in the year that it occurred, so make sure you talk to your bookkeeper in advance and plan the best time to make larger purchases.