Five things to consider when starting a business
Starting a business is a busy and exciting time. It is easy to get caught up in implementing the great ideas that you have for your business and overlook some key legal considerations.
Our corporate and commercial law professionals can walk you through the details relevant to starting your business so that you can get started on the right foot and protect your investment over the long term.
Five things to consider when starting a business include:
1. How will your business be structured?
The three basic business structures are:
- corporation
- partnership
- sole proprietorship.
A corporation provides some protection against personal liability, but comes with some additional expenses and there are various jurisdictions in which you can decide to register. A partnership is only an option if you have a partner. A sole proprietorship may be the best option for a small business with fewer anticipated liability issues.
2. What tax considerations do you need to be aware of?
You will most likely need to register with the federal government for a GST/HST number and be prepared to collect and remit GST. In Alberta, the current GST rate is 5% and there is no provincial sales tax.
The way your business pays you may affect the personal income tax that you incur. For example, if you decided to register your business as a corporation, you have the option of paying yourself a salary, dividends or a combination of the two. The choice you make will have different consequences for the income taxes paid both by yourself and by the corporation.
3. Do you need to hire employees?
Having an employee comes with its own list of legal considerations, including the need to be familiar with:
- requirements surrounding withholding taxes and remitting them to the government
- employment or labour laws and your responsibilities as an employer
- worker safety requirements and workers’ compensation laws
- any mandatory certification, training or registration with regulatory bodies that your employees must have
- hiring practices and human rights considerations.
4. What licenses and permits do you need?
Most towns require that you obtain a business licence in order to carry on business of any kind in that town. This is likely true even for home-based businesses or if your business is based in another town.
Depending on the nature of your business, you may need a number of other permits and licenses in order to do business. For example, if you intend to open a bar, you will need a liquor licence. There are various classes of licence, depending on which specific services your business will provide.
5. What are your insurance and liability concerns?
Depending on the needs of your business, your insurance needs may vary from protecting your inventory from accidental damage to protecting your business from professional liability claims. Having adequate insurance is vital to protecting the time and money that you invest in your business.
Depending on the nature of the business you plan on starting, you may have different concerns than the above listed five things to consider when starting a business. Contact our corporate and commercial law team today to arrange for a consultation!