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Guidelines for New Businesses

If you read ski and travel magazines, you’ve probably seen a number of articles on Golden over the past years, and with a phenomenal snow year behind us, more are likely to be in the works.  If this year proves to be the same as the last five, there are also likely to be a number of new businesses in the planning stages. 

Few things are more exciting than opening a new business, but in that excitement, important details in the setup are often overlooked.  It is not unusual to see clients for the first time several months after their business has opened, and all too often they are already behind the eight-ball.  The following is a short checklist which will help those planning a new business enterprise to get properly set up with the right agencies, and hopefully avoid a few common pitfalls along the way.

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Sources of financing - Generally a start up operation will require a personal commitment in addition to either help from friends and family, government grants and assistance, and/or bank financing.
 
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Business Plan - If you are planning on receiving grants or bank financing, you will need a business plan.  While you can prepare one yourself, be aware that the credibility of your plan will play a huge part in your chances of obtaining financing.  Projections and estimates must have some basis in fact, and cannot just be pulled out of thin air.  A business plan must show that considerable thought has been put into the planning of your future business.  Even if you do not require financing or grants, a business plan is a key factor in keeping your business on track.
 
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Proprietorship, partnership or corporation - There are many factors that need to be considered here, and you should seek professional advice before deciding on what form of business structure will best serve you.  Many rush to incorporate, before considering all of the factors relative to their circumstances, which can result in a lot of unnecessary costs.
 
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GST - If your anticipated yearly sales of GST taxable sales will be $30,000.00 or over, you must register for GST.  If they are likely to be less than $30,000.00, but your start up expenses will be high and you expect that your sales will increase, you may choose to register in order to claim back all of the GST you will pay out.
 
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PST - If some or all of your sales or services are taxable, you must register for PST.  A word of caution here.  Don’t go on the advice of other people in the business.  They might be wrong, and if you fail to register when you should have, you will still be expected to hand over 7% of your sales to the government, so check this out yourself.
 
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WCB - If you have employees other than yourself, you must register with WCB.  If you have a corporation and pay yourself a wage, or in some cases T5 income, you must register.  If it is a partnership or proprietorship with no other employees, registration is optional.  Personal optional protection can be obtained, however, and certainly should be in many lines of work.
 
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Business number - If you are going to have employees, you will need to obtain a business number.  Payroll remittances must be sent into CRA on a regular basis, typically monthly but in some cases quarterly or even as often as weekly.
 
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Business License - If you are operating within town, you will need to obtain a business license from the Town office.
 
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Record Keeping - I cannot stress enough the importance of keeping complete, accurate records.  Not only does a proper record-keeping system keep you up to date on the progress of your business, it also ensures that you pay no more tax than you absolutely have to.  It will also help you survive an audit relatively unscathed.  If you know that you are unable or unwilling to handle this task, then be prepared to pay someone to do it for you. It will be money well spent.

Be aware that it is your responsibility to ensure that you have registered with all of the proper authorities, that you file required paperwork on time, and that all required remittances are paid when due. You must also ensure that you remain current and be aware of any changes that take place within the tax act.  An excellent source of information for anyone starting a business is the government agent’s office, and I would encourage anyone planning a new business to start there first.

Lindsey Cox is a business consultant with Cox and Company. She can be reached by email at lindseycox@coxandcompany.biz