Hey there! I’m Zahid, and today I want to share my experience of starting a sole proprietorship business right here in Ontario, Canada. I know starting a business can feel overwhelming, especially with all the government rules and regulations. But trust me, it’s not as complicated as it seems. I went through the whole process of registering my business, getting a business number, and opening a business bank account, and I’m here to break it down for you in an easy way.
If you’re thinking about starting your own side hustle or even a full business, this guide is perfect for you. I’ll also explain some important details about HST registration based on Ontario’s rules. Let’s dive in!
Table of Contents
- Why I Chose a Sole Proprietorship
- Registering My Business Name in Ontario
- Getting My Business Number from CRA
- Opening a Business Bank Account
- HST Registration and When It’s Required
- Protecting Your Business Name and Brand
- Final Thoughts and Tips
- Frequently Asked Questions
Why I Chose a Sole Proprietorship
When I first started my business, I wanted something simple and straightforward. That’s why I went with a sole proprietorship. It’s the easiest way to start a business in Canada because it doesn’t require any complicated registrations or fees if you use your own name. Basically, you and your business are the same entity.
All the income I make from my business gets added to my personal income for tax purposes, so I file just one tax return. Taxes are simple this way, and I don’t have to worry about separating business taxes from personal ones.
However, there’s a trade-off: there’s no legal separation between me and my business. So if something goes wrong, like a lawsuit, my personal assets, such as my house, car, or savings, could be at risk. For many people starting out, this risk is low, but if you’re worried about liability, you might want to consider incorporating later on.
Registering My Business Name in Ontario
At first, I operated my business under my personal name, which meant I didn’t need to register anything or pay fees. But then I realized that having a memorable business name helps clients know what I offer. So, I decided to register a business” name—”Polozon Agency“
In Ontario, if you want to operate under a name other than your own, you have to register that business name with the provincial government. It costs $60, and this registration lasts for five years before you need to renew it. Please check the official website to register your business, and you will get more detailed information.
This registration is important because it allows you to open a business bank account and legally use your chosen business name.
Getting My Business Number from CRA
After registering my business name, I also got a Business Number (BN) from the Canada Revenue Agency (CRA). This number is like a social insurance number but for your business. You need it to handle taxes, payroll, and other government programs.
For most sole proprietors, if you operate under your own name and don’t have employees or don’t collect GST/HST, you don’t need to register for a BN right away. But since I registered a business name, I had to get one.
This number is essential if you want to:
- Hire employees and set up a payroll account
- Register for GST/HST
- Import or export goods
- Incorporate your business later
Opening a Business Bank Account
Once I had my business name registered and my business number, I went to my bank to open a business bank account. This step is crucial because you can’t use your personal bank account for business transactions if you operate under a business name.
Having a separate business account helps me keep track of my business income and expenses easily, which makes tax time less stressful. It also creates a clear money trail if the CRA ever audits my business. Even though it’s not mandatory to open a separate account when you operate under your own name, I highly recommend it to keep things organized.
HST Registration and When It’s Required
Here’s a key point to know about HST (Harmonized Sales Tax) in Ontario:
If your business revenue is under $30,000 in 12 months, you do NOT need to register for an HST number.
But if your business income goes over $30,000, then you must register for GST/HST with the CRA. This means you have to start charging your customers an extra 13% HST on your sales and report this tax to the government every year.
One important tip: the $30,000 threshold is based on your total revenue (before expenses), not your profit. So even if your business is not very profitable but makes over $30,000 in sales, you still need to register.
Also, don’t ever charge HST unless you’re registered. Charging HST without registration is illegal and considered stealing from your customers.
If you want, you can voluntarily register for HST even if you’re under the threshold. Sometimes this can save you money, especially if you have business expenses with HST that you want to claim back.
Protecting Your Business Name and Brand
After registering my business name, I took extra steps to protect my brand. This included securing social media accounts on Facebook and Instagram and registering my website domain name. Even if you don’t plan to build a website immediately, buying your domain name is smart so nobody else can take it.
For example, I registered polozonagency.com and canadawander.com early on to protect my brand. It only cost me about $20, which is a small price to pay compared to the cost of losing my name or having to change it later.
Keep in mind, registering a business name in Ontario doesn’t give you exclusive rights to that name forever. Someone else could technically register the same name, but you can always take legal action if they cause damage to your brand.
If you want the strongest protection, you can register a trademark, but that’s usually only necessary for bigger businesses.
Final Thoughts and Tips
Starting a business in Ontario as a sole proprietorship is a fantastic way to get your dream off the ground without a lot of upfront costs or complicated paperwork. Here’s a quick recap of what worked for me:
- Start under your personal name if you want to avoid registration fees and keep things simple.
- If you want a business name that reflects your services, register it with your province (Ontario costs $60).
- Get a business number from CRA if you register a business name, hire employees, or need to register for GST/HST.
- Open a separate business bank account for better bookkeeping and clear money tracking.
- Register for GST/HST only if your revenue exceeds $30,000 annually, or voluntarily if it suits your business.
- Protect your brand by registering social media accounts and domain names early.
Remember, if your business grows and you start making more than $100,000 in net income, it might make sense to incorporate your business for tax benefits and liability protection. But for starting out, a sole proprietorship is the easiest and most cost-effective way.
Frequently Asked Questions
Do I need to register my business if I operate under my own name?
No, you don’t have to register if you use your personal name for your business. But if you want to use a different business name, registration is required.
What is a business number (BN), and do I need one?
A BN is a nine-digit number from the CRA used for tax purposes. If you register a business name, hire employees, or register for GST/HST, you need a BN.
When do I have to register for GST/HST?
If your business revenue exceeds $30,000 in a 12-month period, you must register and start charging GST/HST. If your revenue is below that, registration is optional.
Can I open a business bank account without registering a business name?
If you operate under your own personal name, you can use your personal bank account. But if you have a registered business name, you need a separate business bank account.
Is it necessary to protect my business name with a trademark?
For most small businesses, registering a business name is enough. Trademark registration is more important for larger businesses or if you want exclusive rights to your name nationwide.
Starting a business is an exciting journey, and with the right information, you can make it smooth and stress-free. I hope sharing my experience helps you take those first steps with confidence. Good luck!
