How to Start a Business in BC in 7 Steps

Are you thinking about starting a business in beautiful British Columbia? Before you dive in, there are a few important things you should know about the legal and governmental requirements in the region.

Starting a business involves filling out appropriate paperwork, paying fees and complying with various laws and regulations. British Columbia has its own unique rules that you’ll need to familiarize yourself with, especially when it comes to taxes and financial accountability. It's essential to be aware of what the provincial and federal governments expect of you to avoid any legal troubles down the road.

Starting a business can be a thrilling adventure, but it's essential to do your homework first. Armed with the right knowledge, you'll be prepared to launch your dream venture in British Columbia and make it a success! Join the corporate tax accountants at T2inc.ca as we walk through our checklist for starting a business in BC.

Note: These steps to starting a small business in BC do not necessarily have to be completed in order. We recommend reading through the entire list of tasks and deciding how to proceed for your specific business, location, financial and personal situation.

1. Come up with a solid, realistic business idea

It is essential to have a strong business idea before beginning the process of making your venture a reality. Setting up a business takes time and money, and you’ll want to be certain that your efforts don’t go to waste! Any successful business starts with a great idea that is not only original, but founded on solid market research to prove there are customers waiting for your product or service.

Here are a few tips to get you going in the right direction before you commit to starting a business in B.C.:

• Confirm that there is a market for your product or service by referring to sites like Small Business BC, where you can learn how to evaluate and test your small business idea. This site also includes resources to help you come up with a business idea if you don’t already have one.
• Understand your competitors and be able to clearly define why your business is likely to succeed. The BDC (Business Development Bank of Canada) helps businesses define their USP, or unique selling point, with a guide that includes questions to ask yourself while researching your competition.
• Confirm there is enough demand for your product or service to make starting a business possible. Following trends via sites like BC Business can help you better understand market potential. For more detailed, custom information about your target market, you can obtain customized market research reports from the SBBC.
• Design a logo, choose brand colours, and create any other visual elements you will use to promote and identify your business. Consider hiring a professional graphic designer to make sure your business has a strong visual identity right from the get-go.

2. Write a business plan

An effective business plan should describe your business goals and potential customers. It should explain how you intend to position yourself relative to your competition, and outline your financial goals.

If you’re starting a business in B.C., it’s important to make a plan, but be prepared to make changes as you move forward. The most successful entrepreneurs are in a constant state of adjustment and re-evaluation, always taking action to make sure their business continues to succeed.

The SSBC has a complete guide to business planning. It can also be a good idea to contact a lawyer or accountant at some point for assistance with your business plan.

As you make your plan, remember that some types of businesses require specific licenses and permits. This can only be determined by consulting relevant municipal, provincial and/or federal regulations. Use BizPal to see which permits or licenses you will need for your business or check with your local municipality.

Specific rules and regulations may also apply. Be sure you are aware of the legal requirements concerning accessibility in British Columbia, British Columbia employment standards and BC Occupational Health and Safety Regulations.

3. Choose a name and location

Choosing a location for your business is important, as you will use your permanent business address on your tax returns and other paperwork. Remember to verify zoning laws and legal requirements before signing a lease or committing to an office location.

You will also need to choose a name for your business. Choosing a business name is a bigger job than it may seem: you will need a name that is unique and hasn’t been used either by a B.C. business or another brand online, so be sure to check websites and social media accounts while doing your research. Even if you don’t see your name anywhere, it could still already be the property of another person. To avoid legal problems, confirm you have chosen a name that is not already protected by Canadian law and have it approved by visiting the NUANS database of incorporated businesses (federally) or the BC Registries and Online Services (provincially).

If you think you might operate in other provinces one day, you may want to check their name registries also. You will need to submit 2 alternative names as well, in case your first choice is rejected. And if you do not want to use a name, you can start a numbered company instead, however this may not be an appropriate choice for businesses that intend to market their services, as it does not allow for branded marketing, etc.

When starting a small business in B.C., it is also possible to protect your name simply by registering it as a trademark. If you aren’t sure whether your business name is appropriate for your official paperwork, contact the business accountants at T2inc.ca.

4. Choose a business structure

There are three common types of business structures to choose from when starting a business in BC. Each of them comes with its own special legal duties, funding possibilities, liability factors, and tax rates.

Before you register or incorporate your B.C. business, it's essential to know the impact of your chosen structure. Some business types can be altered later, but some cannot.

Sole proprietorship

A sole proprietorship is a business owned by one person. It's the simplest way to start a business, and the good thing is you can decide to incorporate later if you want.

In this type of business, you keep all the profit, but you will also have to subtract all losses and expenses from your personal income. Since you're responsible for all debts and losses, creditors can take both your personal belongings and business assets if your business doesn’t thrive. Also, your income is taxed at your personal tax rate. Depending on how much your business earns, you may be taxed at a higher rate than if your earnings were subject to the business tax rate in BC.

Partnership

A partnership is when two or more people own a business together. Working together can make certain aspects of starting a business easier, like sharing start-up costs and risk.

Keep in mind that all partners are responsible for the debts and losses of the business, and a shared venture can potentially become more complicated when there are decisions to be made and actions to be taken.

Corporation

When you incorporate a business in B.C., you can keep your business activities completely separate from your personal finances.

There are many benefits to incorporating, including the security of limited liability, the ability to transfer ownership, and easier access to loans and grants.

However, incorporating your business can be expensive, and the tax rules are more complicated than when you start a sole proprietorship or partnership. To file your annual taxes and maintain accurate corporate records, you might need to hire a business accountant.

It's a good idea to talk to a lawyer or other advisor before you decide to incorporate your business.

5. Register or incorporate

Depending on the type of structure you have chosen, you will need to register or incorporate your business in BC. Let’s take a look at the most important points related to each option.

Register a business in British Columbia

If your business is a sole proprietorship or general partnership, you can register it quickly and easily online with the Province of British Columbia via BC Registry Services. You will need a VISA, MasterCard or American Express to pay for the online transaction. If you prefer, you can pay in person at a Service BC Centre.

Registering a business costs less and can be done more quickly than incorporating, however there several points to consider, depending on the type of business structure you have chosen and the extent of your planned business activities:

• If you intend to be active in more than one province, you will need to register provincially and also federally. You can do this via the Government of Canada’s BRO (Business Registration Online).
• As part of the registration process, new BC corporations, businesses, and societies are automatically assigned a 9-digit business number (BN) that identifies them to the Canada Revenue Agency (CRA). You need this number for official paperwork.
• Registering your business will protect your business name in B.C. for 56 days. If you wish to extend your name registration, you can either incorporate or request an extension. Simply registering your name does not ensure its uniqueness, nor does it provide protection against potential trademark infringement lawsuits. Another option is to register your name as a trademark. This will protect your name throughout Canada, but there are some limits. For example, another person may use your name as long as they offer different products or services. Note also that it can take up to 2 years to register a trademark.
• You do not need to renew your business registration in BC.
• You (and your business partner, if you have one) remain liable for all business debts and losses if your business is only registered, not incorporated.
• In B.C., there are two different tax rates for business – the general corporate income tax rate (12%) and the small business corporate income tax rate (2%) which applies to Canadian-controlled private corporations (CCPCs) with active business income eligible for the federal small business deduction. Federal tax rates may differ. It is always advisable to consult a corporate tax accountant when completing your annual income tax forms.

Incorporate a business in British Columbia

When you start a business in British Columbia, incorporating can be a good idea for several reasons. Advantages to having an incorporated company in B.C. include the separation of your personal and business finances and the ability to apply for loans and grants that are only available to corporations. The Government of British Columbia offers extensive information on the topic. You should consider the following main points before making your decision:

• You will need adequate funds to pay for incorporation. Incorporation initially costs more than registration, and maintaining a corporation will likely also involve paying for accounting and legal services. Incorporation is also more time-consuming than registration, as it also involves following certain operational rules such as establishing company articles and potentially filing documentation multiple times a year.
• You do not need to be a Canadian citizen or a resident of British Columbia to incorporate a business in BC. However, it is mandatory to have an address in the province, even if it is only a P.O. box.
• You can incorporate provincially if you intend to operate only within B.C., or you can incorporate federally if you intend to operate in other provinces of Canada.
• Your business name is protected if you incorporate. Your name can be in either official language, or you can incorporate using a number if you prefer.
• Incorporation never expires or requires renewal if you file your Annual Return every year.

Most incorporations rely on the services of a corporate tax specialist to ensure that their corporate paperwork is maintained accurately and according to current tax laws.

6. Secure funding

It takes money to start a business. Some small businesses can qualify for a loan with the help of the Canada Small Business Financing Program. More information about financing your business venture can also be found on the business grants section of the Government of Canada website. Small businesses in B.C. can get help raising capital thanks to the Investment Capital branch of the B.C. Government. Remember, you will likely still need to contribute a significant amount of your own money to the venture.

It is important to separate your personal and corporate finances by opening a separate business bank account, even if you do not incorporate. To open a business account, you will need to bring a copy of your Business Registration Certificate with you to the bank. For corporations, having a business account is a legal requirement, but there are benefits even if you operate your business as a sole proprietorship or partnership.

Be prepared to get the help you need when it comes to regular bookkeeping and filing business taxes. B.C. businesses can be eligible for a variety of tax credits, and a qualified corporate accountant can save you a lot of time, effort and money by helping you identify deductions you may be eligible for when tax season comes around.

There are many financial aspects to starting and running a business in BC. You will need to secure funding in the form of grants and loans, possibly get business insurance, obtain any necessary licenses, and be prepared to pay appropriate taxes and contributions to the provincial and federal Pension Plan if you have employees. An online presence is also essential for most types of business today, which is another significant business expense that needs to be addressed early on.

It’s never too early to get informed about the costs associated with your business idea.

7. Register for Provincial and Federal Sales Tax

Businesses in B.C. need to pay Provincial Sales Tax (PST) and the federal Goods and Services Tax (GST). Let’s take a look at both.

PST

If your business in B.C. involves selling or leasing taxable goods or services, or providing accommodation, you may have to register with the B.C. Ministry of Finance to charge and collect PST. The Government of British Columbia website contains detailed information about registering for provincial sales tax.

You may also need to pay a Municipal and Regional District Tax (MRDT) if you provide accommodation in one of 50 specific areas of BC. You can learn how to pay the MRDT yourself online, or hire a qualified accountant to help.

GST

You are required to register for GST if your B.C. business sells or provides goods and services in Canada and your annual world-wide GST taxable sales (including those of any associates) are more than $30,000.

Starting a business in BC? T2inc.ca tax accountants can help!

Starting a business in British Columbia takes a lot of work, but successful entrepreneurs all agree that it’s worth the effort. Breaking the process down into doable steps will allow you to plan efficiently and follow through on every aspect of getting your new venture up and running.

Remember that you do not have to face the complexities of filing annual corporate returns and maintaining your business accounts without help. The corporate accountants at T2inc.ca are here to assist B.C. business owners with everything from planning to bookkeeping and taxes.

Contact T2inc.ca today for a free quote! Now is the time to take the first step toward making your B.C. business idea a reality.