You have a business idea. You don't know where to start. Welcome to the most-Googled situation in Canadian entrepreneurship — a problem so common that the answers are scattered across 40 different government websites and dozens of bank, accountant, and lawyer pages, none of which agree on the right starting point.
This guide walks through what to do, in what order, in your first 90 days as a Canadian business owner — and which of the early decisions actually matter vs. which can wait.
Three things — business structure, business bank account, and basic record-keeping. Everything else, including a website, a logo, business cards, and even GST/HST registration in most cases, can wait until you have at least one paying customer. Don't get stuck in setup theater.
Decision 1: Sole Proprietorship vs Incorporation
This is the first decision and the one most often made for the wrong reason. The right framework:
Sole Proprietorship — when it makes sense
- Revenue under $30K-$50K/year (no significant tax benefit to incorporating below this)
- Service-based business with low liability risk
- Side hustle alongside W2 employment
- Testing-phase business (validating idea before committing)
Cost: $40-$80 to register a business name (provincial). No annual filings beyond your personal T1 with a T2125 attached.
Federal or Provincial Corporation — when it makes sense
- Revenue above $50K-$100K/year (small business deduction creates real tax savings)
- Business with meaningful liability risk (contracting, food, anything physical)
- Plan to raise outside investment (investors prefer corporations)
- Multiple owners (partnerships are messy without incorporation)
- Plan to sell the business eventually (LCGE on shares)
Cost: $200 (federal) or $200-$450 (provincial) to incorporate. Plus annual filings: T2 corporate return, provincial annual report, and bookkeeping. Annual cost typically $1,000-$3,000 for a small corporation done by an accountant.
The "look professional" trap
Don't incorporate to look professional. Customers and clients overwhelmingly don't check or care. Incorporation only matters when (a) you have meaningful tax savings to capture or (b) you have meaningful liability to limit.
Decision 2: GST/HST Registration
You must register for GST/HST when your trailing 4 quarters of revenue exceeds $30,000. Below that, registration is optional.
Optional pre-threshold registration
You can register voluntarily before hitting the $30K threshold. The benefit: you can claim Input Tax Credits (ITCs) on GST/HST paid for business expenses (computers, software, supplies, professional services). For a business with significant startup costs and slow revenue ramp, this can be worth thousands.
The cost: you must charge GST/HST on all your sales from registration date forward, increasing your prices by 5-15% (depending on province). For consumer-facing businesses, this can hurt competitiveness.
The decision tree
- B2B service business with meaningful expenses → register early
- B2C consumer business with low margins → wait until $30K threshold
- Selling outside Canada exclusively → may not need to register at all
Decision 3: Federal vs Provincial Registration
| Type | Cost | When it makes sense |
|---|---|---|
| Provincial sole prop name | $30-$80 every 3-5 years | Sole prop in one province |
| Federal incorporation | $200 + $13/yr | Operating in multiple provinces; want federal name protection |
| Provincial incorporation | $200-$450 + $20-$120/yr | Operating mostly in one province |
| Extra-provincial registration | $50-$300 per province | Federally incorporated; want to operate in additional provinces |
Decision 4: Banking and Bookkeeping
Open a separate business bank account on day one — even for a sole proprietorship. This is non-negotiable. Reasons:
- CRA can audit personal accounts if business and personal are commingled
- Liability protection (for incorporated businesses) is undermined by commingling
- Tax-time bookkeeping becomes a nightmare without separation
- Professional appearance to clients (paying to "Acme Inc." vs "John Smith" reads better)
RBC, BMO, TD, and Scotiabank all offer no-fee or low-fee business chequing accounts for low-volume use. Many also offer free integration with Wave Accounting (free) or QuickBooks Online (paid) for automatic transaction import.
Bookkeeping software
- Wave — Free, Canadian, perfect for sole props and very small businesses
- QuickBooks Online — $20-$60/month, the standard for businesses with revenue over $100K
- Xero — $13-$78/month, alternative to QBO with good ecosystem
The First 90 Days
Days 1-30: Structure
- Decide sole prop vs corporation
- Register business name (provincial)
- Get a Business Number (BN) from the CRA — needed for any tax interaction
- Open business bank account
- Set up bookkeeping software
- Get basic insurance (general liability $400-$800/yr; professional liability $400-$1,500/yr if applicable)
Days 30-60: Setup
- Build minimum viable website (Squarespace, Wix, or simple HTML on Netlify — $0-$240/year)
- Register a domain ($15-$25/year)
- Set up business email (Google Workspace $7.20/mo or similar)
- Make GST/HST registration decision
- Get first 3-10 customers (price low, deliver excellent, gather testimonials)
Days 60-90: Grow
- Refine pricing based on first customer feedback
- Build a simple referral system (ask happy customers for warm intros)
- Track CAC (customer acquisition cost) and retention
- First quarterly tax remittance (if registered for GST/HST)
- Decide whether to hire your first contractor (only if revenue justifies it)
The Five Most Expensive Setup Mistakes
- Commingling personal and business funds. CRA audit headache and undermined liability protection. Open separate accounts on day one.
- Missing the $30K GST/HST threshold. Mandatory registration is retroactive. Track quarterly, not annually.
- Incorporating too early. $1K+/year in maintenance costs for no benefit when you're under $50K revenue.
- Not claiming the small business deduction (corporations). CCPCs get a much lower tax rate on the first $500K of active business income — many new corp owners pay themselves wrong and miss it.
- Skipping basic business insurance. One slip-and-fall lawsuit ends most uninsured businesses. $400/year in general liability is cheap insurance.
The New Business Handbook · Canadian Edition
The full 56-page guide: federal vs provincial registration walkthrough, GST/HST decision tree, banking and bookkeeping setup, funding option comparison, first-customer playbook, and 4 ready-to-use templates including the business structure decision worksheet and 12-month launch plan.
Frequently Asked Questions
How much does it cost to start a business in Canada?
Sole prop: $40-$80 (name registration) plus banking and bookkeeping setup. Federal incorporation: $200 + ~$1,000-$2,500/year ongoing. Provincial incorporation: $200-$450 + similar ongoing. Additional costs: insurance ($400-$2,000/year), website ($0-$300/year), and any required professional licensing.
Do I need a business license to operate?
Most service businesses don't need any specific license beyond municipal business licensing (which most cities require — $50-$300/year typically). Specific industries (food, childcare, contracting, financial services) have additional licensing requirements. Check your municipality's website.
Can I operate a side business while employed?
In most cases yes, but check your employment contract first. Many include non-compete and IP assignment clauses that can apply to your side business. The handbook covers how to navigate this without breaching contract.
When should I hire an accountant?
For sole props with simple finances under $30K revenue: not yet — you can DIY with Wave + a self-prep tax return. For corporations or revenue over $50K: yes, immediately. The cost ($1,000-$3,000/year) more than pays for itself in tax savings and audit prevention.