New Business Kit

At CBM Chartered Accountants, our professionals offer practical ideas when you need them. Whether you are a new business just starting out or an established business looking for better service, your success is our objective.

All new businesses need help getting started. This guide, together with the advice and assistance from our professionals at CBM, will help you get started on your exciting business future.

For all good ideas to succeed they must be properly planned and implemented. You should start your planning by first considering the three Ms of business:

  • Management
  • Markets
  • Margins
Competent management, defined markets for products or services and adequate profit margins are absolutely necessary for any business to succeed.


Business Organizations
The legal form that your business will take must be decided in the planning stages. This aspect of planning should be discussed with your Chartered Accountant before proceeding.
The following is a brief overview of the most frequently used business models:

Sole Proprietorships
  • Simplest business form for tax purposes
  • Assets belong directly to the proprietor
  • Proprietor pays taxes directly on income earned
  • Proprietor has unlimited personal liability on all debts
Partnerships
  • Similar to a proprietorship except business is conducted by two or more people
  • Income of partnership is allocated to individual partners
  • Each partner has unlimited liability for all partnership debts
Corporations
  • An entity created by Federal or Provincial law
  • Income taxes are paid by the corporation on its income
  • Corporation can deduct wages paid to owner as an expense
  • Provides limited liability to owners

Initial Decisions
Hiring Employees
Finding the right people to employ requires careful searching and time. To hire someone, you must be registered with Canada Revenue Agency (CRA) as an employer. CRA will provide you with a business number. This number will permit you to withhold the necessary Income Tax, Canada Pension Plan (CPP) and Employment Insurance (EI) from your employees and remit it to the Receiver General together with other employer-required contributions of CPP and EI. You must also register with and pay for Workplace Safety and Insurance Board (WSIB) coverage for your employees. Subsequent to December 31st of each year, you will be required to prepare T4 slips for all your employees to submit to CRA. A WSIB annual report is also required.


Initial Decisions on Start Up
Financing
With a complete business plan, obtaining financing will be much easier, since potential lenders can review your plan and determine repayment rates, security and the interest rates of your loans. Despite the fact that you may have a good plan, without a credit record, financing your project could be a major stumbling block. However, many financial institutions will still provide funding on the basis of the financial strength of the principals behind the business and the credibility of your business plans.

Record Keeping
It is your responsibility to maintain adequate records to ensure proper required annual reporting. Depending on the nature of your business, record-keeping systems can vary. Your accounting system should be designed in such a way that it will generate sufficient financial information for you to effectively manage the business. Consultation with us on system implementation will ensure that the appropriate records are kept. Properly implemented record keeping will save on potentially costly future accounting fees resulting from poorly kept records.

Implementing The Plan
Having selected a location, and having obtained the necessary financing and legal forms, one must set out to acquire the equipment, purchase opening inventory and supplies and make the appropriate renovations to your place of business. Cost over-runs during this phase have hurt many new businesses. Care must be taken to ensure that sufficient working capital is available after start up costs to cover operating expenses while sales volumes are building.


Purchase of an Ongoing Business
When contemplating the purchase of an already existing business, its legal form is of the utmost importance. Each form has various tax consequences and a Chartered Accountant should be consulted regarding these implications. In addition, legal advice should also be sought on other factors associated with the purchase.


Government Applications
The Business Number
This number is required in order to collect and remit GST, Employee Payroll Taxes and Corporate Taxes. Monthly remittances are usually required. Large withholdings require more frequent remittances. Adequate records must be maintained in order to calculate employee deductions, GST collected and input credits. From these records annual filing of GST and T4s are required. To obtain this number for Hamilton and area, contact:
Canada Revenue Agency (CCA)
1-800-959-5525

Workplace Safety And Insurance Board
Most employers are required to maintain Workers' Compensation coverage on their employees. This coverage will compensate your employees should they be injured on the job. The premiums for this coverage range depending on your type of industry. The rate is determined by the Workplace Safety and Insurance Board from industry accident risks. For Hamilton and area, contact:
Workplace Safety and Insurance Board
(905) 523-1800

 Retail Sales Tax License
A sales tax license is required of every business or organization selling, leasing or providing taxable items or services. These licenses are issued by the province in which you are conducting business. In Ontario, remittance of tax collected is generally done on the 23rd day of each month for the prior month. To obtain this permit, contact:
Retail Sales Tax Office
(905) 521-7504


Start Up Checklist
    1. Have you developed your business plan to include:
      • Identification of market for your product or services
      • Amount and source of financing required
      • Determination of management and key personnel
      • Location of premises and facilities
      • Preparation of projected financial statements
      • Preparation of budgets with realistic margins and contingencies
      • Legal form of your business
    2. Have you discussed your business plans with a financial institution to obtain adequate financing?
    3. Have customers been researched?
    4. Have suppliers been contacted to establish pricing and terms of credit?
    5. If a proper location has been determined, have you reviewed your offer to purchase or agreement to lease with a lawyer prior to signing?
    6. Have your financial budgets and projected start-up costs been developed or amended based upon new information?
    7. Have you applied for a Business Number in order to remit GST, Employee Payroll Taxes and Corporate Taxes?
    8. Have you registered with the Workers Safety Insurance Board?
    9. If providing taxable goods or services, have you obtained a Retail Sales Tax Permit for each province you will be doing business in?
    10. Have you implemented an adequate accounting and record keeping system with the help of your accountant?
    11. Have you obtained adequate liability and business insurance?
    12. Have you established a year-end date for the business?
    13. Have you registered with any applicable government licensing body that regulates your industry?
    14. Have you developed marketing strategies on how best to promote your business?