Starting a small business...

[TimG]

If this isn't the proper forum, please move it to the appropriate forum.


I have a hobby that I think I am ready to take to the next level and start a small business selling these widgets.

I was looking on the service Alberta web site but I couldn't find the answers I needed.

If i register a business name at the registry, most likely a sole proprietor, will I need to file with CRA even if I am not selling anything?

Right now I want to register and secure the name so nobody else can grab it.

[Isaiah]

Registering a trade name has no bearing on the CRA or require any tax filings. You should know, however, that simply registering a trade name does not affect anyone else's ability to do so. An unlimited number of people can register the same trade name.

[msommers]

You can register and get a business/gst number online.
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/bn-ne/bro-ide/menu-eng.html

You can go to the registry and do a name search for a marginal fee ($25 rings a bell, don't quote me on that).

[Isaiah]

Originally posted by msommers
You can register and get a business/gst number online.
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/bn-ne/bro-ide/menu-eng.html
This, however, willalert the CRA that you are operating a business and you will begin receiving filing submission notices.

I would go ahead and register the trade name at a registry but avoid requesting your GST# until you are actually ready to start processing revenue.

[swak]

Yea. Pretty sure if you want to lock in a name, you gotta incorporate it and get it on the nuans report listing etc.

*not a business major haha

[Zhariak]

Easiest way, just get incorporated and file taxes.

If you're not making any money, you won't have taxes to pay.

Also, it provides limited liability so your ass can't get sue'd like it would with a sole proprietorship.

Go to local registry, ask to get incorporated, tell them you want a named company, let them do the search. Pay them the money, BAM, done!

[wtf im nameless]

Originally posted by Isaiah

I would go ahead and register the trade name at a registry but avoid requesting your GST# until you are actually ready to start processing revenue.

Although I don't remember the exact number, as long as you don't request your GST number you can do around $30,000 in sales annually without having to charge your customers GST, or give any to the government.

Also, if you do incorporate I'd suggest you hire an accountant as doing your own taxes becomes much more difficult.

[Zhariak]

Originally posted by wtf im nameless


Although I don't remember the exact number, as long as you don't request your GST number you can do around $30,000 in sales annually without having to charge your customers GST, or give any to the government.

Also, if you do incorporate I'd suggest you hire an accountant as doing your own taxes becomes much more difficult.

Keep in mind, if you don't have a GST number, you can't collect back the GST you spent on company purchases...

[Sugarphreak]

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[wtf im nameless]

There's a lot of good reasons to have a GST number, but make sure the pro's outweigh the con's. Once you sign up for it, there's no going back. I'm only mentioning this since it's a hobby that's turned into a business and he mentions he's not currently selling anything. If you're just looking to secure the name, once you have the business number it's literally a 10 minute phone call to add things like import/export number, GST number, etc. if and when you need them.

[swak]

Originally posted by Sugarphreak



I would still get a GST number, charge 5% and then use the quick method (3.6%) for returns. So for every 1000$ you collect you only give the government 720$ and you pocket the rest. The only reason you wouldn’t do this is if you are buying tons of goods and the GST you are paying exceeds the amount pocketed.



I'm confused.

How is it advantageous in your example here?
only pocketing $280? Not that great.

[bourge73]

So you are gonna sell your guitar riffing abilities ?

[microgrinder]

Originally posted by Sugarphreak

I would still get a GST number, charge 5% and then use the quick method (3.6%) for returns. So for every 1000$ you collect you only give the government 720$ and you pocket the rest. The only reason you wouldn’t do this is if you are buying tons of goods and the GST you are paying exceeds the amount pocketed.


Not sure I understand how this works. If I have $200k in revenue + GST and I spent 150k + GST on product what would the calculation be?

Is it 3.6% on 200k versus writing off 5% on 150k?

A few of my notes on small business:
If you file under self-employment you'll pay double cpp. (9.8%)

Usually the lowest tax rate will be through paying yourself from the small business as a dividend, you won't pay any cpp, EI, but it doesn't add towards RRSP contributions.

Be sure to write off a portion of rent, electricity ect...

I think you have to pay taxes and GST quarterly once you hit somewhere around $60k revenue/year.

Incorporation costs ~ $550/year & business registration is a small one time fee of $70 or something like that. Not sure what the business registration actually does or is used for? Maybe someone can clarify here.

[heavyfuel]

I will clarify, that being incorporated unless you're making 500k+ yearly is not worth it and is a pain in the ass. If it's a hobby-type one man gig sole prop. with a gst # is the way to go. Numbers are numbers but that simple word "incorporate" seems to unleash magical powers for A) the CRA to keep you closer on the radar and B) your CA to gouge you harder because all of a sudden it's more "difficult" to prepare your taxes? Gimme a fuckin break CA's. 2+2=4 but when you're incorporated they throw all this big complicated talk at you, like all of a sudden 2+2= 3.8887665533/4 to the 3rd power because of dividend this or bracket that, some bullshit thing called an annual return that actually has nothing to do with your tax return but everything to do with them taking your money, then they charge you stupid amounts of money to do the same number crunching as individual preparations, like fuck off lol I wouldn't incorporate until you're juggling big numbers.

[Sugarphreak]

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[Sugarphreak]

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[CapnCrunch]

Originally posted by heavyfuel
I will clarify, that being incorporated unless you're making 500k+ yearly is not worth it and is a pain in the ass. If it's a hobby-type one man gig sole prop. with a gst # is the way to go. Numbers are numbers but that simple word "incorporate" seems to unleash magical powers for A) the CRA to keep you closer on the radar and B) your CA to gouge you harder because all of a sudden it's more "difficult" to prepare your taxes? Gimme a fuckin break CA's. 2+2=4 but when you're incorporated they throw all this big complicated talk at you, like all of a sudden 2+2= 3.8887665533/4 to the 3rd power because of dividend this or bracket that, some bullshit thing called an annual return that actually has nothing to do with your tax return but everything to do with them taking your money, then they charge you stupid amounts of money to do the same number crunching as individual preparations, like fuck off lol I wouldn't incorporate until you're juggling big numbers.

:banghead:

I'm guessing you tried to do this yourself or you have the worlds shittiest accountant.

[heavyfuel]

Originally posted by CapnCrunch


:banghead:

I'm guessing you tried to do this yourself or you have the worlds shittiest accountant.

Had lol my current CA is pretty awesome.

[msommers]

500K is not some magical number to decide if you should incorporate. Whoever told you that is an idiot.

However if you're planning on using an accountant, the price difference between SP and Incorp. is quite substantial. Reasons to go incorp. would be tax benefits by paying yourself in dividends and sheltering personal assets. If you see someone coming after you to sue, you can get insurance for SP and Incorp. but most people go incorp. WCB is required when you're incorporated.

For a startup business selling widgets, I'd just go SP and see if you even make more than 30K/yr with it.

[microgrinder]

Originally posted by Sugarphreak


Basically when you charge your clients, you add a 5% GST. So you your company brings in 200K... you also charge an extra 10K on top for GST.

If you don't have a lot of overhead in your business, by using this quick method you get to keep ~2800$ of that

Ya, that's how I understood it. Our overhead is about 75% of revenue, so I guess it's the long method for us!

Does anyone know what private loans are recorded as in taxes and if I can file royalty payments as an expense?

Also there's not really a magic number for when to incorporate. Even for low income businesses if you paid yourself completely through dividends you would save a lot of money through savings on CPP expenses. Of course if you have a full time job apart from the business you're likely maxing out your CPP anyways.

[Zhariak]

Originally posted by microgrinder


Ya, that's how I understood it. Our overhead is about 75% of revenue, so I guess it's the long method for us!

Does anyone know what private loans are recorded as in taxes and if I can file royalty payments as an expense?

Also there's not really a magic number for when to incorporate. Even for low income businesses if you paid yourself completely through dividends you would save a lot of money through savings on CPP expenses. Of course if you have a full time job apart from the business you're likely maxing out your CPP anyways.

Dividends for the win!!!!

[Sugarphreak]

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[Zhariak]

Originally posted by Sugarphreak


^^ That is true

I think one of the biggest reasons I incorporated was liability. If my company ends up in hot water for something, it is a separate entity I can just chop off without it ruining my life. Not something you can do as a sole proprietor.

Liability is something you have to look at objectively, if you are making fridge magnets... then yeah, no reason you need to worry too much about it, on the other hand if you are making baby cloths or toys and some freak accident occurs that involves your product, you want to be behind the protection of a company with liability insurance.

Just keep in mind, a piece of the fridge magnet could fall off and a baby could choke.

Always just better to get incorporated.