As a part of our “I’m Starting A Business, Now What?” series, we’re showing you how to set up a sole proprietorship in British Columbia, Canada. If you’re still in the “idea” stage, head to our first blog in the series for the first steps in planning your business model.
If you’re trying to move your business plan from idea to reality, you’re most likely deep into Google. Don’t worry, we’re here to save you from your most recent internet tail-chase. To keep you from running in circles, we’ve compiled everything you need to know in this blog. From licensing to insurance to registering a sole proprietorship in BC, we’ve got your answers.
Naming a sole proprietorship in BC
Pick a name
When it comes to a name, choose one that appropriately represents your services. There are a few areas to consider when picking a business name in British Columbia. Keep in mind that submitting a name request for a partnership or sole proprietorship doesn’t secure the name’s availability if you incorporate later. The BC Government website walks you through some rules and tips for choosing the best name.
Submit a name request
Once you have an idea of what you’d like your name to be, you’ll need to check to see if it’s suitable and available by submitting a name request. If you plan on running your business under your legal name only, you don’t need to submit a name request.
3 reasons your name should be approved:
- To ensure that your name, or a similar one, isn’t already being used by another business.
- To tell you whether your chosen name is confusing or misleading in any way.
- To help provide a public record of searchable businesses and organizations.
Register your business name
Next, you’ll need to register your business name with your province. If you’re using your full legal name only, you’re not required to register. However, when using your full legal name, plus any other clarifying words like “Jane Smith Accounting”, you need to register as a trade name.
Registering as a sole proprietor in BC
In BC, sole proprietor owners can operate without registering only if the business runs under the legal name of the business owner. In this case, if you’d like or need a business license, then you’ll need to register with the province first.
How to register
To register a sole proprietorship in BC, contact BC Registry services or go to your nearest Service BC location. Here, you’ll have the choice to register as a sole proprietor which will give you access to a business number. Having a business number can be an important part of being a business owner. It gives you an identifier if you need to create a CRA account, make WorkSafe BC payments, or decide to incorporate later.
Does a sole proprietor need a business license?
The easiest way to answer this is to check with your city as most municipalities in BC require you to obtain a business license. Contact your local city hall and the city hall in each community in which you’ll be doing business to see which permits or licenses you need.
What you might need to apply for…
If you’re planning on hiring one or more staff members, then you’re required by law to register for WorkSafe BC. This includes full-time, part-time, casual, or contract workers. See this WorkSafe BC site for more information about who needs coverage.
In BC, anyone who sells or leases taxable goods or provides software or taxable services is required to register to collect PST. You can register online, in person, or via mail. Want to see if your business applies? Check this BC Government website page.
A CRA account is necessary to meet certain tax obligations and receive certain benefits, rebates, and refunds. For example, you’ll need to register with the CRA for GST/HST remittance and payroll deductions. If your sole proprietorship has no employees and is not required to register for GST/HST, you do not need a CRA account.
You are required to register for GST if you are not a small supplier or if you make taxable sales, leases, or other supplies in Canada. Find out if your business applies on this Government of Canada page.
Are you a small supplier for GST purposes?
A small supplier is defined as someone whose revenue (and revenue of persons associated) from worldwide taxable supplies is equal to or less than $30,000 in a single calendar quarter and over the last four consecutive calendar quarters.
Keep track of your money
When you start a sole proprietorship in BC, you’re not legally obligated to open a separate business bank account. However, having a separate account has lots of perks. It helps you keep your finances tidy, understand growth, and makes it easier to file your personal and business taxes. In the end, keeping your business and personal deposits and transactions separate allows for happy books.
Organize your income and expenses
The best way to track your income is through QuickBooks Online. Doing this correctly gives you important information, like when to start charging GST. The best way to ensure your QuickBooks is on track is through LearnQBO. You can learn how to set your QuickBooks up for easy and accurate bookkeeping.
Before you get into the thick of it
Start the general set-up. Add your clients, products/services, and any other information that will make your job easier in the long run. This helps you track how much you make and spend on each product or service and keeps your clients organized.
Does a sole proprietorship in BC need insurance?
Consider setting up business insurance to cover yourself from any claims or property damage. Sole proprietorship in BC has the same legal responsibilities and liabilities as large corporations. Any claims against your business such as someone injuring themselves on your property could result in destructive legal fees. Researching which insurance you require is always a good idea before committing.
Cover all bases with a contract
Although you want to think everything will run smoothly, you should be prepared for difficulties. Save any miscommunications with a customized contract for your services. Have your client agree and sign your terms before you start a project or partnership. You might be able to find a free contract template online, but we suggest chatting with a lawyer to get one drawn up. Like we said before, better safe than sorry!
For more information and tips on bookkeeping with QuickBooks Online, visit Learn QBO.