Top 10 Start-up Accounting Checklist for New Business Owners in Canada
Starting a small business in Canada definitely comes with it’s challenges, thus having a checklist to starting your own small business is very important. Our starting a business checklist includes all the tasks you need to get going.
To help, we’ve put together this accounting checklist for start-up entrepreneurs. It includes all the tasks you need to get going.
- Legal approval of business name The first thing your lawyer will do is submit a name reservation request on behalf of your company, and a request for legal approval of the name that you’ve chosen.
- Register your business name When you are registering your business. you’ll need to determine your business structure. You have three primary options when registering your business in British Columbia:
- Sole proprietorship — You are the sole owner and responsible for assets and liabilities personally.
- General Partnership — You and one or more partners own the business and share responsibilities, assets and liabilities personally.
- Corporation — Incorporating a business creates a separate legal entity, so all assets and liabilities are tied to the professional corporation and not you personally. It’s the most complex of business structures.
- Apply for GST/HST number Most sole proprietorships, partnerships and corporations with total revenues under $30,000 per year are defined as a small supplier by the CRA, and they don’t have to collect GST/HST. As soon as your business generates $30,000 in sales within a fiscal year, you must register for a GST account. It is important to speak directly with your accountant to see if your business is required to pay GST. For more information on GST please visit: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hstbusinesses/account-register.html
- Set Up A Business Bank Account Tracking your business income and expenses separately from your personal will make record keeping and tax filing at year end easier. You may want to visit your local financial institution to open a separate bank account especially if you are planning to receive cheques payable to your business name. You will likely need to provide them with confirmation of your Registered Business Name and Business Number (BN). You might also need to provide 2 pieces of I.D. 1 Primary I.D. (photo) and 1 secondary I.D. (such as birth certificate). If a partnership, they may require a copy of your partnership agreement. If a corporation, they may require a copy of your articles of incorporation, central securities register, or borrowing by laws, etc.
- Apply for municipal business license It is important to notify your local municipality that you are planning to start a business and obtain a formal business license. While at the office, be sure to ask about any potential regulations in place including zoning, new structures, permits, by laws, and other rules and regulations that could impact your business startup activities.
- Apply for a dedicated business credit card You may not qualify for a business credit card right away, but for reasons described above, you should at least use a separate personal credit card for all your product and service business expenses.
- Set Up Your Accounting System When you start a new business, it is important for you to have a bookkeeping process up and running from day 1. Many small business owners outsource their accounting to a bookkeeper or chartered accountant. While that can save you a lot of time, you still need access to tools that let you see how your finances are doing month-to-month.
- Familiarize Yourself with Payroll Taxes Employee salaries require taxable amounts withheld from their payroll. You must treat certain contractor payments in a similar fashion. Speak with your accountant to ensure you meet all tax responsibilities.
- Get business insurance General liability insurance is a must-have for every business. Business liability insurance protects your small business from negligence that may cause injury to others, such as a customer or employee. It also protects your company if someone is injured as a result of using your product or service. It will usually cover the damages from a lawsuit as well as the legal costs. Depending on your business needs, liability insurance may be purchased in many forms, some of which are outlined below.
- Track your out-of-pocket expenses Out-of-pocket expenses are business-related payments you make with your personal money. These payments get recorded in your accounting system as either business expenses or capital expenditures, and result in a business deduction and an IOU (from your company to you) called a shareholder loan.
If you plan to work with partners, you should speak to your accountant or lawyer about drawing up a shareholders’ agreement. Looking to incorporate? You must file an Incorporation Application with BC Registry Services.
We strongly suggest using accounting software (i.e. QuickBooks Online or Sage) to keep your books up to date and stay on top of your business’s financial health.