Windsor-Essex Business Lawyers Providing Advice on Creating a Business in Canada
Establishing a new business venture can be equal parts exciting, rewarding, and daunting. Businesses in Canada are governed by multiple laws at both the provincial and federal levels and involve a myriad of legal, corporate, tax, and regulatory compliance requirements. According to Statistics Canada’s 2021 small business report, almost 40% of new businesses will struggle to last five years.
Willis Business Law is passionate about helping entrepreneurs and new business ventures find their footing and flourish in the Canadian business landscape. The firm’s collaborative business law team supports clients at every stage, from initial research to financing to setting up corporate strategies that help the business grow. As a firm dedicated to the business community, founded by the sole corporate and commercial business law specialist in the Windsor-Essex area, Willis Business Law is uniquely positioned to help enterprises of all sizes succeed.
Navigating the Language of a Start-Up Business
Entrepreneurs eyeing the Canadian business market should be familiar with the various steps and terminology involved in setting up a new business.
Initial Research Stage
The initial research stage lays the foundation for a business’ success. Entrepreneurs should avoid rushing through this groundwork, as having a well-researched plan at the outset helps facilitate a smoother growth process in the future.
Business names must be carefully researched to ensure they are distinctive and don’t run afoul of another company’s intellectual property or trademark. Aside from sole proprietorships, most businesses will need to register their business name with the government.
Field research enables a prospective business to conduct hands-on data gathering from potential customer bases. Common forms of field research can include surveys, interviews, focus groups, and research panels.
Market research helps a new business venture identify its potential client base, competition, and industry-specific challenges. Mining as many information sources as possible ensures the business has a balanced view of the existing business landscape in its geographical location and targeted industry. Business owners can use the market research process to identify a niche, underserved area.
Business Structures in Ontario
Choosing a business structure supporting the company’s vision is essential. This decision sets out who will control, profit from, and be responsible for the business.
Corporations are the most formal business arrangement in Ontario and effectively create a legal entity considered separate from the business owner. This offers significant tax benefits and limits the owner’s personal responsibility for the corporation’s liabilities. Depending on the industry involved and target geographical locations, a corporation can be incorporated provincially (under Ontario’s Business Corporations Act) or federally (under the Canada Business Corporations Act).
A partnership does not have a formal legal structure, as is the case with a corporation, but is usually based on a comprehensive partnership agreement that sets out how the partners will share the expenses, revenue, and responsibilities of the business.
The most common structure chosen by start-up businesses, a sole proprietorship considers the business and its owner as the same entity. While this structure is created easily and is uncomplicated, the owner is personally liable for the company’s debts and day-to-day operations.
Tax Considerations for New Businesses
Canadian tax law is expansive and complex. New businesses should consult with a qualified business lawyer and tax professional to ensure they are set up to understand and meet all tax considerations from the outset, particularly as tax liabilities vary from province to province.
Goods and Services Tax (GST) / Harmonized Sales Tax (HST)
The goods and services tax (GST) is paid on almost all goods and services sold in Canada. In some provinces (including Ontario), the GST has been merged with provincial sales tax (PST) and is called the harmonized sales tax (HST). Once a business reaches a certain level of growth (i.e. once it generates $30,000 in taxable revenue for four consecutive calendar quarters), it is responsible for collecting and remitting GST/HST to Canada Revenue Agency.
Business Plans & Financing
The planning and financing stages of creating a business are when an entrepreneur’s research starts to pay off.
Creating a detailed, professional business plan is critical for persuading potential investors and lenders to finance a new operation. The business plan sets out the target client base and industry and explains how the proposed business will be able to serve those areas and grow. Business plans will set out next steps and projected finances.
Business Loans / Debt Financing
Debt financing is the traditional form of business financing obtained via loans from financial institutions or personal lenders. They are paid back on a set schedule, usually with interest.
Equity financing occurs when a company or individual invests in a business in exchange for an ownership interest in the business. Equity investors are therefore given decision-making ability as part owners. Common forms of equity financing are angel investors (experienced business leaders who usually invest their own money in start-ups) or venture capitalists (investors targeting high-risk/high-return projects in sectors experiencing a burst of growth).
Grants & Subsidies
Grants and subsidies are funds, often provided by the government, that do not need to be repaid and are aimed at encouraging economic growth in Canada. They can be challenging to obtain as they will have limited potential recipients each year.
The Benefit of a Qualified Business Lawyer
The terms and steps set out above represent just a small portion of the process of setting up a new business in Canada. Having the guidance of a qualified business lawyer ensures that all angles of a business’ creation are considered and helps avoid costly errors and delays.
The knowledgeable business lawyers at Willis Business Law can help entrepreneurs and new business ventures navigate every element of the start-up process, including:
- Business planning;
- Business structures and incorporation;
- Agreements, including partnership and shareholder agreements;
- Leasing and procurement;
- Legal and regulatory compliance.
Willis Business Law Provides Multi-Faceted, Expert Advice to Canadian Start-Ups
The business lawyers at Willis Business Law are invested in their clients’ success and provide tailored, client-focused solutions to start-ups, new business ventures, and enterprises of all sizes. The firm’s founding partner, William J. Willis, is the only certified corporate and commercial law specialist in Windsor-Essex County, and clients benefit from his knowledge on every file.
Located in the heart of downtown Windsor, Willis Business Law is committed to providing first-rate, dynamic business law, employment and labour law, and mediation services to private and public sector clients. The firm proudly serves clients throughout Windsor-Essex County and the surrounding communities, including Amherstburg, Chatham-Kent, Essex, Kingsville, Lakeshore, LaSalle, Leamington, Pelee, Tecumseh, and Sarnia. To speak with a knowledgeable business lawyer, please contact the firm online or call 519-945-5470.