So you’ve decided to kick employee life aside to start a business in your home? Congrats! Being your own boss is exciting, but aside from ‘doing the work’ you probably have a lot of questions about getting the business set up. Don't worry, we have 5 tips to get you on the right track.
It Starts With Structure
Whatever your scenario—quitting full-time employment or starting up a side gig—before you dive into completing projects, you’ll need to determine your business structure for your home business. In Canada, there are four business structure types:
A Sole Proprietorship: the owner solely controls the business,
A Partnership: two or more people operating a shared business,
A Corporation: a distinct legal entity separate from its owners,
A Co-operative: a corporation owned by a group of people looking to satisfy a certain need.
Most home businesses will be a sole proprietorship or a partnership. There are different tax and legal reasons why you may choose one structure over another. You may move to a corporation or a co-operative as you grow but we recommend talking with an accountant or lawyer on the best structure for you.
It’s All in the Name
To stand out in the crowd, it’s important for your new home business to have a good name. Your business name should describe what you do, be unique, and be memorable. Easy, right?
You’ll want to make sure that your business name doesn’t already exist, so be sure to do your research. Google search is great and you can also use NUANS Canada to do a business name search.
Expert Tip: If you have a unique name or tagline, look into getting copyright. That means you’ll have ownership of this name, ensuring no one else can use it. There are services in Canada, like Witmart, that can assist you with securing copyright. Securing your intellectual property is an important aspect of protecting your business.
Get Your Name Out
You’re now legal and legit, so get to work! At this stage, it’s important to get your name out there. Purchase your domain name (website URL) and set up a website to explain your business or services offered. There are several easy-to-use tools that provide domain names and website hosting, as well as templates to launch your web presence. Grab your business name on social media channels and start sharing stories about your clients and your areas of expertise. Follow other businesses to who you could offer your services. Add your company logo or a professional photo of yourself to start building brand recognition.
Make it Legal
The next item on your to-do list should be to register your home business with the federal government. While you don’t have to register your business to start, it is helpful if you want to open a bank account for all the money you’ll be making, or when you need to apply for a GST number. Plus, registering your business helps protect your business name.
Next, you should get a business license from your local government. Of course, different businesses will need different licenses. For example, someone offering marketing services may only need to register their name while a child day home will need an operations license from the city. You will need to provide your business name, the type of business you are starting, and contact info.
Depending on what you are planning on doing for your business will determine what kind of licence you need. Make sure you check with your local government on the types of businesses you can legally operate in your home, as there may be some restrictions in your municipality.
The Tax Man Cometh
Once you start making money, you’ll have to start paying taxes for your business. Yes, there’s no way around that.
Make sure you keep track of your income and expenses throughout the year. You may be able to claim a portion of your utility bills and rent or mortgage on your business taxes if you are operating out of your home. If you plan on doing this, it might be smart to hire an accountant or find a friend who can help you out in exchange for your services.
We have some great tips for how to plan your expenses in our previous post.
Set Up For Success
Starting a business in your home is an exciting time and a big step. Following these five tips will help make the transition from employee to business owner easier and will ensure that your home business is legal, licenced, and ready for success. If you have any questions about getting started, we have probably seen it all, so we are always here to help.