STARTING A BUSINESS
Do you believe in your project and know that your products or services meet the needs of the market?
Here are a few elements to help you launch your business.
There is no one way to start a business. The way you approach it will be influenced by your financial situation, your needs, the location where you are starting your business and the nature of your business. Depending on the scope of the project and the services you want to offer, in addition to thinking about your financial security and that of your business, you should also think about the following:
Name and business plan
Come up with a unique, catchy and distinctive name for your business that reflects your values and the products and services you offer. Check websites, such as Canada Business Network, to see whether you can use the name you’ve come up with. Whether you are starting off part-time or full-time or whether you are starting up the business alone or with partners, writing up your business plan and determining your objectives will help you in this process.
Registration and requirements
Throughout the process, you should think about obtaining your business’s name, a business number and an account to collect sales tax. You may also have to register and licence your business at the municipal, provincial or federal level. If you start your business in Quebec, the Registraire des entreprises, the provincial government’s business registrar, can help you. If you are starting your business anywhere else in Canada, the Canada Revenue Agency website can help you. Depending on the nature of your business and the location where you are starting up, you may also have to obtain specific permits and licences in order to operate.
Adjusting your insurance coverage
You have quit your job, started your business and are now your own boss! If you no longer have insurance, it is important to protect yourself and make sure you get adequate coverage in case of an accident or death.
Life insurance - Life insurance is an effective financial tool for protecting the future of your business. It also allows you to ensure the financial security of your loved ones should something bad happen.
Are you starting your business with a partner? What would you do if your partner dies suddenly? Would you have the money you need to buy back his or her shares? What would the impact be on your business? Now is the time to think about it.
If you don’t have life insurance, consider getting some in order to take into account your new needs as a self-employed worker. If you already have life insurance, consider increasing your coverage to make sure your family does not become burdened with financial troubles.
Disability insurance - If you become disabled as a result of an accident or an illness, would you be able to cover your financial obligations during this period?
Disability insurance provides salary replacement income so that you can focus your energy on recovering without being worried about your finances.
Critical illness insurance - As a self-employed worker, you are in a category of high-risk individuals due to the stress you experience on a daily basis and the high number of hours you work.
Financial protection in the event of a serious illness could make a huge difference for your business, as it would provide the money needed to cover your financial obligations during your absence (salaries, lost income, make up your salary, etc.) and relieve your banker’s anxiety.
Save to protect yourself
As a self-employed worker, you may face slow periods throughout the year and you must be ready for anything. You should create an emergency fund, and save for your projects and your retirement.
TFSA - A tax-free savings account will help you save money without affecting your taxable income. It can be used to help you realize your projects and be ready for the unforeseeable.
RRSP - Build your retirement plan and have the retirement you want. A registered retirement savings plan will help you grow your money tax-free. It will also allow you to deduct all your contributions from your taxable income.
Think about your taxes
As a self-employed worker, you can include certain current expenses and purchases on your tax return. You can claim deductions for the use of your personal vehicle, portion of your home, office supplies and much more. Visit the Canada Revenue Agency and Revenu Québec websites for more information.
You can also think about opening a TFSA to save the taxes you will be required to pay. This will ensure that you are not surprised with a tax bill.
Changing your beneficiaries
Do you have a spouse, children or business partners? You should adjust your beneficiary designation for all your individual and group insurance and savings products. This will hep you to ensure that, should something happen, benefits will be paid to the right person or people.
Go to Changing your beneficiary to see the steps to follow to change or modify your beneficiary.