12 Steps to Starting Your Business

12 Steps to Starting Your Business

What is a Business: A business is an organization or person involved in the trade of goods, services, or both to consumers. This means that if you are selling goods or services and have costs associated with those goods and services you are in business. If you haven’t registered your name or you don’t have a business license has nothing to do with it – that just means that you haven’t taken those steps in the process of setting up your business yet.

There are first steps you need to take in starting a business that can cost you if you don’t do them first. Below is an outline of those steps:

1. Step One – Register your name.

Your name should be memorable, something easy to say or spell and it is one of your first impressions so it is the start of building a brand/image for your business.

2. Step Two – Get a business license.

You can register for a business license at your local municipal office. In the Yukon you can get a Business License for the town where you are operating your business and/or an Inter Municipal Business License so that you can operate in any town within the Yukon.

3. Step Three – If you are incorporating your business then get it incorporated.

You need to do a name search before you incorporate unless you just want to use the number assigned by the government. (A numbered company is not a very catchy name.) Incorporate before getting your business number.

4. Step Four – Get your business number from the Canada Revenue Agency.

a. Your business number is the number that is used for all aspects of your business. It is a nine digit number assigned by the CRA; the numbers following the nine digit number determine whether it is for GST, payroll, exporting, corporate tax, etc.

The most common are:

12345 6789 RT0001 – GST

12345 6789 RP0001 – Payroll

12345 6789 RC0001 – Corporate

12345 6789 RM0001 – Import/Export

12345 6789 RZ0001 – Information Returns

b. Ensure you do step 3 above before you buy anything for your business. This is essential as you cannot claim any GST on assets and large purchases you do when you start your business if you do not first have the GST number. If you buy a truck the day before getting your GST number you cannot claim that GST.

5. Step Five – Register for WCB

WCB is required by all incorporated businesses – they will send you a notice about registering when you incorporate. You are required to register the directors as well and any payroll or dividends that they may be taking from the business.

If you are a sole proprietor you have to register if you are going to have employees. If you don’t have employees you can apply for optional personal coverage for yourself.

Employee’s coverage is based on estimated payroll for the next year. Whether you are a sole proprietor or a corporation you have to inform and get WCB coverage for your employees.

Note: Depending on the province or territory your subcontractors/contractors may not be covered by WCB under you – phone WCB to find out. You need to ensure that they have their own WCB coverage before coming to work for you.

6. Step Six – Talk to Your Insurance Agent

You will need liability insurance for your business if clients/customers are coming to your place of business. You may also need this depending on where you work, eg. working onsite in a gold mine operation or in the oil patch. If you are in business it is best to talk to your insurance agent to ensure that you are covered – this is especially true if you are in the trades industry. If you work out of your house, talk to your home insurance agent about your policy to ensure it covers a home office. Also, check zoning with the town you are in to see if your zoning allows you to have a business in your home.

7. Step Seven – Set up Business Bank Accounts

It is essential to keep your business separate from your personal. Open a business chequing account. If you combine both personal and business in one account it is way too easy to make mistakes on what is business and what is personal. If you are ever in an audit situation then not having it separate is going to cause you more time and problems as you will have to prove each deposit or withdrawal even if it was your personal money or personal expenses.

Open a savings account right in the beginning as well. Transfer 15% of each deposit into your savings. This 15% pays for your GST payments and income tax at year end. If you have employees you will want to transfer at least 22% into this account so that you also have money for your employee remittance that you are required to do monthly. This account ensures you always have the money to pay what is owed to the CRA and therefore saves you from getting into tax trouble.

8. Step Eight – Find an accountant/tax preparer

You can hire a bookkeeper or an accountant/tax preparer to do your bookkeeping and taxes for you. Your bookkeeper will also be able to do your payroll for you. Ensure you ask for references before hiring and also ensure you ask for monthly statements so that you know where your business stands financially.

You are responsible for your own taxes and the finances and taxes of your business, ensure the person you hire is working for you and doing what is necessary.

A note here – you can do your own bookkeeping and tax as well by using any of the software available. If you are a sole proprietor then your tax is part of your personal tax. If you are incorporated and not selling your shares on the stock market you can also use T2 software to do your own tax.

9. Step Nine – Refine Your Elevator speech

Here is a simple formula for creating your elevator speech (your introduction to others about your business):

a. Who are you – what is your business name?

b. Who you serve – who do you help and/or who are your customers?

c. What is your target market’s greatest problem – in providing your products/services are you solving a problem for your customers?

d. What are the ramifications of that problem – what happens if that problem is not solved?

e. What is the solution you provide – what does your business do to provide relief or fix the problem?

f. What are the benefits of that solution – why, is you fixing the problem, a benefit?

Answer each of these and then refine it down to 2-3 concise sentences.

10. Step Ten – Business Cards

Business Card tips:

· Can you read your card in low light – this may be the case various times if you are handing them out in a parking lot, in a restaurant, etc.

· Make sure the information is correct – if you change addresses, email, phone number, get a new cell then change your card.

· Another consideration is that we are electronic everywhere now so can your card be scanned so that it fits into a database. Try scanning it yourself and see if it works into your email program.

· Make sure you’ve given yourself a title besides “owner”. What are one or two words that say what you do? Eg. Garden maven.

· Use the flip side. Don’t forget the other side of the card. What will appeal to your customers? A tag line, list of services, joke, discount, etc. eg. Present this card for ___% discount  then you can personalize the discount right there in front of them.

11. Step Eleven – Set Up Your Recordkeeping

To set up your filing/recordkeeping system use an accordion box and label the box by month. The last few pockets label them as GST, payroll, tax, medical, personal expenses, etc. This is to keep all your business papers in one place each year.

Keep your receipts filed monthly with the bank statement in that same pocket in the file box as well as any government forms that pertain to that month. This saves time if you ever have to look anything up and shows that you are conscientious and have done due diligence for the record keeping for your business. It’ll also save you on bookkeeper/accountant fees. Also keep any travel logs, journals, appointment books, planning papers, etc. within that box of files for the year. Make a backup CD of electronic bookkeeping files and put it in the box. (You may want to do a yearly print out so you have a paper copy in case the backup fails.) Records need to be kept for a period of six years from the end of the last tax year to which they relate.

12. Step Twelve – Do a business plan

Get help if you need to, but do one. Your plan will bring to light things that you may not have thought about when imagining your idea in action. Your plan can also be used as a tool for future planning as well as contains information that you may need in your daily business operations; e.g. Employee job descriptions readily available when you decide to hire.