Chapter 3: Legal Framework

Laws and regulations affect every business, including yours. Licensing and permitting requirements enacted by governments aim to assure that moving companies have the necessary financial and ethical framework to warrant the public’s trust. Various tax and labor laws will also affect your business. Ultimately, the structure, location and size of your business will determine what rules apply to your moving company.

Different Canadian provinces, as well as US states, have different requirements for moving companies, so you will need to research what specific rules apply to you. It is best that you contact your local government offices to get information about what laws and regulations affect you. There are, however, some basic legal requirements needed to start your moving business. In Canada, for example, you must get a business number and a GST/HST account. This chapter will provide you with such guidelines, which will help you to avoid expensive penalties.

To register your business with the state, you will first need to choose a legal entity. You have several choices for the structure of your business that offer particular advantages and disadvantages, so carefully choose your organizational structure. Although you can change your entity later, the process is often complicated, so making the right choice now can save you much future pain.

When you organize your business as a sole proprietorship, you are the owner of the business and are, therefore, liable for all of its debts. All the profits, however, are yours. As a sole proprietor, no difference exists between you and the business, so creditors can make claims against all your personal and business assets.

Partnerships are unincorporated businesses that have multiple owners. A general partnership makes every partner liable for the debt of the company. Limited partnerships allow people to become part of the business without taking part in daily operations. Professional businesses can organize as a limited liability partnership to reduce their exposure to lawsuits. Except for the limited liability partnership, all partners in businesses share unlimited liability for the decisions made by the company and its debts.

If you organize as a corporation, you create a separate legal entity at the federal or provincial level. As a shareholder, you are not personally liable for the debts of your moving company. Also, the ownership of businesses organized as corporations are easy to transfer. Corporations, however, must comply with many regulations and are required to keep detailed records.

In the United States, you can organize as a limited liability company (LLC). Doing so is often the best way to organize your business because it offers the liability protection of a corporation and tax advantages. You might consider converting to a C corporation later on, however, if you need to attract external investors.

Before choosing your legal entity, make sure you research all the legal requirements and licensing costs for each available option.

You must choose a name for your business that is unique from other companies that are registered in your state. You should also verify your chosen name against existing trademarks, to avoid unnecessary legal penalties. Registering your business name and logo as a trademark gives you added protection that you can renew every 15 years and can prevent competitors from imitating or copying your brand.

When you register for a business number, you receive a unique nine-digit number that identifies your company with municipal and provincial governments as well as with the federal government. Your registration creates several accounts that you will need to use:

Practically all provincial and territorial governments require business registrations. Contact the government offices for your area to learn applicable rules.

If you choose to incorporate, you can do so at the federal or provincial level. A federal corporation enables you to engage in business using the same name everywhere in the country, although you must register in each province and territory where you do business. As you read above, a corporation protects your personal assets from corporate liabilities.

Your moving company will probably need to get one or more permits, licenses and documents to ensure legal compliance, and to protect your business. Some common documents include:

Some laws and regulations that apply to moving Canadian moving companies include:

As you prepare to open your moving company for business, you should acquire insurance to cover the operation of your business as well as any damages or injuries suffered by you, your staff or your customers. Also, you should consider attending and completing a professional certification course. Having both insurance and certification can make more individuals and businesses have confidence in your firm because they know that you have met a minimum level of confidence and have the ability to compensate them for any losses.

You should also create a customer contract that is customizable for every situation. The contract will identify the services that you will render as well as relevant time frames, deadlines and special handling. Your contract with each of your customers should also stipulate your price and terms of payment as well as the appropriate way to resolve disputes. Consider creating a template that you can easily reuse and adapt. Doing so will save time without compromising the rights of your business or customers.

You must also keep good bookkeeping habits to ensure that you have full financial accountability for your firm. Accurate books are essential for taxation purposes and for selling your business. If you lack sufficient bookkeeping and accounting skills, consider hiring an outside firm to do the job. Doing so will help you focus on the operation of your business and preserve your peace of mind.

As a business owner, you are responsible for creating a legal framework that keeps you compliant with all the applicable laws and regulations. Although acquiring licenses and permits, and creating documents can be a complicated process, you can speed up the process by using the Business Registration Online website operated by the Canada Revenue Agency. The site has everything you need in one place to complete your federal registration in Canada. Other provinces and territories may also have online registration services available. If you have any questions or doubts about compliance, meet with a business attorney or similar professional for advice and guidance.

This chapter has discussed many aspects of the costs associated with starting and operating your moving company. You cannot properly price your products and services or raise funds from banks and investors without a solid understanding of your expenses. Make sure you have included all your expenses, including selling costs, licenses and fees, computers and equipment, payroll, administrative costs, and a cash reserve for emergencies.

When you have a reliable estimate for your first year of operation, including sales and expenses, you can arrange to have enough money on hand to support your company through its first year. As you begin operating your business, you should continually monitor your revenue and expenses to improve your estimates. Failure to aggressively monitor your capital requirements can jeopardize your startup, leaving it starved of cash.

After calculating your prices, you can use your sales projections to estimate how long your company must operate before earning a profit. In the interim, you must use have enough cash to operate. If you have an insufficient of cash on hand, you can borrow money from a bank, credit union or other financial institution. You can also apply for a small business loan or search for partners or investors.

As you look for funding, make sure you consider modern options such as crowdfunding, angel investors, and business incubators and accelerators. These unconventional fundraising tactics have proven successful for many startups in your industry because they help overcome barriers associated with having sufficient business and personal credit. Your business plan will help potential investors learn about your startup and decide if they want to invest. In return, you can offer investors equity in your company or an ongoing share of your profits.

To conclude, investing the necessary time to learn about the types of costs your business faces will help you make adequate financial preparations. Your decision between opening as a startup or buying a franchise directly impacts the amount of money you need to get started as do accurate estimates of your initial and recurring expenses. The accuracy of your estimates can help you avoid unpleasant surprises while establishing pricing or searching for financing.

Much of your success as the owner of a moving company depends on accurate cost and revenue estimates. As you begin operations, you must keep accurate records so that you can use your bookkeeping data to verify or modify your estimates as you gain real-world experience. Although spending much time planning the financial aspects of your business might seem frustrating or boring, your effort will pay off when you have sufficient cash reserves and operating capital to carry you until you start earning a profit.