1) Choosing a Legal Entity
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.
2) Naming Your Business
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.
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3) Obtaining a Business Number
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:
- GST/HST - taxes that apply to goods, services, and sales.
- Payroll deductions - for employee tax contributions.
- Corporate income tax - if you operate as a corporation, the corporation pays taxes as an entity that is separate from yourself.
- Import/export - a tax account for use if you bring materials into the country or ship them to another country.
4) Provincial and Territorial Business Registration
Practically all provincial and territorial governments require business registrations. Contact the government offices for your area to learn applicable rules.
5) Deciding on Incorporation
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.
6) Be Aware of Specific Permits, Licenses, and Documents
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:
- Vehicle permits
- Non-disclosure agreements
- Employment agreements
- Commercial invoices
- Payroll and tax accounts and forms.
Some laws and regulations that apply to moving Canadian moving companies include:
- Conditions of carriage. You must meet the legal requirements for the transport of household goods via truck, including the creation and possession of bills of lading.
- Warehouse and Storage. Most provinces in Canada establish legal requirements for storing goods.
- Consumer Protection Act. You must comply with the legal disclosures and other provisions intended to protect the rights of your customers.
7) Other Things to Consider
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.