How to Start a Business in Canada: What It Actually Takes

Three options, and the choice has real consequences.

Sole proprietorship. Cheapest and fastest. You and the business are legally the same entity, which means your personal assets are exposed if something goes wrong. Fine for low-risk side work. Poor for anything where a customer could sue you.

Partnership. Same exposure, shared. Never do this without a written partnership agreement, regardless of how well you know the other person.

Corporation. More paperwork and more cost, but it separates your personal assets from the business, gives you more tax flexibility, and is generally what lenders and larger commercial customers expect to see. If you are hiring, taking on liability, or buying a business, this is usually the answer.

You can incorporate federally or provincially. Federal gives you name protection across Canada; provincial is usually cheaper and sufficient if you operate in one province.

Register your business name with your province. Costs vary but are typically modest — tens of dollars in some provinces, a few hundred for incorporation.

Do a name search first. In most provinces you will need a NUANS report for incorporation, which checks your proposed name against existing ones.

Your business number comes from the Canada Revenue Agency and is the single identifier everything else hangs off.

Then, depending on your situation:

• GST/HST account. Mandatory once you exceed $30,000 in revenue over four consecutive quarters. Many people register from day one voluntarily, because it lets you claim input tax credits on your startup purchases.
• Payroll account. Required if you hire employees. Not required if you work with genuine independent contractors, but the distinction matters enormously and the CRA applies real tests to it — control, tools, chance of profit, risk of loss.
• Import/export account if applicable.

This is where trades and home services differ from most businesses.

General liability insurance is effectively mandatory. One to two million dollars of coverage is standard, and most commercial customers will not let you on site without proof.

Licensing depends on the work, not the business. In Ontario there is no general handyman licence, but a Certificate of Qualification is required for electrical, plumbing, gas fitting and HVAC work. British Columbia regulates trades certification through its own framework. Alberta is comparatively light for general handyman services. If you are in construction-adjacent work, WSIB or provincial workers’ compensation coverage will likely apply.

Get this right before you start, not after. Retroactive compliance is expensive.

Most people underestimate working capital and overestimate how quickly revenue arrives.

The Canada Small Business Financing Program is the main federal route. It is a loan guarantee, not a grant — you apply through a bank or credit union, and the government shares the lender’s risk. The ceiling is $1.15 million: up to $1 million in term loans, of which no more than $500,000 can go to leasehold improvements and equipment, and within that no more than $150,000 to intangible assets and working capital, plus up to $150,000 as a line of credit.

A 2022 modernisation made intangible assets eligible, which included franchise fees — a change many loan officers still do not raise unprompted. There is a 2% registration fee, which can be financed, and a 1.25% annual administration fee.

The Business Development Bank of Canada is the other main source, and lends on terms conventional banks often will not. If a franchise is one of the routes you are weighing, franchise financing works slightly differently and is covered separately.

You can complete all five steps in a fortnight. None of them is the hard part.

The hard parts are finding customers before you run out of money, pricing work so it is actually profitable, and building the operational habits that stop a busy business from becoming a chaotic one. Those take years to learn, and most people learn them by making expensive mistakes.

Which leads to the question that belongs in this article and almost never appears in one.

There are three routes into business ownership, not one.

Start from zero. Full control, lowest upfront cost, highest failure rate. You are solving every problem for the first time, and some of those problems have already been solved thousands of times by other people.

Buy an existing business. You get revenue on day one, and you inherit whatever is wrong with it. Valuation is the hard part, and so is the handover — many small businesses are worth considerably less without their founder in them.

Buy a franchise. You pay for systems, brand and support, and give up some autonomy plus a percentage of sales in perpetuity. It is not for everyone, and any franchisor who suggests otherwise should be treated carefully.

The honest comparison is not “which is best” but “which failure mode can you survive.” Starting from zero fails slowly and privately. Buying an existing business fails when you overpay. A franchise fails when the owner will not follow the system, or when the system was not worth following. We have set out the full comparison between buying a business and buying a franchise in more detail.

Say you want to be in home services in Canada — a category with steady demand and fast payment.

Starting independently, you would register, insure yourself, buy tools and a vehicle, and start marketing. Realistic capital: $25,000 to $65,000. You would spend the first two years learning what to charge, which jobs to avoid, and how to keep good tradespeople interested in working with you.

Through an established system, the entry point is higher — in our case $105,520 to $213,824, including the first three months of operation — and you skip most of that learning. You also pay 9% of gross sales on an ongoing basis for the brand, the marketing fund and the technology.

Neither answer is universally right. But the comparison is the one to actually run, and very few people run it before choosing. If home services is the category drawing you in, the profitability maths for a handyman business is a reasonable place to start.

Register, get your numbers, insure properly, sort out licensing, and fund conservatively. Then spend your real energy on the part no checklist covers: getting customers and keeping them.

If the systems-and-support route interests you, the current territory list shows what is open.