1. Guide to New Business in British Columbia
Employment vs. Self-employment:
From Canadian tax point of view, it’s an important issue for a Canadian resident
particularly for new immigrants to decide between employment and self-employment.
Canadian laws differentiate differently between employment and self-employment.
Employment starts when you are hired or start working for someone. You are called
employee as long as you have limited involvement with that business particularly in
decision making, risk taking and profit sharing. Whereas, self-employment starts when
you decide your own schedule of work, own your set of tools, take risk and share profit.
Employed or self-employed is a very important decision for taxpayers. Before you
decide which way to proceed, you need to consider certain aspects risk and tax
implications.
Why self-employment?
Recently many Canadians have chosen the path of self-employment after experiencing
a period of slow economy, laid-offs, unemployment or under unemployment, workplace
harassments, job insecurity, low wage rate, and higher cost of living. The most
important benefit of self-employment over employment is independence. It would bring,
the chance to be your own boss and the opportunity to earn unlimited profit. These are
some good reasons which attracted many investors, skilled workers and professionals
getting into entrepreneurship. Canadian laws have been enacted to facilitate the growth
of small businesses to overcome the unemployment or under employment problems.
If you are ready to be an entrepreneur, first of all ask these questions to yourself. Are
you ready willing and capable of running a business? Are you prepared for a change in
your lifestyle? Are you willing to work extended hours? Are you willing to take risk? Are
you are willing to share profit and loss? Your decision to getting into a business is one
that you need to make by considering your own situation, family configuration, financial
stability and willingness to sacrifice some hobbies.
The most important implication of an entrepreneurship is risk taking. As a business
owner, you will be exposed to either unlimited or limited risk. Although there are ways to
minimize different types of risk, but remember there is also a fee involved with it. The
level of risk that you might feel comfortable with may not be the same for others.
Assessing your personal tolerance to risk taking ability is crucial before you step into
any business.
Few more questions that you might ask to yourself before entering into a business are;
• Why do I want to get into business ?
• What are my personal strengths and weaknesses to run the business profitably?
• What is level of my personal risk tolerance?
• What type of financial resources do I have or can I arrange in short time?

2. Business setup tasks:
After you know what you’re going to do, where, when, how and with whom, then the
following setup tasks need to be accomplished:
(i) Organizational structure
The basic business organizational structures Canadians choose to do business are:
• Sole proprietorship
• Partnership, and
• Corporations
At the beginning, you need to choose one business structure but you can change from
one structure to another later for business expansion, profitability, risk reduction or tax
minimization.
(ii) Name approval and business registration
Once you decided the organizational structure for your business, you need to choose an
operating name for your business. Usually three names are sent to the BC Registry
Services to get a name approved. Upon receipt of name approval, you need to register
your business. Businesses can be registered provincially, inter-provincially or federally
considering the nature and scope of business.
(iii) Business number
Following the business registration, your company will be automatically assigned with a
business number. In case, a business number is not assigned to your company upon
registration, you need to contact the Canada Revenue Agency (CRA) to obtain a
business number. A business number is a nine digit number that CRA assigns to your
company for identification purposes. Separate extensions of business number are
issued when the business is registered for
• Employees payroll deductions
• Goods and services tax
• Corporate tax return
• Import and export
• Dividends etc.
(iv) Registration with regulatory and licensing agencies
Once you have set up your business, you are required to register your company with
few regulatory and licencing authorities like:
• Workers compensation board
• City business license
• Provincial business licence(s)
• Provincial sales tax
• Excise tax

3. (v) Business Bank Accounts, credit cards and line of credits
As soon as your company is official, it’s a good idea to open a business bank account
separate from your personal bank account. A business bank account allows you to
separate your business and personal financial transactions. It provides a good level of
transparency should you ever be audited by CRA. Applying for business credit cards
and line of credit helps business to maintain its financial independency.
(vi) Legal and accounting services
Although most of the setup tasks could be accomplished by yourself, but some
preferred to obtain legal and accounting services at the first place. Partnerships obtain
legal services under Partnership Act to draft partnership agreement. Corporation hire
law firms to get the company incorporated under the Business Corporations Act. and
preparation of minute book. As these acts are complicated and require time to be
trained, so hiring professionals would reduce your risk of future litigation. Similarly,
hiring an accounting firm from very beginning would reduce your chance of
noncompliance with different taxation, regulatory and licencing requirements.
Once your company is official, you will start receiving different letters/forms. Therefore,
it’s time to learn the “ins and outs” about business services yourself. Some
entrepreneurs preferred to oversee the managerial aspects while segregating other
duties to family members, employees, lawyers, bookkeepers, accountants etc. If you
decide to do some of those tasks yourself, which is not unusual for small business, then
you should look for various sources of information or undergo training sessions
conducted by different organizations.
Source of Business Information
The following sources can give you invaluable information required for the planning
stage of your business. In most cases what it will cost you is the time and effort to
approach the various sources and request for the information you need.
• Community Futures, • Better Business Bureau • Chamber of Commerce • Professional
Associations • Ministry of Small Business • Service Canada • WorkSafeBC. • Financial
Institutions • Industry and Statistics Canada • Business Consultants, Law Offices and
Accounting Firms
Disclaimer: This article is presented as a general source of information only and is not
intended as a solicitation for business. It is always recommended that you consult a
Professional Accountant before deciding on any of the suggestions outlined above.
Firoze Shaik, MBA, PhD, CPA, CGA, is the proprietor of Firoze Shaik & Associates,
Chartered Professional Accountant. For more information on this topic or any other
business and taxation matters, please contact firozecpa@gmail.com.