Understanding when and how to register your business is crucial for legal compliance, financial stability, and to access benefits and protections that can help it thrive.
Step 1: business structureSole proprietorship: A business owned and operated by one person who is responsible for all legal and administrative obligations. Start-up and operating costs tend to be low, and Operations simple. Drawbacks include unlimited liability, difficulty obtaining credit, and sole responsibility. Sole proprietors report their income on their personal tax return.Partnership: A group of “partners” operating a business together, sharing its profits and losses. General partners are authorized to administer and represent the partnership; limited partners only contribute capital and have limited liability. Partnerships are common in some industries (i.e., law firms, medical practices), but do signify unlimited liability. Individual partners report their share of income and are taxed at their personal income tax rates.Corporation: An enterprise that generates profit for its shareholders. It is owned by shareholders, governed by a board of directors, and managed by officers (i.e., CEO, VP). You can incorporate provincially and/or federally. Incorporation offers advantages, like limited liability for constituents, easier access to capital, and lower tax rates—roughly 12% for small businesses in Quebec. However, it’s more expensive and complex to start up and operate.Non-profit: An entity that operates for a specific mission or purpose, such as charitable, educational, religious, or social goals, rather than for the purpose of generating profits for its stakeholders. Surplus funds are typically reinvested into the organization to further its mission.Step 2: business registration
Except for sole proprietorships that include the owner’s first and last names (i.e., May Willis Design), all businesses must register in-person (at a Registrar’s office) or online within 60 days of beginning business activities. Tip: when registering online, use the “find an enterprise” function to search allowable business names.Bonus: Quebec incorporation automatically registers your business in Quebec!Step 3: GST/QST registration
GST/QST Registration is required if your business generates more than $30,000 in annual revenue. If this applies, you must collect and remit sales taxes on the government’s behalf.You can register for GST/QST via revenu quebec.ca. Tax remittance schedules vary, depending on the volume and value of your transactions.The good news: you can claim GST/QST paid on your business expenses come tax time.Registering a business in Quebec is important for legal and financial reasons, and for fostering trust with customers. Need guidance? Consult our helpful experts at YES!