The side-hustle is taking off and you’re ready to take the plunge into Entrepreneurship. Okay great, have you considered all the startup costs? Many Entrepreneurs don’t budget at the onset (if at all) and the costs start adding up before a dollar is brought in. Our goal isn’t to scare you off, but assist you in making informed decisions with your limited time and financial resources.
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Sole Proprietorship / General Partnership Registration: There are nominal costs to register a business and business name. While you can do-it-yourself, considering using a guided service from Small Business BC to help you along.
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Incorporation: If plan to incorporate, be prepared to pay a Lawyer. Costs are driven by the complexity of needs. The incorporation will be straight-forward if you’re a sole shareholder, perhaps a wife or business partner and are okay with the standard Articles of Incorporation. There are cost-efficient online options such as Ownr available for incorporating, but expect those to be standard applications without any legal advice. If you’re planning to become a Certified B Corporation, incorporating is the time to do it.
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Legal Agreements: If you’re taking on investors or borrowing money from debtors, additional legal agreements such as SAFE Notes, Convertible Notes, Loan Agreements, Shareholder Agreements are required. Lawyers will be charge separately for these agreements.
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Business License: Every business is required to have a Business License with the cost varying by municipality. A licensed is required whether you operate in a commercial space or at home. And in some cases, a license is required as long as business is carried on in the city. A benefit of valid licensing is that you can qualify for government grants and local business awards.
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Industry-Specified Licenses & Permits: Depending on your industry, there may be additional requirements for Federal, Provincial, and Municipal licenses and permits. Consider license requirements for things such as import, export, construction, food & beverage, etc.
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Insurance: Often neglected as the benefit isn’t there until something costly happens. Insurance protects your hard-earned money against catastrophic events. Besides the standard policies for leasehold improvements, inventory, and equipment, there are coverages available for risks such as business interruption, cargo, product recall, cyber security, etc.
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Website: For some businesses, having a website is more important than a commercial space. While there are do-it-yourself options available such as Squarespace, don’t forget to factor in the full cost of developing a website. Perhaps you can DIY the coding and hire contractors to take care of the rest — branding, copywriting, SEO, etc.
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Accounting: Most people will want to start off with managing their own books. Consider things such as:
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Sales Tax: Register for Good & Services Tax (GST), Provincial Sales Tax (PST), US Sales Tax (if selling in the US). Determine when your business and if your product or service is taxable.
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Hiring Employees: Register for a Canada Revenue Agency Payroll number, WorkSafe BC. Setup an online payroll system such as Quickbooks Online Payroll for the ease of calculating payroll taxes and net pay.
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Bookkeeping System: Setup a system like Quickbooks Online to record your revenues and expenses. Good habits at the beginning leads to less work (re: less cost) when it comes to year-end.
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Banking: Determine the right bank and banking package for your needs. Ask your bank about things such as business credit cards, free e-transfers, international wire transfers, physical location for deposits, etc. A strong relationship with your banker will go a long way as your business grows.
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