Wondering what it takes to become an entrepreneur? Here’s a brief outline of starting a small business in Alberta.
Alberta has a lot more than oil and the Rocky Mountains — it has a rich small business community. Whether it’s tourism, artisanal wares, a retail store, or eCommerce, there are endless opportunities to start a business in this western Canadian province.
You might plan to take on entrepreneurship full time. Or, you may want to get into the side-hustle trend. Either way, this article is perfect for you! Below we discuss six steps to starting a small business in Alberta.
6 Steps to Starting a Business in Alberta
1. Research and Develop Your Business Plan
Your business needs a foundation. This foundation usually starts with a plan, which forces you to think through how your company will operate. It should include:
- Company Description: What does your venture plan to do? What’s your product or service? What are its missions and values?
- Market Research: What is your industry like? Are there trends or seasonality issues? Also, consider who your target audience is. Who else is vying for that demographic’s attention — who are your competitors?
- Financial and Operational Strategies: What are your profit margins? What do you expect your first-year financials to be like?
- Marketing Strategy: How will people find out about your business, products, and services?
- Risk Mitigation Plan: What happens if something doesn’t go according to plan? Do you need to purchase insurance?
2. Determine Your Costs
The whole point of your business is to make money. So, figuring out how much it costs to start your company is important.
The great part is that technology has made starting a business affordable. Sometimes, all it takes is a laptop and an internet connection. This, however, depends on what type of company you’re starting.
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Consider your costs for needs, such as:
- Products: The materials going into your product or service. This also includes expenses like registering a patent and manufacturing.
- Operations: The daily expenses that ensure your business can function. It includes legal and accounting, technology costs, your utilities, and more.
- Team: Some people can run their business solo. Others need to hire employees or independent contractors for help — this support can be pretty expensive.
- Marketing: Some tactics like social media can be free. But investing money into a website, logo, paid ads, and print materials could be worth the bucks spent.
3. Choose a Business Structure
Your business structure is a critical decision. In Canada, there are several structures to choose from, but the three most common are:
- Sole Proprietorships: This is common for new businesses because it’s simple. You’re the only owner, and you’re personally responsible for your business’ debts, contractual obligations, and liabilities. Company profits are also taxed as personal income. Sole proprietorships don’t require a name registration, unless you use a name other than your own.
- Partnerships: This structure allows two or more people to form a business without the complexities of incorporation. There remains no legal separation between you and your business. Debts, contractual obligations, and liabilities are all the responsibilities of you and your company partners. Often, however, these obligations and liabilities are divided based on a partnership agreement — and so are the profits.
- Corporations: A corporation provides your business with a separate legal entity. So, you and any partners are not personally responsible for your company’s obligations and liabilities. Your corporation has a unique tax return that’s separate from yours. To incorporate your business, you must either incorporate in Alberta or do federal incorporation.
Speak with your accountant or lawyer about the business structure that fits your needs. Many new entrepreneurs believe they automatically need to incorporate. But in actuality, a sole proprietorship or partnership could be more efficient because you’re not dealing with minute books, corporate tax returns, and other documents.
4. Choose and Register a Business Name
Selecting a good business name is essential. It is your company identity, but it’s also how customers and clients will find you through Google or your website. Consider whether your name is unique enough to find on a search engine and whether a domain name is available.
In Alberta, you need to register your business name as a sole proprietorship if you use a name other than your own. So, if you plan to call your freelance graphic design business “Fun and Affordable Designs,” you need to register it. Name registrations in Alberta are generally mandatory for corporations.
The cost to register your business name varies. It depends on your company structure and other factors. See Alberta’s registry agent product catalogue for specific prices.
5. Register for Sales Tax
Businesses that earn more than $30,000 a year must collect sales taxes like GST, HST, and PST and remit it to the Canada Revenue Agency. The specific type and amount of tax depends on where you and your customer or client reside.
If you open a physical store, you’ll most likely charge whatever your province requires. But online businesses need to be cautious of their customer’s location to charge the correct sales tax.
You can register for a GST/HST number online, through fax or mail, or by phone.
Your business can also voluntarily sign up for a GST/HST number. As a GST/HST registrant, you can claim input tax credits — effectively a rebate on the sales tax you pay on your business needs.
6. Buy the Right Insurance
Small business owners face a lot of risks. You might get sued or lose your expensive tools and equipment to a flood or fire. You can, however, take steps to mitigate these risks by buying a business owner’s policy.
This is a set of insurance policies designed to protect small business owners. It generally includes professional liability insurance, general liability insurance, and contents coverage:
- Professional liability insurance protects you from lawsuits by paying for legal fees and damage awards if a client sues you for negligence or misrepresentation.
- General liability insurance protects you from lawsuits similar to a professional liability policy. However, general liability insurance protects from bodily injury or property damage lawsuits. This includes slip and fall cases or if you damage a client’s expensive belongings.
- Contents coverage provides the replacement or repair costs if your business assets are lost, stolen, damaged, or destroyed.
These policies generally cover your risks as a small business owner. Depending on your company’s characteristics, you might further purchase policies like cyber liability, business interruptions, or product liability insurance.
It’s important to speak with an expert insurance adviser to understand your business’ risks. They can then set you up with the right insurance products.
Get a free quote and speak with one of our insurance advisers today. APOLLO’s custom coverage can help make the insurance part of running your business feel effortless. Find out how you can get covered in minutes with our quick, easy, and entirely online application process.
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