Starting a small business in Simcoe: registration, HST and the $30,000 rule

Many immigrants in Simcoe County start a business with what they know how to do: cleaning, renovations, home-cooked food, beauty services, tutoring, transportation, design. The start is usually small and informal, but some rules apply from your very first client. Knowing the basics avoids headaches with the Canada Revenue Agency (CRA) later.

Self-employed, registered name or corporation?

In Ontario, the most common ways to start are:

• Sole proprietorship: you work under your own name. If you use a business name different from your personal name (for example, "Maria Cleaning Services"), you must register it on the Ontario Business Registry, online, for a fee.
• Partnership: two or more people share the business.
• Corporation: the business becomes a separate legal entity. This usually makes sense when revenue grows or there's more risk involved, and it's normally worth talking to an accountant first.

In every case, business income must be reported on your income tax return.

The $30,000 HST rule

In Ontario, most goods and services are subject to 13% HST. But businesses with low sales are considered small suppliers and don't have to register or charge the tax. According to the CRA:

• the threshold is $30,000 in taxable sales over four consecutive calendar quarters;
• if you go over that amount in a single quarter, you stop being a small supplier on the sale that put you over and must register and charge HST from then on;
• if you go over it across the last four quarters, you stop being a small supplier at the end of the month after the quarter in which you exceeded it;
• you can register voluntarily before that, which lets you recover HST paid on business purchases.

Track your sales month by month in a spreadsheet. Many people only realize they passed the threshold when they get a bill from the CRA.

Licences and insurance

Some activities require a licence from the municipality or specific agencies. Food prepared for sale, for example, follows public health rules, and services such as beauty treatments, passenger transportation and renovations may have their own requirements. Check with your town and the Simcoe Muskoka District Health Unit when relevant. Liability insurance also protects you if something goes wrong at a client's home or business.

Checklist to get started

• Open a separate bank account just for the business.
• Keep every expense receipt (supplies, fuel, phone, part of your rent if you work from home).
• Set aside part of each payment for the year's income tax.
• Register your business name, if you use one.
• Track the $30,000 HST threshold.
• Create a free profile on local directories so new clients can find you.

Where to get free help

The Government of Ontario runs Small Business Enterprise Centres, which offer free advice, workshops and, at times, funding programs for people starting out. Barrie and Simcoe County have this kind of service, and public libraries also offer entrepreneurship courses. For tax questions, the CRA has detailed web pages and a business phone line.

Have a business in the region? List your business for free and get found by the community.