How to Start a Small Business in Canada | Part 2: Provincial Registration

This is the second of four blog posts teaching you how to set up your small business. In this post, we’ll discuss the rules surrounding provincial business name registration for small businesses in Canada. We’ll also clear up some misinformed information you may have heard regarding registration and go over provincial sales tax. Follow the rest of the blog series below:

• 1: Business Structure – Identifying & structuring your business
• 2: Provincial Registration – Registering your business name & PST/QST accounts
• 3: Federal Registration – Obtaining a business number & registering for GST/HST
• 4: Licensing & Insurance – Municipal business permits/licences & small business insurance

This post is informative only and is based on my knowledge and experiences. Please consult with a local professional for the best information for your business. This post may contain affiliate links, which means that I may earn a commission on any sales at absolutely no extra cost to you. Review our Policies for more info.

When to Register your Business

Once you have established that you are in fact running/starting a business and have decided on the business structure (we worked through these topics in Part 1), you may need to register the business provincially and/or federally.

I see a lot of misinformation and confusion about this topic, especially in various crafting and Etsy sellers Facebook groups. Many people reference a $30,000 sales threshold at which you must register your business or charge/pay taxes. Have you heard this number referenced in regards to registration and/or taxes?

Let’s talk about this a bit more. Here are two common variations of statements I see often from new sellers.

To address these statements, we need to first clarify two important things:

First, “registering your business” has two different aspects in Canada: provincial registration and federal registration. These are completely separate things, each with their own rules and procedures. Federal registration requirements will apply the same way to all Canadian businesses, whereas provincial/territorial registration requirements will vary depending on your location.

Second, “taxes” can refer to both income tax and sales tax (GST/HST/PST). These are also completely different things. Income tax is the money you pay to the government on your various sources of income: employment/salary, business profits, investments, etc. Sales tax is charged on purchases you make. If you are running a business, you may need to charge sales tax to your customers and then remit/pay that money to the government as it was collected on their behalf.

Many people either confuse the above terms or don’t clarify them properly when giving advice and cause the advice-seeker to misinterpret the information. That is why the “True or False” statements in the photo can cause a lot of confusion – they don’t clearly specify whether they’re talking about provincial or federal registration and sales tax or income tax. Let me answer the statements by first clarifying them:

“I don’t have to register my business federally if I make under $30,000 in sales.”

TRUE or FALSE?

• TRUE – If your worldwide sales are less than $30K over the past 4 quarters or in a single quarter, then you do not have to register for a business number with the federal government. I discuss this in more detail in Part 3: Federal Registration.
  • For provincial registration, there is no sales threshold. Requirements are based on your business structure (ex. sole proprietor) and your business name. Your sales volume is irrelevant here. Find more information about this below.

“I don’t have to pay income tax if I make under $30,000 in sales.”

TRUE or FALSE?

• FALSE – You are required to report all income that you make on your income tax. In Canada, there is no sales volume threshold at which point you must now start reporting that on your tax return. You can also deduct expenses from your income, so you won’t owe income tax on the full amount, just the profit. But you must report every penny in income.

“I don’t have to charge federal sales tax if I make under $30,000 in sales.”

TRUE or FALSE?

• TRUE – Federal sales tax requirements are the same as the federal business registration mentioned above. If your worldwide sales are less than $30K over the past 4 quarters or in a single quarter, then you do not have to sign up for an HST/GST account and start charging your customers sales tax. I discuss this in more detail in Part 3: Federal Registration.
  • A few provinces also have a separate provincial sales tax (PST/QST). Their registration requirements vary. We’ll discuss this in more detail below.

Provincial Business Name Registration in Canada

In Canada, provincial registration may be required for your small business.

If your business is operating under anything other than the owner’s exact name, you must register the business name with your provincial government. For a sole proprietorship, you can run the business under your own name without needing to register provincially. The only exception to this is Newfoundland & Labrador – they don’t require you to register a business name unless you are incorporating.

Let’s look at a few examples. Say your name is Emily Brown. If you sell under the name:

• “Emily Brown” – you do not have to register that name provincially as it is your legal name.
• “Emily’s Creations” – you must register that business name provincially. Even though it is using part of your name, it contains other words as well.
• “Rustic Creations” – you must register that business name provincially as it is different than your own name.

Registering your business name provincially is quick, simple, and relatively cheap. The costs and processes differ slightly between provinces. Prices range from about $40-$110 for registering as a sole proprietor and typically last several years before they must be renewed. Partnership and Corporation registration fees are higher.

Some provinces require you to run a name search and/or reserve a name before registering. If your province does not require this, you may still wish to perform a search to avoid choosing a name that is already in use. The business name search/registration process will involve extra fees.

Provincial Business Registration Resources in Canada:

• Newfoundland & Labrador: Sole proprietors or partnerships are not required to register with the province, regardless of the name they are using.
• Prince Edward Island: You must first reserve a business name here and then register your business here.
• Nova Scotia: You must first reserve a business name and then register your business. Do these online here.
• New Brunswick: You must first perform a business name search and then register your business here.
• Quebec: Register your business online here. If your business name is in English, you must also include a French version of the name which will be considered the primary business name.
• Ontario: Register your business name online here. A business name search is recommended before registering, but it is not required.
• Manitoba: You must first reserve a business name and then register your business. Do these online here.
• Saskatchewan: You must first reserve a business name and then register your business. Do these online here.
• Alberta: Register your business name online here. A business name search is recommended before registering, but it is not required.
• British Columbia: You must first request and reserve a business name and then register your business. Find the steps online here.
• Northwest Territories: You must first apply for a name search & reservation and then register your business. Find the forms online here.
• Yukon Territories: You must first apply for a name reservation and then register your business. Find both forms online here.
• Nunavut: Complete a business registration using the form found here.

It is your responsibility to renew your registration before it expires, so be sure to make note of this date. If your business address changes, you will have to update the registration. If your business name or structure changes, you will have to submit a new registration.

Registering for a Provincial Sales Tax (PST/QST) Account

We briefly touched on Canadian sales tax above. Let’s dive into it a bit more.

There are two components of sales tax in Canada: a federal GST portion and a provincial PST (or QST for Quebec) portion.

For information on registering for a GST/HST account with the federal government, read Part 3: Federal Registration.

Some provinces (ex. Alberta) have no provincial tax, so they only charge the 5% GST. Some provinces (ex. Ontario) have combined the federal & provincial taxes into one harmonized sales tax (HST). The four provinces below have a separate provincial PST, which you must register for separately:

• British Columbia: Register here. If you are located in BC or make sales in/to BC, you must register for a PST account. Exceptions may apply if you are considered a small seller (typically with annual sales under $10,000).
• Saskatchewan: Register here. If you are located in SK or make sales in/to SK, you must register for a PST account. Exceptions may apply if you are considered a small trader (typically with annual sales under $10,000).
• Manitoba: Register here. If you are located in MB or make sales in/to MB, you must register for a PST account, unless you meet certain exceptions (such as annual sales under $10,000).
• Quebec: Register here. The same sales threshold of $30K that is used for GST/HST registration also applies to QST when determining your eligibility as a small supplier. Once you are no longer a small supplier, you must register for QST.

Once you have registered for PST/QST accounts with each of the provinces above, you will have to begin charging your customers the appropriate sales tax when fulfilling orders in/to those provinces. Keep records of all sales tax collected and any sales tax you spend on business expenses. You will have to file a PST/QST return with each province to remit/pay them the sales tax you collected on their behalf. Your filing frequency will be determined by your sales volumes and may differ between provinces. Be sure to file and pay on time to avoid interest charges and fees.

Next Steps

In Part 1 of this blog series, we identified whether your actions are classified as a business in the eyes of the Canadian governments and discussed the different business structures. In this post, we took a look at a common source of misinformation in regards to business registration and sales tax. We also established the rules for registering your business name with the provincial government and when you must set up sales tax accounts with the provincial governments.

Next, we will discuss the rules and process of federal business registration and GST/HST accounts. Ready to learn more? Head to “Part 3: Federal Registration”