Starting up a new business can be exciting. However, you need to understand some common mistakes to avoid during the business registration process. So that you don’t repeat the same mistakes business owners make.
Business registration errors must be addressed. And if your registration process encounters any error, running the business plan smoothly will become difficult.
As of December 2022, there were 1.22 million employer businesses in Canada. Of these, 1.19 million (97.8%) were small businesses, 23,395 (1.9%) were medium-sized businesses, and 3,128 (0.3%) were large businesses. On average, 30.6% of small businesses created in the goods-producing sector survived at least 19 years, compared with 19.5% of small businesses created in the services-producing sector.
The main reasons for the survival of those businesses were strong action plans, effective business registration tips, and error-free foundations (registration and legal paperwork).
If you are thinking of starting up a business in Canada or going through the business registration process, first get your hands on the common mistakes to avoid during the business registration process. Understanding the pitfalls in business registration can help you a lot to grow your business in the promising landscape of Canada.
LEGAL STRUCTURE OF BUSINESS REGISTRATION IN CANADA:
Before getting into the details of mistakes in business formation, you should know about the legal framework of Canada.
While every province and territory has its own rules and regulations, federal laws are applicable everywhere in the country equally. Important federal statutes of business registration in Canada are:
- Canada Business Corporations Act (CBCA) for federal incorporation.
- The Income Tax Act Canada for the implication of taxes.
You must have to follow all the principles stated by these Acts to make your business a legal entity.
WHAT ARE THE COMMON MISTAKES TO AVOID DURING BUSINESS REGISTRATION?
Let’s discuss the 5 most common mistakes to avoid during the business registration process.
INACCURATE COMPANY NAME:
If you are starting up a new business, you should have a unique name for it. Even before the registration process, you should have a name that clearly reflects your business structure.
For this purpose, you need to understand the structure of your business. Whether it’s a sole proprietorship, corporate, Limited Liability Company (LLC), or any other. Based on that, choose a unique name.
Moreover, the trademark or logo of your business should not resemble any already existing business.
INACCURATE BUSINESS STRUCTURE:
Choosing a correct business structure can be counted as a common mistake to avoid during business registration.
Most people look for easy and quick alternatives for their business registration. They may choose sole proprietorship as it has the most quick and hassle-free registration process. But it gives no distinction between the owner and the business.
Whereas a corporation makes you file an article of incorporation or more paperwork. But it provides you with secure liability protection. Hence, instead of choosing a quick and easy process, choose a more secure business structure for success in the long run.
INCOMPLETE DOCUMENTATION:
Inaccurate or incomplete documentation can be counted as a mistake in business formation. You will have to submit many important documents while registering your business. They may include:
- Articles of incorporation.
- Shareholder’s agreement.
- Partnership agreements.
- Register the address for the office location.
- Proof of the renting in case the office location is rented.
- Employer Identification Number (EIN).
There can be many other documents including the above-mentioned ones. Double-check your all necessary documents beforehand to avoid business registration mistakes.
IGNORING TAX OBLIGATIONS:
Another common mistake to avoid during business registration is ignoring tax obligations.
It is very important to timely pay your taxes. Because it can result in huge fines and penalties. Your business requires the following documents for peaceful tax filings:
- A GST/HST registration.
- Payroll taxes.
- Corporate income tax filings.
You can also seek professional help from business consultants to avoid business incorporation mistakes.
NEGLECTING EMPLOYMENT REGULATIONS:
Employment regulations can be overlooked. It can also be counted as a common mistake to avoid during business registration.
If your business plans to hire employees, you should follow these important factors:
- Follow the rules and labor standards.
- Monitored payroll deductions.
- Safe and secure workplace environment.
- Ensured employment insurance.
- Abiding by the labor laws.
Following them can be proven as steps to successful business registration.
KEY TAKEAWAYS:
Starting a new business can be an exciting venture, but it requires careful attention to detail and thorough legal paperwork.
As you navigate the registration process, be aware of the common mistakes that can arise. Keeping track of these errors and addressing them promptly will help you build a strong foundation for your business and maximize your revenue potential.
To ensure a smooth registration process, follow our guidelines on common mistakes to avoid during registration. Additionally, learn how business registration can help your business grow. With the right approach, you can set your business up for success!
Contact Numeracy Accounting Solutions for more precise and professional help. With our business registration best practices, we make our client’s business go from zero to the highest possible revenues.