Starting a business

Starting a business is an exciting life and career milestone. The rush of becoming your own boss, however, comes with the important responsibility of managing your finances.

Here are some important financial questions for you to consider :

  • Should you operate as a sole proprietor or should you incorporate? What are the tax implications of each option?
  • How can you ensure that your personal investments or family assets are not put at risk?
  • How much capital do you need to get started? Are you better off using your savings or borrowing?
  • Should you establish a line of credit – and what are the costs of drawing on it?
  • Where and how can you get financing?
  • What happens if you become incapacitated? Do you need “key man” or disability insurance?

As a business owner, you must contribute to the Canada Pension Plan (CPP) as both the employer and the employee. You are not required to contribute to Employment Insurance (EI) but can opt in if you wish.

Speak to an advisor with expertise in the area of business planning to help guide you through your decisions.

The Government of Canada has information about starting a business and CPP/EI rules for self-employed individuals.