What Licenses Do You Need When You Start a Business?

No matter what your company does or what legal structure you choose for your new business, there are likely going to be licenses and registrations that must be obtained or completed. How many are needed and how long they take to be approved will depend on the nature of your business. Many of the common and straight-forward licenses can be obtained almost instantly. While it can seem like there is a lot of paperwork involved, many of these applications can, thankfully, be completed online.

Some of the most common licenses required by businesses include:

Business name registration: This registration can be done on-line with the Province of Ontario. It is commonly referred to as a master business licence. The registration must be renewed every 5 years. If you change business structure you will need to renew the license at that time.

Ontario Employer Health Tax: If your business has employees you will need to register for the Employer Health Tax which requires employers to pay tax on remuneration paid to its employees and former employees. In general, eligible employers are exempt from Employer Health Tax (EHT) on the first $400,000 of annual Ontario payroll.

Workplace Safety and Insurance Board (WSIB): Most businesses in Ontario need to register for the WSIB no-fault insurance program when they hire their first employee. Sole proprietors, partners in partnerships and executive officers are not eligible for WSIB coverage so no premiums need to be paid.

Business Number: You will need to obtain your Business Number (BN) from the Canadian Revenue Agency. Once you have your BN number you can obtain your GST/HST number if your annual sales exceed $30,000. Your BN number will be used for collecting HST, Canadian Pension Plan (CPP) & Employment Insurance (EI) contributions and paying income tax.

Industry specific licenses: There is a huge range and variety of business license requirements that could apply to your business. Examples such as a liquor licenses for bars, a certification for a trade such as an electrician or a license for professions like accountants are fairly well-known. Others can catch you by surprise. For example, bar owners must have a license from SOCAN in order to play music that is copyright protected. This Canada Business Network web site has a useful search tool to determine what industry specific licenses you may require. Local business owners can also check out the City of Ottawa website for certain types of business that require licences and permits. Approval of licenses for many of businesses can require inspections for fire, health & safety and building standards and other.

Many of the licenses and registrations can take time and it may be tempting to start operating before they are all acquired. But the potential risk is high as financial penalties for non-compliance can be severe and there is always the risk that certain licenses or permits will not be granted and the business will be shut down.

Mike D’Aloisio