Question 1

Do I need to register a sole proprietorship in Canada?

Accepted Answer

If you operate under your own legal name (e.g., "John Smith Consulting"), you do not need to register a business name in most provinces. If you use any other name (e.g., "Maple Leaf Consulting"), you must register that trade name with your provincial business registry. Registration fees are typically $60–$100 and are required to open a business bank account and invoice clients under a business name.

Question 2

Should I incorporate or operate as a sole proprietor?

Accepted Answer

Incorporate if you need liability protection, plan to have employees or significant contracts, or want access to the federal Small Business Deduction (15% corporate tax rate on active business income up to $500,000). Stay a sole proprietor if you are just starting out, have low risk, and want simplicity — all business income flows through your personal tax return. Most accountants recommend incorporating once you consistently earn more than you spend personally.

Question 3

When do I have to register for GST/HST in Canada?

Accepted Answer

You must register for GST/HST once your taxable revenues exceed $30,000 in any single calendar quarter or over four consecutive quarters. You can register voluntarily before reaching that threshold, which lets you claim input tax credits (ITCs) on your business expenses. In Quebec, you must also register for QST (9.975%) separately with Revenu Québec.

Question 4

Is there an LLC in Canada?

Accepted Answer

No. The Limited Liability Company (LLC) does not exist in Canada. The closest equivalent is a Canadian Corporation (Inc. or Ltd.), which provides the same personal liability protection as a US LLC. Unlike US LLCs which can be taxed as sole proprietors, Canadian corporations are always taxed as separate entities — which can be an advantage through the Small Business Deduction.

Question 5

What is a Business Number (BN) and do I need one?

Accepted Answer

A Business Number is a 9-digit number assigned by the Canada Revenue Agency (CRA) when you register any business account. You need a BN to register for GST/HST, payroll deductions, import/export accounts, and to file corporate tax returns. You can register for a BN online at canada.ca/cra-business-registration. Getting a BN is free.

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