Brokentoy

My Cheat Sheet articles here are to answer some common questions that my friends and readers ask. It’s not meant to be the defining guide but hopefully it’s enough to put you in the right direction.

This first sheet is for any Canadian looking to set up a business as an individual:

Decide on corporation or sole proprietorship

Setting up a sole proprietorship is the easiest way for an individual to get started as a business. Corporations have more benefits when it comes to filing a tax return, but they’re are a lot more complicated and require a lot of planning before they can be registered. My choice is start small, and when I’m confident that my business will be a success then I’ll hire aaccountant specialized in setting up corporations to convert everything over.

Register online at the Canada Revenue Agency

Register here to to avoid all the hassle of paper forms and calling queues. If you’re in British Columbia, Ontario or Nova Scotia you can also share your information with the provincial equivalent and kill two forms with one click.

Sign up for a GST/HST/RST account

You might not want to rush into this step. If your personal and business revenue is under $30,000 a year then you qualify as a “small supplier”. You’re not obligated to collect taxes from your clients or customers but also can’t claim a tax credit for your business expenses.

Start saving those receipts

Save your receipts for everything. I started with a small envelope and now I’m up to an end table drawer full of this junk. It’s a pain to get out of the habit of throwing out receipts for small purchases but those small things can really add up. Give special attention to receipts for:

• office supply and computer purchases
• client lunches (even if your client is on email, IM, Skype,etc.)
• lease payments for cars you use for business travel
• rent for any living spaces you use as a home office
• gas, mileage to and from all business meetings

Put some income away for a rainy day

I learned this lesson the hard way. When you start making a steady income avoid the temptation to reward yourself the a new 17″ MacBook Pro or a new flat panel TV for your living room. There are always unforeseen expenses, and when you don’t plan ahead things can get real messy real fast when it’s time to file your return.

There’s always room for improvement

I’m no expert yet. At eight months into my business I’ve got a lot of surprises before I’d consider myself a seasoned business owner. Hopefully by my good (and bad) experiences can help you make the most out of your venture.

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