How to Start a Business in Toronto

August 29, 2024 / 5 mins read

So, you’re ready to be your own boss and start your own business in Toronto. Toronto is a city of neighborhoods, providing ambitious entrepreneurs with opportunities to succeed in store front locations. Or are you starting an online business based in Toronto?

Where do you start? How do you launch your Toronto small business?

Let’s look at how to start a Toronto business:

1. Research your business idea:

Who is your competition?
How will your Toronto business stand out from its competitors?
Who are your target customers?
What problem are you solving for your customers?
Do you have enough money to start your business?
How will your business be financed?
What market gaps can your business fill?

Here’s why you need to research your Toronto business idea: Data on new small businesses show that 21.5% of small businesses close before the end of their first year. About 50% of small businesses make it to five years and a third make it to 10 years in business.

Recognize the challenges you have ahead and prepare yourself for the ups and downs of launching a business.

2. Make a business plan: Yes, it takes work but it’s an important document to guide your new Toronto business in the right direction.

Think of it like a road map that you’ll follow to help you make the right decisions.

What’s in a business plan?

An executive summary: It’s an overview of your business plan.

Company profile: Your products or services, the market you will be serving, and any trends in your industry.

Sales and marketing plan: Your target customers and how you intend to market and sell to them – online, bricks and mortar or both.

Operations plan: Your location, equipment and machinery, production planning, research, and any other important information about your business.

Human resources plan: Do you need HR policies for your employees? How many employees are you planning to have and what policies you will have in place for them. How do you plan to recruit your employees, train them, and retain them?

Your business plan is the document you’ll give lenders and investors if you need financing.

3. What’s the ownership structure of your Toronto business?

Your Toronto business can be set up in one of four ways: sole proprietorship, partnership, corporation, or cooperative.

Sole proprietorship means the business is owned by one person -- you. You benefit from the profits alone, but you’re also responsible for all the debts and losses. It is the most common set-up for a new business in Toronto.

A partnership means two or more people own the business and it’s similar to a sole proprietorship. The rewards and risks are shared by the partnership.

A corporation is a separate legal entity from its owner(s). It limits the personal liability of those who own the company.

A cooperative is a corporation run by members who have an equal vote on business matters.

4. How are you financing your Toronto business?

Are you financing your own small business?
Are you getting a loan?
Combination of personal money and loan
Do you have investors? Are they getting a stake in your business?
Will you be relying on credit cards and lines of credit to fund your business?
Do you qualify for grants or subsidies?

It’s important to have your financing in place well before your open your Toronto business and know how it will affect you personally should your business have to close.

5. Will your Toronto small business have a physical location and/or will it sell online?

You will need to choose a neighborhood and a commercial location that suit what you are selling. You will also need to decide whether to buy or rent your location and how much you can afford to pay.

If your business will also be online or online only, you will need to get your website built, set up a domain name, and find a hosting company. Remember, your website will need to work intuitively and flawlessly for your customers to engage with what you are selling.

If setting up a website isn’t among your skills, hire someone who can competently do this for you and manage your business’s website.

6. Register your Toronto business

If your business has employees, facilities, or offices in Ontario, you must register using the Ontario Business Registry.

Search the Ontario Business Registry for free to find out if your business name is already taken.

You will be registered for a 9-digit Ontario Business Identification Number (BIN) from ServiceOntario.

You will need this number to incorporate, create an import/export account, register for an account with the Canadian Revenue Agency (CRA)

Your Ontario Business Identification Number (BIN) from ServiceOntario is different than a Business Number (BN) that is provided by the CRA.

7. Get your Toronto business a GST/HST number

You will need to collect GST/HST while doing business. It’s unavoidable unless you are classified as a small supplier, which is a business with revenues that don’t exceed $30,000 over four calendar quarters.

If you’re a small supplier, you can voluntarily register to collect GST/HST to avoid having to get a GST/HST number later as your business grows.

8. Get your business insured

If you own a small business in Toronto, Greater Toronto Area (GTA) or anywhere in Ontario, your Western Financial Group business insurance expert will give you top-notch commercial insurance advice at the right value for you.

If you are starting a business, Western will help you with the commercial insurance you need to protect your business so that you can focus on its launch.

Here are the insurance basics for small Toronto businesses:

Commercial general liability insurance is essential for your Toronto small business because a supplier or customer could get injured or their property damaged at your business.

If you were sued, commercial general liability insurance would cover the legal costs to defend the claim against your Toronto business in court, as well as costs to cover damages to compensate third parties.

What kind of risks does commercial general liability insurance cover?

Injury to a third party who is not your employee
Damage to someone’s property
Damage to rented property
Medical bills if someone is injured
Legal costs and settlement costs of liability lawsuits filed against you
Liability lawsuits related to slander and libel

Without CGL insurance, you will pay costs related to third-party injuries or damage out of your own pocket. Can you afford that as a Toronto new business owner?

Ask your Western Financial Group business insurance expert how much CGL insurance you need to protect your excavation business.

Commercial property insurance

Commercial property insurance protects your Toronto business from insured risks that occur, such as a fire, theft, vandalism, or storms. For example, if your business is vandalized with spray paint, commercial property damage could help cover the costs of cleaning off the graffiti.

You should consider adding a sewer backup coverage extension, which standard business insurance policies typically don’t cover, to protect your Toronto business.

Cyber liability insurance

Cyber liability insurance helps protect your Toronto small if you electronically store financial data like the credit card numbers of clients. Depending on the size of the breach and the information that was taken, the customers who are affected can hold your Toronto business liable and sue for damages.

Commercial auto insurance

If you’re driving your car to make deliveries as part of your Toronto business activities, your personal car insurance typically would not provide coverage in the case of an accident. Commercial auto insurance protects you if you are driving your car for deliveries or meetings with suppliers.

Business interruption insurance

This type of insurance supports you when your Toronto small business can’t operate due to a covered loss.

There are a number of losses that can force your business to shut down. Some examples are:

Damage to your equipment from fire or vandalism
A major reduction in revenue due to a client/supplier facing losses of their own
A disruption in your supply chain

Business interruption insurance can help with these expenses:

Payroll
Rent
Utilities
Property taxes
Alarm monitoring
Relocation of your business

Did you know? Fire is one of the biggest threats facing business owners. If your Toronto small business has damage or losses due to a fire, you can file a commercial property insurance claim to help cover your financial losses.

Did you know? Cyber-attacks are increasing against businesses in Canada and small businesses are at the greatest risk. Protect your business with cyber liability insurance.

Here’s an insurance checklist for Toronto small business owners:

Do you have the best business insurance rate that suits your business?
Do you have the right amount for your deductible and regularly review it to make sure it’s the right amount for your business?
Do you know the value of your equipment and tools and are they properly insured?
Are you or your employees using personal vehicles for your work?

What do I do if my Toronto business has an insurance claim?

Contact your broker immediately after any business-related mishap. Waiting to file a claim can confuse insurers about the severity of the damages to your business.
Know your policy so that when you contact your broker you are familiar with what will be covered or not.
Document the damage. Take photos right away and write down what happened.
Do not throw away damaged goods after taking photos. Keep the physical evidence so that your adjustor can see it.
Do not invite lawsuits. Don’t say anything that could be used against you, especially if you aren’t sure what happened.
Be honest about what your damaged property is worth. Damaged commercial property is generally valued according to its actual cash value or replacement value.

Western Financial Group has licensed BUSINESS INSURANCE EXPERTS to get your Toronto business the right insurance package. Our experts are available now to help you navigate the business insurance journey to protect your Toronto or Ontario business.

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