Starting a business is exciting – and full of decisions
Starting a new business brings a long list of decisions, and the choices you make in the first few months can affect your taxes, paperwork and flexibility for years. At Trehan & Company, we assist with all aspects of starting a new business, including selection of an appropriate legal structure, registration with taxation authorities, budgeting and cash flow analysis, and obtaining financing.
Clients who have set up new businesses with us have told us they value our advice on the pitfalls to watch for. That is the heart of this service: helping you understand the rules and your options before you commit, so you aren't undoing decisions later. We explain things in plain language and focus on what matters for your type of business.
Whether you're a tradesperson going out on your own, a professional opening a practice, a driver starting out with a ride-share platform or a family opening a shop, we help you set up the foundation properly. Once you're up and running, we can stay with you for bookkeeping, payroll, GST and year-end.
Choosing a legal structure
In Alberta, most new businesses start as one of three structures, each with different tax and paperwork implications.
| Structure | How it works | Things to consider |
|---|---|---|
| Sole proprietorship | You run the business yourself and report its income and expenses on your personal tax return using form T2125. | Simple to start, but your business and personal finances are closely linked and you are personally responsible for business debts. |
| Partnership | Two or more people carry on business together, and each partner reports their share of the income on their own return. | A written partnership agreement is important to set out shares, responsibilities and what happens if someone leaves. |
| Corporation | A separate legal entity, incorporated provincially in Alberta through a registry agent or federally, that files its own T2 return. | More set-up and annual paperwork, but it separates the business from you personally and can open up planning opportunities. |
Which structure is right for you?
There is no single right answer. A sole proprietorship is often the simplest way to test an idea or start small, while a corporation may make more sense once profits are steady, when you want to leave money in the business or when your work carries more risk. A partnership can work well for people starting together, as long as expectations are clear from day one.
We look at your expected income, your plans for growth, your personal tax situation, the risks involved in your work and how much administration you're comfortable with. We'll walk you through the trade-offs in general terms and confirm what applies to you, so the structure you choose fits both your business and your family's finances.
If you start as a sole proprietor and later decide to incorporate, that is possible too. Planning ahead makes the change smoother, so it is worth talking to us when your business starts to grow rather than after the fact.
Registering your new business
Once you have chosen a structure, a few registrations put your business on record with the province and the CRA.
- 1
Register your name or corporation
If you operate under a business name rather than your own, you register a trade name through an Alberta registry agent. Corporations are incorporated provincially through a registry agent, or federally.
- 2
Get your CRA Business Number
Your Business Number (BN) is your main identifier with the CRA. Program accounts are attached to it for each type of tax your business deals with.
- 3
Open the program accounts you need
Common accounts include RT for GST, RP for payroll and RC for corporate income tax. We help you work out which ones you need now and which can wait.
- 4
Decide on GST registration
Registration is required once taxable revenues exceed $30,000 in four consecutive calendar quarters, and taxi and ride-share drivers must register regardless of revenue. Others may choose to register voluntarily.
- 5
Set up payroll if you're hiring
If you will have employees, including paying yourself a salary from your corporation, you'll need a payroll account before the first pay. We can then look after your regular payroll.
Planning the numbers
A business plan only works if the numbers behind it are realistic.
Budgeting
We help you estimate start-up costs, ongoing expenses and realistic revenue so you can see what your first year might look like.
Cash flow analysis
Profit on paper isn't the same as money in the bank. We map out when cash comes in and goes out, including tax and GST payments, so you can plan for the lean months.
Obtaining financing
Lenders want clear, organized financial information. We help you prepare budgets, projections and financial statements to support your application, though the lending decision is always the lender's.
Bookkeeping set-up
We help you choose a practical way to record income and expenses from day one, so GST filings and year-end are straightforward.
Separate business banking
Keeping business and personal money apart makes your records clearer and your business expenses much easier to support.
Your first-year deadlines
New business owners are often surprised by how many dates come up in the first year. Missing them can mean penalties and interest, so we help you build a simple calendar from the start.
Your exact dates depend on your structure, your fiscal year-end, your GST reporting period and whether you have employees. We'll confirm the deadlines that apply to you once your registrations are in place.
- Sole proprietors: personal return due June 15, but any balance owing is due April 30
- Corporations: T2 return within six months of the fiscal year-end
- Alberta corporations: generally also an AT1 return with Alberta Tax and Revenue Administration
- Corporate tax balance: generally due two months after year-end, or three months for certain Canadian-controlled private corporations
- GST: a return for each reporting period once registered
- Payroll: remittances on your CRA schedule and T4s by the last day of February
Common pitfalls we help you avoid
Many problems in a new business come from small oversights rather than big mistakes: mixing personal and business spending, not keeping receipts, forgetting to set money aside for income tax and GST, or registering for accounts that don't fit the business. Each is easy to fix early and harder to untangle after a year or two.
Self-employed people are sometimes caught off guard by CPP, because they pay both the employee and employer portions. Drivers and tradespeople may under-claim vehicle expenses because they didn't keep a kilometre logbook, which is needed to support the business-use percentage. Corporation owners sometimes take money out of the company without a plan for how it will be taxed. We point out issues like these before they cost you.
Records matter from the very first receipt. Tax records and receipts should be kept for six years from the end of the tax year they relate to, so a simple filing system set up on day one saves a lot of stress later.
Support that continues after opening day
Setting up the business is only the beginning. We believe in building long-term relationships, because the more we know about your affairs and your organization, the better we can meet your needs as the business changes.
We encourage clients to contact us throughout the year with any challenges, so we can help in a practical, reasonable and efficient manner. Whether it's your first hire, your first GST return or the decision to incorporate, you'll have a firm that already knows your story.