To start a business is an exciting adventure, but it can also present challenges, particularly when it comes to navigating various regulations and obligations.
In Quebec, setting up a business involves several key steps to ensure the business is established correctly and in compliance with provincial laws, which will be discussed in this article.
We have gathered all the necessary information from government websites to make your life easier. Feel free to follow the table of contents to help you follow the steps to start a business. Happy reading!
Step 1: Understand Your Obligations before You Start a Business in Quebec
Step 1 for starting a business in Quebec is a crucial phase, which covers the registration of the business, its incorporation, initial tax obligations, and those specific to your field of activity. Understanding these elements is essential for the smooth running of your business.
What is Registration in Quebec?
Registration is an administrative process through which a business obtains official legal identification in a specific jurisdiction. This usually involves registering the business name, its activities, its address, and other relevant information with a government authority. Once registered, the business receives a unique business number that distinguishes it from other legal entities.
Generally, any business must register with the business register managed by the Registraire des entreprises. This register centralizes information concerning most commercial entities operating in Quebec. By registering, you obtain a Quebec business number (NEQ), which is a unique ten-digit identifier that facilitates the identification of your business by public entities and your business partners.
Your NEQ facilitates your interactions with various Quebec government ministries and agencies, making your registration for various government programs and services easier.
However, registration is not mandatory for certain legal forms of businesses, such as sole proprietorships operating under the owner’s name, legal entities under public law, partnerships, and associations or other groupings of people. Moreover, exceptions exist for individuals who operate a retail tobacco outlet or a tanning salon, who must register even if they operate under their own name.
What is the Incorporation of a Business?
Incorporation is the creation of a new legal entity, typically a business. This includes the preparation and filing of official documents, such as the company’s articles or charter, which describe the nature of the business, its purpose, its capital, its management structure, etc. Once incorporated, the business is considered a separate entity from its owners, with its own rights and obligations.
Businesses in Quebec can operate under several legal forms, some of which are considered legal persons. These entities have a unique status as they are legally separate from their members or shareholders and have their own rights and obligations.
If your intention is to create a corporation or a non-profit organization, it is necessary to submit an application for incorporation to the Registraire des entreprises. If you wish to create a cooperative, your application for incorporation must be addressed to the Ministry of Economy, Innovation, and Energy.
It’s important to note that legal persons established under Quebec law are automatically registered when their incorporation documents are filed with the register.
Tax Obligations to Start a Business in Quebec
The tax obligations related to starting refer to the tax requirements that new businesses must meet when they start their activities.
In Quebec, new businesses are generally required to meet certain tax obligations towards the provincial and federal governments before launching their commercial operations.
Most businesses doing business in Quebec must register for the Goods and Services Tax (GST) and Quebec Sales Tax (QST) files, managed by Revenu Quebec. These registrations require businesses to collect taxes on all taxable sales they make and to remit these amounts to Revenu Quebec.
It’s important to note that if you are registered for the GST file, you are automatically registered for the Harmonized Sales Tax (HST) file.
If you employ workers, you are required to makewithholdings from the wages you pay to your employees and pay employer contributions. Before you start making these payroll withholdings, you must register with Revenu Quebec’s source deduction file.
Obligations by Industry
Industry-specific obligations refer to regulations, legal requirements, and compliance standards specific to a business based on the field in which it operates. These obligations may include, but are not limited to, obtaining specific licenses or permits, complying with safety or quality standards, adhering to specific ethical codes, or complying with environmental standards. Failure to meet these obligations can result in legal sanctions, fines, or even business closure.
The field of activity of your business plays a crucial role in determining the various obligations to be met, including those related to permits and licenses. Therefore, it is essential that you inform yourself about the obligations specific to your field before launching your activities if they are related to:
- Retail Trade
- Food Services and Drinking Places
- Transportation Services
- Professional, Scientific, and Technical Services
In summary, registration, incorporation of your business, understanding fiscal and sector-specific obligations are fundamental elements for starting a business in Quebec. These steps lay a solid foundation for the growth and success of your business.
Let’s now move on to step 2, related to the legal form of the business.
Step 2: Choose the legal form of the company
The second crucial step in the process of creating a business in Quebec is choosing the legal form of your business. This choice is crucial because it will not only determine the legal and tax obligations of your business, but also the way it will be managed and operated. The following table presents the different legal forms available and gives a brief description of each to help you make an informed decision.
|Individual operating a sole proprietorship||This is a sole proprietorship, where the individual is both the owner and the operator. They alone bear the risks, benefit from all the profits, and are responsible for all the debts.|
|Corporation (also called “company” or “legal person”)||A legally distinct entity with independent rights and responsibilities. Its main objective is to generate profits for its shareholders, who own shares in the company in the form of stocks.|
|General partnership (G.P.)||An association of two or more people running a common business with an equal distribution of profits and losses. Each partner shares equal responsibility in the business.|
|Limited partnership (L.P.)||A company composed of active partners, called general partners, and passive partners, called limited partners. General partners have unlimited liability, while limited partners are only liable up to the amount of their investments.|
|Partnership||An unincorporated company where each partner acts on behalf of all other partners for the common interest of the business.|
|Non-profit legal person||A grouping of individuals engaged in activities without the intention of making a profit. The entity is legally distinct from its members and has no shares to distribute.|
|Co-ownership syndicate||A legal entity composed of all the co-owners of a condominium building. Its mission is to preserve the building, maintain and manage the common areas, and conduct all operations of common interest.|
|Association or Group of Persons||A union of two or more people gathered around a common goal or interest.|
|Cooperative||A legal entity composed of a group of people with common needs, and operating a business together in a democratic and egalitarian manner.|
|Trust operating a commercial business||An entity that conducts a structured commercial activity with a view to making profits. The trustee manages the assets of the trust for the benefit of the beneficiaries.|
|Foreign company||A foreign company is a corporation that has been established outside of Quebec but conducts business in the province. It must respect local laws and may be subject to specific restrictions or obligations.|
|Mutual society||A mutual society is a non-profit organization run for the mutual benefit of its members. It can be used for financial services, insurance, health, education, and other services to its members.|
|Religious corporation||A religious corporation is a religious organization that has been legally incorporated to facilitate its management and operations. It is often used by churches and religious charitable organizations.|
|Trade union||A trade union is an association of workers formed to protect and promote their rights and interests. Trade unions negotiate working conditions, including wages and social benefits, with employers.|
|Union, federation, or confederation||These are groupings of associations, unions, or other organizations that unite to achieve common objectives. They can have a wide range of objectives, from political activism to the promotion of workers’ rights.|
|Legal person incorporated in Quebec before 1994||This is a business or organization that was legally incorporated in Quebec before the year 1994. It is subject to the laws and regulations that were in force at the time of its constitution, as well as any changes made since then.|
The legal structure you choose for your business is crucial as it affects your tax responsibilities towards Revenu Québec, especially in terms of taxes, levies, and source deductions. Please consult their website page according to the chosen legal form:
Once you have made your choice, it’s time to choose a name for your business!
Step 3: Choose a Business Name
It is important to be aware of the rules for choosing a business name (or trade name). You can also request a name reservation from the business registry.
Definition and rules applicable to the business name
The term “business name” refers to a word or combination of words used to identify a business and distinguish it from other businesses.
According to information from the Quebec government’s website, a business name in Quebec must be in French and comply with the Charter of the French Language, this is a prerequisite for obtaining legal personality. This name can represent various entities, such as a legal person, a sole proprietorship, a partnership, or another type of grouping.
If a business uses another name to identify itself in Quebec, this trade name must also be declared to the business registry. If this name is no longer used, it must be removed from the registry. If the business does not have a French version of its name, it must declare a French name used for its activities in Quebec.
The business must comply with certain rules for its constitutive name and other names, according to the law and certain regulations. More information is available in the document “Business Names in Quebec” and from the Quebec Office of the French Language.
There are several criteria for choosing a business name. In addition to being in French, the name must not evoke an immoral idea, incorrectly indicate the legal form of the business, or falsely suggest that it is a non-profit organization or a public authority. The name of a legal person cannot be used by another entity in Quebec.
The registrar of businesses reserves the right to verify the actual use of names declared by a business.
A business name should not falsely suggest that it is related to another entity in Quebec or be likely to be confused with another name. If the name is misleading, an administrative remedy can be used, administered by the Registrar of Businesses.
Finally, a business name generally consists of three parts: a generic component that generally designates the business, a specific component that clearly distinguishes one business from another, and a particle component that provides precision, often related to the legal form of the business.
Request or cancel a business name reservation
Anyone can ask the Business Registry to reserve a business name. This reservation can serve several purposes: the creation, maintenance, merger, or reconstitution of a Quebec for-profit corporation. You can also reserve a name to modify that of an existing corporation. In addition, name reservation is also possible for the creation or modification of a Quebec non-profit entity.
The reservation of a business name is an optional process that prevents the use of this name by another business to create or modify a corporation or a non-profit entity. This is a pre-validation of the name, which could be refused later for various reasons. It is advisable to provide details about the nature, origin of the name, and a brief description of the business activities.
If you wish to reserve a business name, use the online service provided for this purpose. Please note that fees apply, either $24 or $36 if you want priority processing. Consult the rate schedule to see if the price has changed since this article was written.
In summary, choosing the name of your business is a key step in your business creation process. It is imperative that you understand and comply with the rules in place during this selection. You also have the option of reserving a name with the Business Registry, which allows you to secure the desired name for your business. Ensure that the chosen name properly reflects your brand and value proposition, as this is what will be presented to the outside world.
Step 4: Registering and Incorporating a Business
The next important step in starting your business in Quebec is the registration or incorporation of your business according to its legal form. You will see a table compiling the possible steps and another section providing a link to start your business,
Register or incorporate a business according to the legal form
In this section, we present a detailed table that highlights the different legal forms, the regular rates in effect in 2023, and direct links to the specific procedures for the registration of each type of business.
It’s crucial to be well-informed about business registration and to be aware of new obligations for business transparency. Make sure to choose the legal form that best suits your business needs and financial situation. If you don’t want to take risks and find this topic too complicated, don’t hesitate to contact your accountant or your lawyer!
Start a Business Service
The “Start a Business” service, available only in French, helps you to fulfill the start-up obligations of a business, to follow your procedures and to know your obligations to the various ministries and organizations in Quebec. It includes several mandatory steps, such as answering a questionnaire, registering your business, enrolling your business in the files of Revenue Quebec, obtaining a clicSÉQUR identifier, etc.
Whether it’s through the table presented, which clarifies the different legal forms, their costs, and the specific registration procedures, or via the “Start a Business” service which offers step-by-step assistance, you have invaluable resources at your fingertips to effectively start yourbusiness in Quebec.
These tools not only facilitate navigation through the administrative formalities of launching a business, but they also ensure that you fulfill all your legal and regulatory obligations with the various ministries and organizations in Quebec. By using these resources, you can ensure that your business starts on a solid and legal foundation, ready to grow and succeed.
Step 5: Prepare for the Next Steps
The final step, “Prepare for the Next Steps,” encompasses crucial elements of the business startup process. From registration with Revenue Quebec’s files, obtaining the necessary permits and licenses, to opening an account with the Canada Revenue Agency, these essential steps are the final part of your preparation to successfully and compliantly enter the business world.
Register the business with certain Revenue Quebec files
If your business conducts commercial transactions in Quebec and the total of your business income and that of your partners exceeds $30,000, registration with the GST/HST and QST registries is mandatory. Click here to learn more. However, if your business income is below the $30,000 threshold, check this page: Specifics concerning the small supplier.
Obtain a permit, sticker, or registration certificate
In certain circumstances, to conduct activities in the areas below it is necessary to have a permit, sticker, or registration certificate:
- Tobacco: See Tobacco Tax
- Fuel: See Fuel Tax
- International or interprovincial transport: See International Agreement on Fuel Tax (IFTA)
Take steps with other organizations
You may need to open an account with the Canada Revenue Agency, which could concern corporate income tax or import-export operations. This would result in the allocation of a federal business number. Opening an account with the Canada Revenue Agency can be done before or after your registration with one of Revenue Quebec’s files.
If you employ people, you will also need a dedicated account for source deductions.
For all other organizations, the online service “Start a Business” from Entreprises Québec, as mentioned in step 4, allows you to take steps with different ministries and organizations.
Depending on the type of activities your business conducts, it may be necessary to obtain permits or licenses from various organizations to operate your business in Quebec.
Preparing for the next steps in creating a business is a complex process that requires time, effort, and a precise understanding of your legal and regulatory obligations. It’s important to note that, depending on the type of activities your business conducts, additional permits or licenses may be required. Keeping this in mind and using available resources, you are on the right track to ensure the smooth running and success of your business. Good luck in your entrepreneurial journey!
Once you have gone through these five essential steps, you will be well-placed to start a business in Quebec! However, launching a business is a continuous journey. As your business evolves, you might need to review your legal and tax obligations, like getting your T4A from Service Canada, modifying your legal structure, or adapting to new challenges and opportunities.
If you are a self-employed worker and still have questions about starting a business, take a look at our complete guide for self-employed workers.
By staying informed and proactive in managing these aspects, you will put all the chances on your side for your business to prosper. Good luck in this entrepreneurial adventure!