info@greatstartbookkeeping.com
Starting and registering a business is an exciting venture that can open up new opportunities for financial freedom, creativity, and self-employment. Whether you’re interested in a side hustle or want to build a full-scale company, Manitoba provides an excellent environment for aspiring entrepreneurs. This guide will walk you through the necessary steps to start and how to register a business in Manitoba. We will focus on key considerations such as sole proprietorship, business name registration, taxes, and legal obligations.
Why Start and Register a Business in Manitoba?
Manitoba is an attractive location for business owners because of its supportive government policies, low cost of living, and a strong economy. Starting a business in this province allows you to take advantage of various resources available to small business owners, including financing programs, business advisory services, and tax benefits.
Unlike many other provinces, Manitoba has its own set of regulations and steps for business registration, taxation, and licensing. Let’s walk through how to start a business, focusing specifically on this province.
Also, read: 10 Bookkeeping Tips for Contractors and Construction Companies in Manitoba
Choose a Business Structure
When starting a business in Manitoba, one of the first decisions you’ll need to make is choosing your business structure. The two most common structures are sole proprietorship and incorporation. of course, a partnership is another well-known option, so don’t worry, we will also talk about it.
Sole Proprietorship
A sole proprietorship is the simplest form of business. In this setup, the business and the owner are one and the same. This means that all business income and expenses are reported on your personal. Many entrepreneurs in Manitoba, especially those just starting, opt for this model because it’s easy to set up and requires minimal legal formalities. In fact, this is how Great Start Bookkeeping was first born.
Key advantages of a sole proprietorship include:
- Simple to set up: No need to formally register with the government if you operate under your legal name.
- Lower costs: There are no registration fees if you operate under your name.
- Tax benefits: Business income is taxed as personal income, which may simplify your tax filing process.
However, a sole proprietorship does come with some risks. Since there is no legal distinction between you and your business, your personal assets, such as your home or car, could be at risk if your business faces lawsuits or debts.
Partnership
A partnership exists when two or more individuals or corporations carry on business together with a view to profit. In Canada, the provinces have exclusive jurisdiction with respect to partnerships and, accordingly, each province has enacted its own specific partnership legislation.
All provinces recognize general partnerships and limited partnerships. For tax purposes, a partnership is not recognized as a distinct entity. Rather, the profits and losses of the partnership flow through, on a proportionate basis, to the partners, who must pay tax on these amounts in their personal tax returns.
Corporation
A corporation is a legal entity that separates the business from its owner/operator. So, when you incorporate your business you create a separate legal entity from yourself. This structure provides limited liability protection, meaning your personal assets are typically protected if your business encounters legal issues. Incorporation is generally recommended once your business starts earning significant revenue, or if your industry comes with a higher risk of liability.
In Manitoba, incorporation comes with additional costs, including government registration fees, and may require a more complex tax filing process. However, it can be worth it for the legal protections and potential tax advantages, especially if your business grows quickly.
How to Register Your Business In Manitoba
To register a business name in Manitoba, it is often necessary to reserve that name first. The Government of Manitoba enables online reservation and registration of business names with varying fees, according to your business structure.
*If you choose to operate your business under your name, you don’t need to register for a business name.
Here are the steps you need to follow to register your business name in Manitoba:
1. Do a Name Search and Choose a Business Name
This step is optional but I strongly recommend it. The idea is to do a name search to ensure that the name you desire is available. You can use the Manitoba Companies Office online search tool or visit the NUANS database of incorporated businesses. When selecting a business name, this must be unique and appropriate for your business.
Your business name should reflect the nature of your business and comply with Manitoba’s naming rules. For example, you can’t add Inc. or Corporation to your business name if you are a sole proprietor. Also, you can use words such as “org, bank, or university if this is not the legal and true nature of your business.
2. Submit a Request for Name Reservation
Once you’ve found a name you like and think is available, the next step is to request a Name Reservation report with the Manitoba Companies Office. The name reservation ensures that your name is set aside for you while you complete the registration process. They will reserve your business name for 90 days, giving you enough time to finalize the registration without losing your chosen name to another applicant. The fee for this service is $45.00, and you can submit your request either online (recommend it) or by mail.
3. Register your the Business Name
Once your name is reserved, you can then proceed to request to register your business. The registration process can also be completed through the Manitoba Companies Office either online, by mail, or in person. When registering, you’ll need to provide details such as the business structure (sole proprietorship, partnership, or corporation), the reserved name, and additional information related to ownership.
Once your business name request is approved, you’ll receive a 9-digit Business Number from Manitoba Companies Office. The fee for this service will depend on the business structure you selected. The Manitoba government provides a complete list of relevant forms and fees for registering a business.
Also, read: Financial Planning for Seasonal Businesses in Canada
Opening a Business Bank Account
Even if you start with a sole proprietorship, it’s advisable to open a separate business bank account. Although it’s not legally required unless you operate under a business name or incorporate, separating your business and personal finances can make bookkeeping much easier and help you stay organized for tax season.
A business bank account will also make it easier to track revenue and expenses, ensuring a clearer financial trail if your business is ever audited by the Canada Revenue Agency (CRA).
How to Open a Business Bank Account in Manitoba
The process of opening a business bank account in Canada is similar to that of opening a personal bank account. To do that you basically need to do the following:
- Bring your personal identification document
- Bring your business certificate or Master Business Licence (if you have registered a business name).
- Ensure that your account is solely for business-related income and expenses.
Using a dedicated business account will simplify your bookkeeping and allow you to present a more professional image to clients.
Tax Considerations: GST/HST and PST
Manitoba has its own tax system that you must consider when running a business, including PST (Provincial Sales Tax) and GST (Goods and Services Tax). You can also read our article about Manitoba GST and PST returns.
GST Registration
If your business earns more than $30,000 in a 12-month period, you are required to register for a GST account with the CRA. This applies whether you are a sole proprietor or incorporated.
Once registered or incorporated, you’ll need to start collecting 5% GST from your customers and remit it to the government. This can feel daunting at first, but setting aside this amount in a separate savings account will help you avoid surprises at tax time.
Provincial Sales Tax (PST)
In addition to GST, Manitoba charges a 7% Provincial Sales Tax (PST) on certain goods and services. As a business owner, you must register for a PST account if you sell taxable goods or services. This tax is collected on top of the GST and remitted to the Manitoba government.
Voluntary Registration
If your business makes less than $30,000 in a year, you are not required to register for GST. However, some business owners choose to register voluntarily, as it allows them to claim Input Tax Credits (ITCs) on business purchases. This can lower your overall tax burden if you make significant investments in your business.
Registering with the CRA: Business Number and Payroll
If your business operates beyond a sole proprietorship or earns more than $30,000 annually, you’ll need to register for a Business Number (BN) with the CRA. This number is used for tax filings, including GST/HST, payroll, and corporate income tax.
Payroll
If you hire employees, you will need to open a payroll account with the CRA and deduct the necessary taxes from your employees’ wages, such as income tax, CPP contributions, and EI premiums. This requires accurate bookkeeping, which is crucial for staying compliant with tax laws in Manitoba.
Hiring a bookkeeper for your business
Good bookkeeping practices are essential for any business, regardless of size. Whether you’re running a sole proprietorship or an incorporated entity, keeping track of your income, expenses, and taxes is critical to the success of your business.
As your business grows, consider hiring a professional bookkeeper to handle your finances. This can free up your time to focus on expanding your business and ensure that your books are accurate and up-to-date. This is where Great Start Bookkeeping comes in. We offer customer-tailored bookkeeping solutions for small to medium-sized businesses. Contact us today to learn more about our bookkeeping services.
Conclusion
Starting and registering a business in Manitoba is a straightforward process, but it requires careful planning and adherence to provincial regulations. Whether you choose a sole proprietorship or decide to incorporate, understanding the tax requirements, registering your business name, and keeping accurate financial records will set you up for success. By following these steps, you’ll be well on your way to building a thriving business in Manitoba.
Frequently Asked Questions
How much does it cost to register a business in Manitoba?
In Manitoba, it costs $105 to register a sole proprietorship or partnership: $45 for the Name Reservation request, plus $60 for the Business Name Registration. On the other hand, it costs $350 to register a Limited Partnership (liability) or an Extra-Provincial Limited Partnership, in addition to the $45 for the Name Reservation request. The Manitoba government provides a complete list of relevant forms and fees for registering a business.
How long does it take to register a business in Manitoba?
The whole process of registering a business name in Manitoba takes about 15 to 18 business days. However, if you pay an additional fee for expedited services, you can have this done in about 3 to 6 business days.
