Starting a Business in Canada

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Flock Free Nation

No nonsense information on small business.

Sep 27, 2011 - 2 minute read - Comments - legal

Copyrights In Canada

The Canadian Intellectual Property Office defines a copyright as:

Copyright is the exclusive right to copy a creative work or allow someone else to do so.

Copyright applies to all original literary, dramatic, musical and artistic works. These include:

  • books and other writings
  • music
  • sculptures
  • paintings
  • photographs
  • films
  • plays
  • television and radio program
  • sound recordings, such as records, cassettes or compact discs
  • performer’s performances
  • communication signals
  • computer programs

Copyright doesn’t apply to:

  • facts
  • themes
  • ideas
  • most titles
  • names
  • catch-phrases and other short-word combinations

It’s not necessary to register a copyright because a copyright automatically exists when the work is created. However, having a registered copyright is a signal to others that you own the copyright to the work. It can also make it easier for a company to find you if they want to license your work.

Generally speaking, copyrights last for the life of the author plus 50 years following death. There may be some exceptions in specific situations.

The copyright holder is responsible for enforcing his or her rights under the Copyright Act. This has important business implications for the copyright holder. If a multi-national corporation infringes on your copyright, it is your responsibility to take them to court to enforce your rights. This can be prohibitive for artists and entrepreneurs that don’t have the money to support this kind of court action. It’s something to consider when assessing the strength of your copyright protection.

For more information, you can download the Canadian Intellectual Property Office’s A Guide To Copyrights.

Sep 26, 2011 - 4 minute read - Comments - business planning

How To Quickly Test The Viability Of Your Idea

People come up with ideas for businesses all the time. These ideas need to be tested to see if they have a serious possibility of becoming actual businesses. The first thing I like to do is some rough calculations to see if there is sufficient profit involved to even consider the opportunity.

An idea needs to meet a certain threshold of profitability to even be worth looking into further. We each only have so much time in our day. If you choose to work towards launching a business that has low profit potential, you are giving up the opportunity of doing something more profitable. This profitability threshold will vary from person to person but you should have one based on your own situation.

I usually use a spreadsheet to do these simple profitability calculations but it’s not necessary to go that far. These are the typical “back of a napkin” calculations that business people have been doing for years. Use whatever method works best for you.

The first step is to calculate revenue. Let’s use a hypothetical business idea of selling musical instruments online through a website. Let’s say you think 10 instruments will sell every day at an average price of $75 and you will earn a 10% commission on each sale. That’s 10 x $75 x 10% = $75 per day.

Let say you were also going to run ads on your site using Google’s Adsense ad network. Lets say you are going to get 1,000 visitors to your site a day and 1% of them will click on a Google ad, and that Google pays $0.10 per click. That’s works out to 1,000 x 1% x $0.10 = $1 per day.

Let’s summarize.

Revenue Source Daily Revenue Monthly Revenue Annual Revenue
Commissions $75 $2,281 $27,372
Google Adsense $1 $30 $365
Total $76 $2,311 $27,737

The next step is to figure out what expenses will have to be incurred to generate this revenue. For this hypothetical business, we’ll be using a home office. There will be costs for web hosting, advertising, office supplies, professional services, bank charges and utilities. Notice that I haven’t mentioned any start up costs. For the purposes of this quick calculation, we are only interested in on going expenses that would be listed on a business’s income statement. Let’s assume the following:

Expense Monthly Annually
Advertising $250 $3,000
Bank charges $25 $300
Office supplies $20 $240
Professional Services $208 $2,500
Web hosting $15 $180
Total $518 $6,220
 

This works out to:

Income $27,372
Expense $6,220
Net income $21,152

So our rough calculations show that the business would make about $21,000 per year. Any salary for yourself would have to come out of this number as would any taxes and payroll deductions.

This amount would also have to represent the return on any investment you’ve made to get the business running. You need to get a return on your investment or you’ve just bought yourself a job. How much would that investment be? Fifteen or twenty thousand dollars? A site like this would need to have the ability for people to create accounts and post their items for sale on the website without interacting with a person. This requires advanced website development, which is beyond putting up a simple brochure-style website.

All of the numbers above are estimates and have not been researched. You might dispute that the assumptions I’ve made are accurate. This is where the use of a spreadsheet comes in handy as it is easier to run different scenarios and see the effects of different assumptions. You will have research the variables that go into your quick calculations based on the industry you are entering. The more accurate you can get your assumptions, the more accurate your overall result will be.

Don’t be overly optimistic with your numbers. It will be much harder to achieve a given level of sales or to keep expenses to a low level than you think. Be realistic.

The bottom line is that our hypothetical business appears to be not worth pursuing, given the assumptions that have been made. There is not enough income to pay a reasonable salary and to provide a good return on investment.

Sep 23, 2011 - 1 minute read - Comments - business news

B.C. Government To Add $3 Million to Venture Capital Credit (VCC) Program

The Ministry of Small Business, Technology and Economic Development administers the Venture Capital Program. Corporations investing in shares of a registered venture capital corporation or eligible business corporation can claim a Venture Capital Tax Credit (VCC).

Corporations may claim a tax credit in a taxation year equal to the lesser of:

  • the amount of the tax credit certificate issued by the Ministry of Small Business, Technology and Economic Development
  • provincial income tax otherwise payable

This credit only applies to provincial income taxes. If the credit cannot be used up against a single year’s income, it is possible to carry the credit forward for up to four years.

This addition of $3 million to the tax credit budget will allow more investments to qualify under the program.

Sep 22, 2011 - 1 minute read - Comments - business news

CYBF Creates YOU Innovate Canada Tournament

The Canadian Youth Business Foundation (CYBF) has created an innovation contest to promote Global Entrepreneurship Week, which runs from November 14th to 20th, 2011.

On September 26th, eligible participants will be asked to turn their minds to creating new value out of an everyday object. YOU Innovate Canada participants will use that object as the raw material to create a new innovation, define its value and submit a brief video about their innovation or the chance to win cold hard cash provided by Studentawards.com.

The contest has $25,000 in prizes.

  • Fourteen regional awards of $1,500 in cash
  • National cash award of $4,000
  • Trip to Liverpool, England to attend the Global Entrepreneurship Congress (March 2012)
  • Cash awards generously provided by Studentawards.com

Sep 21, 2011 - 1 minute read - Comments - business news

Ottawa Universities Get $1M To Launch Young Entrepreneurs Program

The Ontario Centres of Excellence has given $1 million to Ottawa’s Young Entrepreneurs, which is a partnership between Carleton University, Algonquin College, La Cité collégiale and the University of Ottawa.

The funds are intended to support the entrepreneurial ecosystem in Ottawa. Students and recent alumni can apply for funds to assist in business planning and to help with bridging the gap between initial start up and generating sales.

Each of the four participating universities have programs designed to assist entrepreneurs as they start and grow their businesses. Students interested in learning more about entrepreneurship and the programs available to support entrepreneurs, should contact the business college in their university.

Sep 20, 2011 - 1 minute read - Comments - government

How To Get A Business License in Saskatoon

Saskatoon does not currently have an online system for getting a license for your business. The City does participate in BizPal, which will ask you a series of questions about your business and give you a list of licenses and permits you need before starting up, but to get a business license you will have to communicate directly with City Hall.

The current fees for business licenses are as follows:

New Application Fee Annual Renewal Fee
Change in Location No Change in Location
Commercial business license $95 $95 $70
Home based business license $95 $95 $70

The application forms for a business license can be submitted in person or by mail. The forms can be downloaded here.

February 15, 2014 - The city now has an online application. See our recent post.