Starting a Small Business.......

[blueline]

I am looking for some info as to how to go about starting up a small business. I left my profession a few years ago, spent 20 years in an Engineering capacity and just had enough. Since then it has been temp contract jobs here and there, some survival jobs, etc. So now I am tired of the layoffs, downsizing (happened to me twice), BS interviews, crappy jobs, not having any luck trying to resume my career, feeling like I am over qualified for most of the jobs I apply for because of my background. Enough is enough. I want to work for myself.

All along, I had been buying/selling collectibles on ebay in my spare time to help out.

Well I am considering making that my full time gig now but am in need of some advice how to start this all up. I have several sources from which to acquire my product.

Can someone tell me how to start? i.e) I need info on getting a vendor license, possibly obtaining some funding to start up, tax advice (gst payments, etc), what expenses I am able to deduct, etc.

Should I meet with a business lawyer or someone like that? With ebay starting to clamp down now on sellers, I have to make sure I do this right.

Any help would be appreciated. Thanks.

 

[tboy]

RevCan has all kinds of resources for you.

First off you will need a Business Number BIN
Since you are selling goods (in Canada?) you will need a PST number also.
You should also pickup an accounting program like quickbooks or simply accounting to track your purchases, spending and expenses.
I'd also set up an account with FedEx, UPS and Purolator for your shipping. If you plan on shipping a lot, you could also do something through Canada Post.
If you're going to import a lot of goods, I'd also set up an account with a border broker to make it easy to ship back and forth. However, if you're only going to be buying single items of low value (under $1000.00) you won't need a border broker. That's only if you plan on making a lot of cross border shipments (into Canada).

You can apply for a BIN and PST number online.

For the record, since you're only buying and selling, you don't actually need to 'start a business'. You can simply be self-employed with your vocation being an online retailer. In fact, I think Ebay has a ton of resources for people just like you. They hold seminars quite often locally. Attend one of those and they'll tell you all you need to know.

 

[blueline]

Thanks Tboy .........some good info there

As for the ebay, I have been at that since 1999 so I have a very good handle on it along with shipping, etc. Unless instructed to do so otherwise, I always ship by Canada Post. More often than not, I purchase locally (i.e - within Canada, in and around Southern Ontario) and if I do buy from the USA, it is for very low end amounts.

So I know all about the ins and outs of ebay, I just would like to know more about the day to day 'running of the business' aspect. As I mentioned ( and as you did in your reply) the taxes - how do I handle that, the GST, what can I claim as business expenses, etc. Since I plan on working out of my home, what am I allowed to claim as business expenses (part of my mortgage?, utilities, etc?), my vehicle expenses, computer repairs, incorporating, etc. Info like that.

Is it recommened that I do seek some business legal advice so I know what types of expenses to keep track of?

thanks again.

 

[tboy]

I'm not a tax accountant by any means but here's some basics:
You can claim anything to do with running the business or in other words, expenses spent to earn income.

This includes:
a telephone line dedicated to your business or a portion of your home line
space (sq footage) of your home to house an office, and since you're shipping and receiving, space to ship from and space to store the items.
Utilities: hydro, etc
Vehicle: if you use it for business purposes (ie: go and pick up something or take it to a courier's depot)
COmputer and internet access
ALL packing materials used to ship the goods
Equipment to prepare the packing materials and store them (ie: warehouse racks, shelving units etc)
Office supplies, cellphone, etc
Professional services: ie: accountant, business consultant
Advertising services: website costs, flyers, business cards
Banking fees: service charges, interest on line of credit used to purchase goods

I wouldn't worry about incorporating your business. You don't need to. What incorporation does is limit your liability in case something goes wrong with the company. IE: it goes bankrupt or if you get sued due to negligence or something....(but from the sounds of it, you're exposure will be minor ie: an item not shipped etc).

GST is charged on EVERYTHING you sell to anyone in canada. PST is charged only to people you sell to in Ontario (or so I think). SInce the item isn't bought in another province, that province can't collect PST on the sale.

GST is paid quarterly or you can set up your own interval. But unless you plan on selling more than $30K worth of stuff, GST doesn't need to be collected but if you go 1 dollar over, GST is owed on everything, not just the dollar.

The gst forms are shown on the rev can site. You basically list what your sales were. What GST you paid out. What GST you collect, and the difference is either paid to you or you pay the government. For eg: I often take a deposit on a project, and not do the final invoice for x number of weeks until the project is finished. Therefore in 1 month, I may pay out more GST than I take in, but in other months I take in a lot of GST but only pay out a little. You might find that if you bought a number of items one month, and then didn't sell them for 3, you may find the same......

 

[blueline]

Great - thanks again Tboy. That is helpful.

 

[tboy]

I think the simplest thing for you to do is just operate as a self employed person for the time being. That is if you want to make it "official".

If you grow to a point where you want to become a registered dealer, then see about getting a business name etc but I wouldn't do that until you have a storefront or something.

Best bet would be to talk to a business consultant about the pros and cons of each (self employed/small business/incorporation)

 

[blueline]

I think the simplest thing for you to do is just operate as a self employed person for the time being. That is if you want to make it "official".

If you grow to a point where you want to become a registered dealer, then see about getting a business name etc but I wouldn't do that until you have a storefront or something.

Best bet would be to talk to a business consultant about the pros and cons of each (self employed/small business/incorporation)

That is most likely my next step, to meet with someone before I get started. Much appreciated.

 

[stang]

How to start a small business?


Start a large business and wait.

 

[tboy]

That is most likely my next step, to meet with someone before I get started. Much appreciated.

not to be smart about it, but you already HAVE started, you just didn't know it yet lol

 

[Lou Siffer]

tboy has given you some very good info, very generous of him. when i initially saw your post and started to respond, i decided i didn't really have time to write it all down for you. i don't disagree with anything that tboy said.

just a comment on the home based business expenses....anything that is purchased solely for business use (office supplies, dedicated phone/fax line, etc.) can be expensed 100% through the business...expenses such as utilities and mortgage are based on the percentage of your home that you use for business purposes (i.e. if you use 200 sq.ft. of a 2000 sq.ft. home, you can claim 10% of your mortgage interest and 10%of your utilities including things like maintenance (lawn care, cleaning service, etc.). But make sure that whatever space you claim to use is used solely for the business. If an auditor came to your home and saw that your "business office" was actually used for both business and personal use, they could penalize you for that.

Auto expenses are treated in a similar fashion. Technically, you should keep track of mileage on your vehicle and how much is personal and how much is business use. Although, there are rules that allow you to claim up to 70% of your personal vehicle expenses as business expense. Keep in mind that we're not just talking about fuel here. You can claim up to 70% of all vehicle costs, including maintenance, lease or depreciation, insurance, etc.

An accountant can go over your specific situation and advise you better.

A good accountant, one who asks you questions and gives you feedback and advice, as well as doing your taxes at the end of the year is well worth the money IMO.

 

[21pro]

blueline, i'm familiar with the auction industry... though i don't know how to make money in it. LOL... my business is a service business in the automotive sector and most of my growth came from royalties based from a few patents i have. i didn't make anything for my 1st 2 years for take home, but I now do over 8 figures in annual sales.

the best motivator for growing a hobby into a full time business is necessity. for me i had the patents and biz plan, but couldn't get off my ass to start (to busy with hockey and stuff)... i've found that i've had to take on enormous risk so that my entire livelihood was put at stake to get going... when you are on the edge of losing it all, it kinda gives you a kick in the pants

 

[Meister]

Damn, I feel for blueline. I don't want to go off on a rant again, but it is a pretty sad statement in a country like Canada that an Engineer who was downsized a few times is now diddling (sorry blueline) on Ebay for a living. You don't see that kind of thing happening with accountants, doctors, lawyers....

We have just abandoned our manufacturing base and nobody seems to care. McGuinty is busy setting up commissions to study the relevance of the "Lord's prayer" in school while hundreds of thousands of high paying jobs are disappearing. And before somebody chimes in with the good ole "unions are to blame", unions are just a small part of it. It's an entire manufacturing base that is disappearing. Let's all start selling stuff to each other on ebay or become insurance sales guys or real estate dudes or whatever other meaningless jobs are left in this province.

 

[C Dick]

The advice I always give to people starting a business is this:
- Start doing business first, not pleasing the government. Yes, you eventually have to file tax returns and things like that, but it is a mistake to spend the first three months doing that. Start by making sales, then do the other things when you have to.
- Keep good records of everything. Save all your paperwork, all your computer documents, take notes of all meetings, etc. This is handy for later when you have to document what you have already done.
- Find a good accountant. Mine pays for himself many times over.

 

[3Tees]

Everything said is exceptionally valuable, and spot-on. People have been very generous.

Only two things that I would add. First, if you sell stuff to the US or other countries, you do not charge them GST - I believe term is zero-rated. You'll claim the GST input tax credit on the item when you purchase it, but you don't charge for it when you sell to the person living in the US.

Second, on top of a good accountant, I recommend a good bookkeeper - they're as low as $35/hr, and for your business, it may be only a few hours every few months. A bookkeeper will help you enter transactions and set-up the accounting programs others recommend you purchase, and they know basic rules about deductions and can properly enter transactions so your more higher-priced accountant doesn't have to redo everything.

 

[Papi Chulo]

GST is charged on EVERYTHING you sell to anyone in canada. PST is charged only to people you sell to in Ontario (or so I think). SInce the item isn't bought in another province, that province can't collect PST on the sale.

Actually, everyone does not pay GST and some people in Ontario are exempt from paying PST.

Anyone purchasing goods for the provincial government or one of its agencies (IE Ministry of Corrections) are GST exempt. Any federal governmental agencies (IE Coast Guard) do not pay PST. Natives may be PST exempt. Anyone purchasing goods for resale, with a PST number may be PST exempt.

When goods are shipped out of province, they are PST exempt, however if someone from another province picked up the goods, they would be required to pay PST.

 

[tboy]

Actually, everyone does not pay GST and some people in Ontario are exempt from paying PST.

Anyone purchasing goods for the provincial government or one of its agencies (IE Ministry of Corrections) are GST exempt. Any federal governmental agencies (IE Coast Guard) do not pay PST. Natives may be PST exempt. Anyone purchasing goods for resale, with a PST number may be PST exempt.

When goods are shipped out of province, they are PST exempt, however if someone from another province picked up the goods, they would be required to pay PST.

OK, if the OP sells his collectables to the provincial government he shouldn't charge them PST but for the record, notice the word anyone? The governments are not anyone, they are a public office......

 

[Gyaos]

As for the ebay, I have been at that since 1999 so I have a very good handle on it along with shipping, etc.

The only advice I'll give you here with Ebay is to create an EXIT STRATEGY. If you want to start a business, large (better) or small (not better), get out of Ebay (those cocksuckers). You have to know within yourself if you can do it. Come up with a killer idea, then implement it and never quit. You need knowledge on what to do and how to do it. Funding? Friends, family, credit cards, etc. and create assets. A house is NOT an asset, it's a bank's asset. A car is NOT an asset, it's a depreciated piece of shit that eats up over priced gas and insurance. You have to look at how financially educated you have been, then do a 180 and look at it the other way. You will realize that advice given by 98% of the planet does not provide or lead to the end result you want. If it did, then that 98% would have successful businesses before you.

90% of businesses fail. You only hear about the successes. Is that discouraging? That answer determines whether you can do it or not.

You have to never quit. Everything else including the problems that will arise is nothing compared to quiting. Best of success.

Gyaos Baltar.

 

[Keebler Elf]

The Ontario government also has info about starting a small business on their website or a kit that they can mail.

Seconded.

From what I've heard, there's actually a lot of useful advice on their website for entrepreneurs.

 

[big dogie]

Clarifying a couple of points that were made by others. At start up you don't have to worry to much about the Gov stuff but keep very good records but don't wait to long as you may loose some credits, GST wise. You do not need to start to collect GST until $30,000 in anual sales but at start up you will probably spend more then you will make in GST so you might as well get that money back ASAP.

b d

 

[blueline]

Thanks .........

to all who replied with some advice. Much appreciated.