Toronto offers a large and diverse customer base, access to skilled workers and opportunities in industries ranging from food and retail to technology and professional services. However, turning an idea into a functioning business requires more than registering a name.
To start a small business in Toronto successfully, you need to test your idea, choose an ownership structure, understand the costs, register correctly and confirm which licences, permits and tax accounts apply to you. The steps below will help you move forward in a practical order.
Test Your Business Idea
Begin by identifying a specific problem your business will solve. A promising idea should have a clear customer, a realistic price and a reason for people to choose it instead of an existing alternative.
Before investing heavily, speak with potential customers and research:
- Who is most likely to buy your product or service
- Where those customers live or work
- How much they currently pay for similar options
- What they like and dislike about existing businesses
- Whether demand is seasonal or consistent
- How customers normally discover and purchase the product
You can test an idea with a limited launch, sample, prototype, consultation or small group of customers. The goal is to collect evidence before committing to a commercial lease, extensive inventory or expensive equipment.
Prepare a Simple Business Plan
A business plan explains what you are building and how it is expected to earn money. It does not have to be a lengthy document, but it should answer the questions that will guide your decisions.
Include the following sections:
| Business plan section | Questions to answer |
| Business concept | What will you sell, and what problem will it solve? |
| Target market | Who is your ideal customer in Toronto? |
| Competitor research | Which businesses already serve this market? |
| Pricing | What will you charge, and why? |
| Marketing | How will customers find your business? |
| Operations | Where and how will the business operate? |
| Startup costs | What must you purchase before opening? |
| Monthly expenses | What will the business cost to operate each month? |
| Sales forecast | How many sales can you realistically expect? |
| Break-even point | How much revenue is needed to cover expenses? |
The Toronto Small Business Enterprise Centre provides consultations and business-plan reviews. This can be useful when you need feedback before investing or applying for financing.
Estimate Your Startup Costs
Many businesses struggle because their owners underestimate how much cash they will need before sales become consistent.
Separate your expenses into one-time startup costs and recurring operating costs.
| Possible one-time costs | Possible recurring costs |
| Business registration | Rent or coworking costs |
| Equipment and furniture | Utilities and internet |
| Initial inventory | Inventory replacement |
| Renovations | Insurance |
| Licence and permit fees | Payroll |
| Signage and packaging | Marketing |
| Professional advice | Bookkeeping and accounting |
| Website development | Software subscriptions |
| Rental deposits | Loan repayments |
Create three estimates: a minimum-cost launch, a realistic launch and a higher-cost scenario. Include a reserve for unexpected delays and expenses.
Your projections should also account for personal living expenses. A new business may not provide its owner with a reliable income immediately.
Choose an Ownership Structure
The structure you select affects liability, taxation, administration and how the business can raise money.
| Structure | How it works | Important consideration |
| Sole proprietorship | One person owns and operates the business | The owner is generally personally responsible for the business’s debts and obligations |
| Partnership | Two or more people operate the business together | A written partnership agreement can clarify ownership, responsibilities and dispute procedures |
| Corporation | The business exists as a separate legal entity | Incorporation provides a different legal structure but requires additional filings, records and costs |
A sole proprietorship may be suitable for a person starting a relatively simple operation. A corporation may be considered when liability, outside investment, tax planning or long-term growth makes the additional administration worthwhile.
Review Ontario’s official explanation of business ownership structures before choosing. Consider consulting a qualified lawyer or accountant when the decision could create significant legal or tax consequences.
Select and Check Your Business Name
Choose a name that is easy to remember, relevant to your customers and flexible enough to accommodate future growth.
Before using it, check whether:
- A similar name is already being used
- The matching website address is available
- Appropriate social-media usernames are available
- The name could be confused with an established brand
- The name has an unintended meaning in another language
- The name follows applicable registration rules
Registering a business name does not automatically give you exclusive trademark rights. Businesses building a valuable or widely recognized brand may need professional advice about trademark protection.
Ontario generally requires a sole proprietorship to register when it operates under a name other than the owner’s own name. Requirements differ for partnerships and corporations.
Register Your Business
Ontario businesses can complete registrations and other transactions through the Ontario Business Registry.
The information you may need includes:
- Your proposed business name
- The business address
- A description of the business activity
- The names and addresses of owners, partners or directors
- Your selected ownership structure
- An official email address
- Identification or authorization information
Registering a business name, incorporating a company and obtaining a municipal business licence are separate processes. Completing one does not necessarily satisfy the others.
Keep copies of your registration documents and record renewal or filing dates. Some registrations must be renewed, while corporations have continuing filing and record-keeping responsibilities.
Get a Business Number and Required Tax Accounts
A business number, commonly called a BN, is a nine-digit identifier used for dealings with the Canada Revenue Agency. Not every new business will need every CRA program account.
Depending on your activities, you may need accounts for:
- GST/HST
- Payroll deductions
- Corporation income tax
- Importing and exporting
The CRA’s business registration information can help you determine which accounts apply.
Understand the GST/HST threshold
Most businesses that make taxable supplies must register for GST/HST after they stop qualifying as small suppliers. The general small-supplier threshold is $30,000 in worldwide taxable revenues, calculated according to CRA rules.
Registration timing depends on how the threshold is exceeded. Passing $30,000 in one calendar quarter is treated differently from exceeding it across four consecutive calendar quarters. Certain businesses may also face special rules.
A business below the threshold may be able to register voluntarily. Voluntary registration can allow an eligible business to claim input tax credits, but it also creates responsibilities such as collecting GST/HST, filing returns and keeping appropriate records.
Use the CRA’s current guidance on when to register and start charging GST/HST rather than relying only on an annual sales estimate.
Check Toronto Licences and Permits
Business registration does not give you permission to carry out every type of business activity. Municipal, provincial and federal approvals may also be required.
Licence and permit requirements can depend on:
- The product or service you offer
- Your business location
- Whether customers visit the property
- Food preparation or sale
- Construction or renovations
- Outdoor signs or patios
- Regulated professions or trades
- Music, entertainment or alcohol
- Transportation activities
- The handling of hazardous materials
The City regulates numerous types of businesses and trades. Search the City’s licence and permit categories and use BizPaL to identify possible requirements from different levels of government.
Do not assume that an online or home-based business is automatically exempt. The activities performed at the property may still be subject to zoning, public-health, safety or industry-specific rules.
Confirm Zoning Before Choosing a Location
A property’s zoning determines which activities can operate there. This matters whether you plan to rent a storefront, open an office, use an industrial unit or work from home.
Before signing a lease or purchasing property, confirm:
- Your proposed business use is permitted
- Customer visits are allowed
- Your planned operating hours are acceptable
- Parking or loading requirements can be met
- Your proposed sign is permitted
- Renovations require building permits
- Food, entertainment or other specialized uses need additional approval
The City’s zoning information and interactive map can provide a starting point, but some properties are affected by site-specific rules or older bylaws. When the use is uncertain, obtain confirmation from the City before making a financial commitment.
A lease being advertised for commercial use does not guarantee that your particular activity is permitted there.
Set Up Business Finances
Keeping personal and business transactions separate makes bookkeeping, tax preparation and performance tracking easier.
Set up a system for:
- Recording sales and other income
- Saving invoices and receipts
- Tracking expenses by category
- Monitoring GST/HST collected and paid
- Sending professional invoices
- Following up on unpaid accounts
- Preparing cash-flow forecasts
- Setting aside money for taxes
Create a monthly cash-flow forecast showing when money is expected to enter and leave the business. A profitable business can still experience financial difficulty when customers pay after major bills are due.
The CRA generally requires businesses to retain relevant records and supporting documents for at least six years, although some records must be kept longer. Review the CRA’s current record-retention requirements for your circumstances.
Review Insurance and Risk
Business insurance requirements vary, but operating without appropriate protection can expose the owner to significant losses.
Depending on the business, coverage may include:
- Commercial general liability
- Professional liability
- Commercial property
- Product liability
- Cybersecurity and privacy incidents
- Business interruption
- Commercial vehicle coverage
A home insurance or tenant insurance policy may not cover business equipment, inventory, visitors or claims arising from commercial activity. Review the policy before operating a business from your residence.
You should also use written agreements that clearly describe the work, price, payment schedule, deadlines, cancellation terms and responsibilities of each party.
Prepare to Hire Employees
Hiring creates obligations beyond paying an hourly wage or salary.
An employer may need to:
- Open a CRA payroll deductions account
- Deduct and remit income tax, CPP contributions and EI premiums
- Follow Ontario employment standards
- Maintain payroll and employment records
- Meet workplace health and safety requirements
- Register with the Workplace Safety and Insurance Board when required
- Provide required training and workplace policies
Review the CRA’s official payroll guidance before paying your first employee.
Calling a worker an independent contractor does not automatically make that person self-employed. The actual working relationship determines the classification, and an incorrect classification can result in tax and employment consequences.
Create a Focused Marketing Plan
A small business does not need to promote itself everywhere. Select the channels most likely to reach your intended customers.
A local Toronto business might use:
- A properly completed business listing
- Search-friendly website pages
- Neighbourhood partnerships
- Community events
- Email updates
- Educational articles or videos
- Referral requests
- Local posters or printed materials
- Social-media content aimed at a defined audience
Set a measurable objective for every campaign. Instead of measuring only views or followers, track inquiries, bookings, store visits, email subscriptions and completed purchases.
Never purchase more advertising simply because early sales are slow. First determine whether the problem is visibility, pricing, customer trust, the offer itself or the purchasing process.
Launch on a Manageable Scale
A smaller first launch gives you an opportunity to improve the business before increasing your costs.
For example, you might begin with:
- A limited product range
- A defined service area
- A small number of appointments
- Temporary or event-based selling
- Pre-orders
- A short pilot program
- Selected opening hours
During this stage, document customer questions, complaints, popular products and operating problems. Use this information to improve your pricing, workflow and customer experience.
Toronto Small-Business Launch Checklist
| Task | Complete before opening? |
| Define the customer and business offer | Yes |
| Research competitors and demand | Yes |
| Prepare a business and cash-flow plan | Yes |
| Choose an ownership structure | Yes |
| Check and register the business name when required | Yes |
| Obtain required CRA accounts | When applicable |
| Confirm licences and permits | Yes |
| Verify zoning for the location | Yes |
| Arrange appropriate insurance | Preferably before operating |
| Establish bookkeeping and record storage | Yes |
| Prepare contracts, invoices and payment terms | Yes |
| Complete employer registrations and policies | Before hiring |
| Test the customer experience | Before or during a limited launch |
Common Mistakes to Avoid
Signing a lease before checking zoning
A suitable-looking storefront may not be approved for your intended activity. Verify the use before committing to rent, renovations or equipment.
Mixing personal and business finances
Mixed transactions make it harder to calculate profit, prepare tax returns and support expense claims.
Treating revenue as profit
Sales revenue must cover product costs, overhead, taxes, refunds and other expenses before the owner earns a profit.
Copying a competitor’s prices
Another company may have different costs, suppliers, debt or profit targets. Build your prices from your own numbers.
Assuming every business grant is guaranteed
Funding programs have eligibility rules, application windows and limited budgets. Build a business model that does not depend entirely on receiving a grant.
Ignoring renewals and filing deadlines
Maintain a calendar for registrations, licences, tax returns, corporate filings, insurance and permit renewals.
Frequently Asked Questions
Do I need to register every small business in Toronto?
Not necessarily. The requirement depends on the ownership structure and the name under which the business operates. For example, an Ontario sole proprietor generally needs to register when using a business name other than their own name. Separate licensing, zoning and tax requirements may still apply.
Does every Toronto business need a municipal licence?
No. Licensing depends on the type of business and its activities. However, all owners should check instead of assuming that no licence is required.
Can I start a business from my Toronto apartment or house?
Possibly, but the activity must comply with applicable zoning rules, lease or condominium restrictions and insurance requirements. Customer visits, employees, deliveries, storage, noise and signage can affect what is permitted.
When do I need to register for GST/HST?
The general threshold for many businesses is more than $30,000 in worldwide taxable revenues, calculated according to CRA rules. Registration timing depends on whether the threshold is exceeded in one calendar quarter or over consecutive quarters. Some businesses are subject to special rules, and voluntary registration may be possible.
Should I incorporate immediately?
Not always. Incorporation can offer advantages in certain situations, but it also introduces additional expenses, filings and administrative duties. The right choice depends on liability, income, ownership, investment plans and long-term goals.
Where can I get help with my Toronto business plan?
The Toronto Small Business Enterprise Centre offers consultations, training and business-plan support. Requirements and availability can change, so check the City’s website for current options.
Business Note: This article provides general educational information and is not legal, tax, accounting, insurance or financial advice. Registration fees, tax rules, licensing requirements, zoning restrictions, funding programs and startup costs are not the same for every business and may change over time. Always confirm current requirements with the City of Toronto, the Government of Ontario, the Canada Revenue Agency and qualified professionals before starting or operating a business.