Canada is a thriving country for entrepreneurs to follow their dreams of building a successful company. According to the Government of Canada, there are 1.19 million small businesses across the country. 

When entrepreneurs decide to start their own businesses, it’s essential for them to ensure they operate legally and follow government regulations. How do you know if you need a business license in Canada? Read on to learn what a business license is, who needs to register for one, and what type you may need. 

• What is a business license in Canada?
• Why do you need a business license?
• When do you need a business license? 
• Choosing your business structure
• Which business licenses or permits do you need? 
• Submitting your application forms
• Launching your business successfully

What is a business license in Canada? 

A business license is a document issued by a government authority that allows the business owner to conduct business in Canada. Your small business may need to obtain several types of permits and licenses from the different levels of government, including federal, provincial, territorial, and municipal. The business license you’ll need is also based on your business structure and industry. 

Why do you need a business license? 

Different levels of government mandate licenses and permits for businesses to operate in Canada. Government authorities grant these documents to ensure that companies adhere to safety regulations, operational rules, and legal requirements.  

If you run a business without the proper licensing requirements, you could be breaking the law and facing consequences such as fines — or even having your business shut down. You're also risking your company’s reputation if you haven’t been following industry regulations.

On the other hand, having the required licenses can help you build trust among your customers.

There are many benefits to registering your business with the federal government. For example, you can apply for business loans, leverage self-employment tax deductions, and enjoy industry supplier discounts. 

When do you need a business license? 

Not all businesses are required to get a business license — it depends on the business structure and the type of products or services provided. You may also need special permits or certifications based on your specific industry.

Here are some common scenarios:

You will need a business license if you’re: 

• Working in tightly regulated industries such as food and beverage, health care, or financial services.
• Located in British Columbia and your business is in the mining, forestry, or agricultural sectors.
• Situated in Ontario or Quebec and selling tobacco products.
• Located in Quebec and your business involves fishing, aquaculture, fuel, or senior homes.

You may not need a business license if you’re:

• Self-employed and you registered a business under your legal name.
• A sole proprietor, such as a freelancer, interior designer, or business consultant. 
• Working on a new startup venture.
• Setting up a home-based business. Municipalities focus on zoning compliance, so business licenses may not be enforced. However, if you run a daycare or catering company, you’ll need to get a food permit.

Consider your industry and location to verify whether you need a business license or not.

Choosing your business structure

When you start your business, you must decide on its structure. Choosing a business structure will determine your business licensing requirements. The most common types are sole proprietorships, partnerships, and corporations. 

Each type of business has advantages and disadvantages. That’s why it’s important for business owners to do their research and weigh their options before making a decision. 

Which business licenses or permits do you need? 

BizPaL is a convenient tool for verifying which permits and business licenses you need to apply for. It will inform you which license you need based on your location and industry. It will also provide detailed information on how to obtain the proper licenses so you can start operating your business. 

For those who plan to open a business in Nunavut, you can find more information on their government website.

If you're looking for regional business support, the federal government website has additional resources. 

Submitting your application forms

Once you know which licenses you need, you’ll need to gather your documents, obtain the necessary forms, and fill them out. When you’re ready to submit your application forms, you’ll need to pay any associated fees and allow time for processing them.

Launching your business successfully

Entrepreneurs must do their due diligence when obtaining the proper business license in Canada.  

Be sure to verify which business license you’ll need to register for based on government regulations, your industry, location, and business type. Having the proper business license provides peace of mind in knowing you’re starting your business on the right foot. 

Starting your business from the ground up can be challenging for small business owners. QuickBooks can help you streamline your bookkeeping so you can focus on making your business blossom.