Business Licenses and Permits for Your Home-Based Business
In Canada, each province has its own rules and regulations regarding which businesses need licenses, permits, and inspections prior to opening and operating a business or home-based business. Even local governments can vary within the same province on licensing of businesses within specific municipalities.
While most home-based businesses will require a business license, it will depend on your location and the industry in question. For example, if you want to work from home as a freelance writer or consultant as a sole proprietor, you will not necessarily need a business license. If you want to run a day care out of your home, however, you will need a business license, along with a criminal record check and a home inspection permit.
Biz Pal, a government of Canada permits search tool, can help you find out which licenses you will need for your home-based businesses. A list of business regulations, licenses and permits for a Toronto business is also easily accessible.
Below are some of the most common licenses and permits you will need to operate a home-based business in Canada.
1. General Business License
If your particular business requires a business license, you can acquire one from your local Municipal Licensing and Standards department. Some trades or professions must meet certain qualifications by means of verbal or written examination, waiting periods, etc.
To apply for a Municipal Business License, you will need the following:
- a business location/address;
- a copy of provincial business name registration
- Two pieces of government-issued identification:
- proof of work status, such as a Canadian Passport or Citizenship Card, Permanent Resident Card, Work Permit, Canadian Birth Certificate; and
- a valid photo ID such as a Driver’s License, Photo Identification Card, Canadian Passport. Note that Health Cards are not accepted.
2. Criminal Record and Judicial Matters Checks
When applying for a business license, a Criminal Background Check is mandatory and must be submitted to your local Municipal Licensing & Standards (ML&S) prior to the license being issued and again every four years. It must be issued by a Canadian Police Service within 280 days prior to the application. As of November 1, 2018, Municipal Licensing and Standards in Toronto will require “Criminal Record and Judicial Matters Checks” for all applications and renewals. “Criminal Record Checks” will not be accepted.
Licensing Services requires original Criminal Record Checks and will not accept copies.
3. Professional License
Certain types of home-based businesses, such as daycare centers, hairstyling, legal services, or financial advisor services, require state or federal professional licensing or certification. Contact The Canadian Information Centre for International Credentials to obtain a list of all occupations or businesses that require professional licensing.
4. Zoning Permit
Zoning approval is required for the majority of new business licence applications. You will need to check with your local city hall to find out if your business is permitted to operate. For those businesses in which zoning approval is required, please see the information on the Licensing Project Review or Building Permits. Zoning approval is not required however if an applicant it taking over an existing business that has a valid business licence or is expired less than one year prior. A signed lease agreement or proof or property ownership is required.
5. Register for a business number:
To register your business, you may need a business number.
A number is necessary if you require:
- GST/HST
- Payroll
- Excise
- Corporate income tax
- Import/export account
You can register your business with Business Registration Online. If you cannot register online, you can register by phone or mail.
6. Register for a Business Name
A business name registration refers to a registration under the Business Names Act. It expires after 5 years and must be renewed. When registering a business name, you will be issued a Master Business License, which includes the registration and expiry dates, as well as the Business Identification Number. It can also be used as proof of registration for a business name at financial institutions.
The Ministry of Government and Consumer Services maintains a registry of business names of sole proprietorships, general partnerships, Ontario Limited Liability Partnerships, Extra-Provincial Limited Liability Partnerships, Extra-Provincial Limited Liability Companies and business names registered for a corporation operating with a name other than its corporate name.
Please note a Master Business License is not issued for registration of a business name for a Partnership/Limited Partnership or for an Ontario Limited Liability Partnership, Extra-Provincial Limited Liability Partnership or Extra-Provincial Limited Liability Company.
Before you register your business it is always a good idea to consult with a lawyer and/or accountant regarding the structure of your business. There are separate forms and processes to register for a business name depending on whether your business is a sole proprietorship, general or limited partnership, corporation, or not for profit.
7.Health and Safety Permits
Depending on the type of business you intend to operate, you may need to get health and safety permits, environmental licenses, and inspections. This is most commonly required if customers or clients actually come to your home to conduct business or for businesses engaging in the wholesale or retail selling of food and beverages. It’s not usually required if your home-based business only provides goods or services online unless you keep an inventory of potentially flammable products at your home.
The City of Toronto Business Regulations, Licenses and Permits webpage lists which business require health and safety permits or environmental inspections on the municipal, provincial, and federal levels.
8.Signage Permit
A Sign Permit is your formal permission to begin constructing your sign that you want permanently installed or affixed to any structure or building. Your municipal regulatory body must review your plans to ensure that they comply with the local sign and zoning bylaw, provincial building code, and other applicable regulations.
Temporary signs such as A-Frame Signs, Development Signs, and Mobile Signs require a permit. Temporary signs are those not permanently attached or fixed to a structure or surface. The permit must be prominently displayed on the sign. A sign without a permit may be removed by the City with all costs associated charged to the owner, or a ticket can be issued with a fine of up to a maximum of $5,000 levied by the courts.
Commercial Sign Permit will be required from the province in addition to municipal sign permit requirements, if you are planning to erect or alter a sign or advertising device on a property within 400m of any provincial highway right-of-way, you may require a permit. There are certain restrictions as to setback, size and location.
There are many types of home businesses, each one requiring different licenses and permits to begin operating. Contact a business lawyer at Kalfa Law Firm and we will help you with everything you need to know to operate your home business, including all the tax implications, such as reporting your income, using tax saving strategies, payroll, and more.
FAQ’s:
-Shira Kalfa, BA, JD, Partner and Founder
Shira Kalfa is the founding partner of Kalfa Law Firm. Shira’s practice is focused in corporate-commercial and tax law including corporate reorganizations, corporate restructuring, mergers and acquisitions, commercial financing, secured lending and transactional law. Shira graduated from York University achieving the highest academic accolade of Summa Cum Laude in 2012. She graduated from Western Law in 2015, with a specialization in business law. Shira is licensed to practice by the Law Society of Ontario. She is also a member of the Ontario Bar Association, the Canadian Tax Foundation, Women’s Law Association of Ontario, and the Toronto Jewish Law Society.
© Kalfa Law Firm, 2021
The above provides information of a general nature only. This does not constitute legal advice. All transactions or circumstances vary, and specified legal advice is required to meet your particular needs. If you have a legal question you should consult with a lawyer.
