Who needs a business license under Canadian law?

Don’t get caught out

When starting a business, it’s easy to get swept up in the excitement of a new venture and forget about things like business licenses and permits.

However, if you plan to do business in Canada, you may need to apply for licenses and permits from multiple levels of government. These are required for many industries within Canada.

Even if you’re a freelancer or sole proprietor, you may still need to get some form of licensing.

In this article, we are going to look at who needs a business license under Canadian law, and how you can go about obtaining the required licensing for your business.

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9 business licenses or permits you might need

With the possible exception of those opening a legal practice, most small businesses owners aren’t clear on the details of licensing. Skim through this list to see which might apply to you.

  1. General business license.
  2. DBA license.
  3. Sales tax permit.
  4. Zoning permit.
  5. Home occupation permit.
  6. Health permits.
  7. Environmental permits.
  8. Police and fire permits.
  9. A signage permit.

Before we dive into the details, let’s touch on who needs a business license in Canada, including what types of freelancers and sole-owner businesses need them. Then keep reading for step-by-step instructions on getting the ones you need.

Who needs a business license in Canada?

Business License Smartphone with Sign Here Note
In many cases, you can get your licenses and permits online.
Photo: Kelly Sikkema on Unsplash

In Canada, each province has its own rules and regulations set in place as to which businesses need licensure. These requirements tend to vary quite a bit.

Even local governments within the same province can vary on the licensing needed to operate in that town or municipality.

This can make it difficult to figure out which business licenses you need. However, you can easily figure out if you need a business license under Canadian law and which licenses you’re required to get by using these tools:

Government of Canada’s permits search tool

BizPal (Business Permit and Licence)

These tools will show you what is required by all three levels of government — federal, provincial and municipal — for your business to operate legally within Canada.

Do I need a license to work from home?

If you’re a freelancer or the sole proprietor of a business and would like to work from home, you don’t necessarily need a business license. Your license requirement will be determined by where your home is located and what industry you are working in.

For example:

  • A real estate appraiser would not need a license to operate out of their home, as long as they have the credentials and education needed to be approved by their governing body, the Appraisal Institute of Canada (AIC).
  • Someone who wants to run a day care out of their home would need a business license, background checks and even home inspection permits. This ensures that the home is safe and secure and that the children are in good care.

As you can see, the need for business licensing and permits is completely dependent on the industry that you are pursuing and the locations where you will operate.

Related: How to write a business plan simply

The 9 most common business licenses and permits

Here are some of the most common types of permits and licenses that you may need to get before opening a business in Canada.

1. General business license

Many businesses will require a general business license to operate within their city or province.

2. DBA license

Business License Man Working at Counter
Unless their business is named after them, sole proprietors need DBA licenses.
Photo: Jacky Chiu on Unsplash

The DBA license, also known as a “doing business as” license, will be required if you’re operating your company under a fictitious name. This includes sole proprietors who are running a business under a name other than their legal name.

3. Sales tax permit

If your business sells goods, whether online or not, you may be required to have a Sales Tax Permit, sometimes referred to as a Seller’s Permit.

4. Zoning permit

A zoning permit will often determine which businesses can and cannot operate within the city’s limits. You will need to check with your local city hall to find out if your business is permitted to operate.

5. Home occupation permit

A home occupation permit applies to many home-based businesses. While not every business will need a permit, you’ll want to check with your city council to find out if you’re required to have one.

6. Health permits

Business License Coffee Shop Window

Any business that handles food will require a Health Permit to ensure that the food is being handled and served in a safe manner.

7. Environmental permits

If your business handles contaminants, then you will likely be expected to have an environmental permit. This ensures that you properly handle and dispense of any chemicals or pollutants.

8. Police and fire permits

Depending on the type of business that you’re operating, you may be required to have permits from your local Fire and Police Departments. A day care service is a prime example of a business that would need permits from both of these departments.

9. A signage permit

Another of the most common permits that a business must have is a sign permit. These permits will ensure that both the business sign itself and the placement of the sign are within the city’s requirements.

While this list is not exhaustive, it covers some of the most common types of licenses and permits that a business may be required to get to operate.

Now that you understand why you need a business license, let’s look at the steps to becoming licensed under Canadian law.

Steps to apply for a business license

If you want to apply for a license or permit for your business, there are several ways that you can do this. First off, you’ll need to determine which level of government issues the required licenses and permits that you’ll need to obtain.

If the licenses and permits you need are issued federally then you can:

If the licenses and permits you need are issued provincially then you can:

  • Visit the Government of Canada’s website
  • Use the Permits and License Search
  • Visit your city hall or municipal office
  • Visit your local Companies Office

The staff at each of these venues should be able to explain the specific licensure requirements that you’ll need to fulfill before legally operating your business within Canada.

What is a business license?

A business license is a government-issued document that grants permission to the business owner to operate within the country, province or municipality that issued the business license.

Business License Handmade Studio Sign

Business Licenses are required for three main purposes:

  • To help identify your business and hold you accountable for its actions
  • To protect the health and safety of the public by enforcing regulatory standards
  • Assist in tracking financial information for tax purposes

Business licenses and permits are required to ensure that companies within Canada are adhering to the guidelines and regulations set out by the Canadian government.

Comply and thrive

Hopefully, this article has helped you figure out whether or not you need a business license under Canadian law.

While there are many types of licenses and permits, the need to get one depends largely on where your business is located and the industry in which you are working. Remember to contact your local city hall or town council if you’re unsure about whether you need a business license or permit to operate in your area.

Image by: Josh Hild on Unsplash