It’s easy to get swept up in the excitement of a new venture — your idea is SO good, it’s bound to be a success! But many entrepreneurs forget to ask basic questions like “Is there demand for what I want to sell?” and “Do I need a business license to sell online in Canada?”
Depending on your business, you may need to apply for licenses and permits from multiple levels of government. These are required for many industries within Canada.
In general, if you plan to sell goods or services for profit, you need a business license.
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.
11 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.
- General business license
- Federal business registration
- Registration with your province
- DBA license
- Sales tax permit
- Zoning permit
- Home occupation permit
- Health permits
- Environmental permits
- Police and fire permits
- 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?
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 this tool:
This tool 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.
- 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. Regardless of the type of business or industry you’re interested in, it’s a good idea to create a website for your business, it’s the easiest way to gain access to a wide audience and also build some trust for your new venture.
The 11 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. The quickest way to answer this is to search for “Do I need a business license + your location.”
2. Federal business registration
If your business brings in less than $30,000/year, you likely won’t need to register with the federal government. If you have employees or make over $30,000/year, you should register here.
The Canada Revenue Agency (CRA) is your one-stop shop for:
- Getting a business number (BN)
- Finding out if you need to make payroll deductions
- Registering for corporate income taxes
- Registering for goods and services tax (GST) or harmonized sales tax (HST), depending on your location
- Signing up for an import-export program account
- Registering a charity and more
3. Registration with your province or territory
Depending on where your business is located, you may also need to register your business with your provincial or territorial government. Use the links below to check on the business registration requirements in your area:
4. DBA license
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.
5. 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.
6. 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.
7. 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.
8. Health permits
Any business that handles food will require a Health Permit to ensure that the food is being handled and served in a safe manner.
9. 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.
10. 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.
11. 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:
- Visit the Government of Canada’s website
- Use the Permits and License Search listed at the top of this article
- Call 1-888-576-4444
If the licenses and permits you need are issued provincially then you can:
- Click on your province under item #3. Registration with your province or territory above
- 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 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. If you’re interested in opening a new business here are some business ideas for Canada.
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.
Frequently Asked Questions
Can you sell online without a business license?
No you may not sell, either online or offline, in Canada without a business license from the province where the business is located. If you sell goods or services for financial gain, you need a business license. Most businesses must renew their license every year.
Licensing makes it possible for the government to ensure that all businesses operating in Canada follow safety and zoning regulations and collect taxes from them.
What do you need to start an online business in Canada?
At a bare minimum, you will need to:
- Choose a name that isn’t already registered to another business in Canada. You can actually search for domain names to figure out if your business name is available or not. It’s not a perfect solution, but it can really help you narrow it down, as most businesses register a domain name that matches their name.
- Register your business with your provincial government.
- Get all applicable business permits — you can get a list of permits and licenses you need by typing in your location and industry
- Apply to charge goods and services tax (GST) if you’re located in Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Quebec, Saskatchewan or Yukon OR harmonized sales tax (HST) if you’re in Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia or Prince Edward Island. Details
But the most important part of the startup process is what happens before those four steps.
It’s tempting to rush to start a business based on the great idea you had in the shower this morning. But without a little research, you could waste time and money on a product or service no one wants or is willing to pay for.
Do I need a business license to sell online in B.C.?
Whether online or not, every business operating in Canada must have a business license. This includes those located in B.C.
Do I need a business license to sell online in Ontario?
Same answer as above. Whether online or not, every business operating in Canada must have a business license. This includes those located in Ontario.
Do I need a license to start a craft business in Canada?
As stated above, if you plan to make money by selling goods, you need a business license as well as any other licenses or permits you find here.
What are the penalties for operating without a business license in Canada?
Running a business without the proper licenses opens you to the risk of steep fines. In 2021 for example, the B.C. Financial Services Authority fined a rental property management company over $100,000 for operating without a license. Not worth the risk.
Q4: How much will it cost me to get the permits and licences I need?
Costs for permits and licences vary. See your provincial, territorial and/or municipal’s website for details.
The information contained in this blog post is provided for informational purposes only, and should not be construed as an endorsement or advice from GoDaddy on any subject matter.
UPDATE: This article on business licensing was first published on 10 September 2019 and updated 23 March 2022.