Starting a business in Québec: the complete legal checklist

Launching a business in Québec is, legally speaking, a surprisingly predictable path: the same steps, in roughly the same order, for almost everyone. Knowing it in advance turns a source of anxiety into a simple to-do list. Here is that path, told in the order it happens.

First, the structure

Everything starts with the choice of legal form: a sole proprietorship for simplicity, a general partnership to go into business together lightly, a business corporation for protecting the patrimony and for tax. That choice conditions everything else, from the tax regime to the documents to be prepared. Take the time to get it right, according to your risk, your expected income and any partners; it is the least expensive decision to get right and the most expensive to correct.

Then the name and official existence

The name gets checked before you fall in love with it: availability in the register, compliance with the language rules, trademarks, domain name. Then comes the birth certificate: registration with the registrar for a sole proprietorship or a general partnership, constitution with articles for a business corporation, followed by its legal organization, by-laws, issue of shares, minute book. A corporation constituted but never organized is a legally unsteady shell, and it is the most frequent omission we come across.

Then the tax administration

Depending on your situation: GST and QST registration, mandatory above $30,000 of taxable sales and often worthwhile before that, a business account with the Canada Revenue Agency, and source deductions from the first employee. These registrations take a few days when done at the right moment, and become an emergency when the obligation is discovered after the fact.

The contracts that protect the value

Four documents deserve your attention in the first months. The shareholder agreement, if there is more than one of you: it is what will stop the first disagreement from being the last. The terms of sale or of service that govern your client relationships. The agreements with freelancers and employees, including the assignment of intellectual property and confidentiality. And the commercial lease, whose renewal and exit clauses bind the business for years. None of these documents is strictly mandatory; every one of them becomes precious the day something snags.

Finally, the cruising rhythm

A business in good standing stays that way through maintenance: the annual updating declaration to the registrar, annual resolutions filed in the minute book, tax returns and remittances at the assigned frequencies. Nothing demanding, provided you make it a routine rather than a catch-up exercise.

One word on method to close. These steps can now be ordered as a whole. Our startup kits bring together the constitution, the minute book, the tax registrations and consultation time with a lawyer, precisely because those pieces belong together. Whether you go through us or not, do them in order, and do them early: every step costs less before than after.

The decisions that come before the structure

Before choosing a legal form there is a conversation to have, and it is the one most often skipped because it is uncomfortable. It turns on four questions, and it concerns everyone starting out with others.

Who contributes what? Money, yes, but also time, contacts, equipment, existing intellectual property. A hundred hours a week and twenty thousand dollars do not compare themselves spontaneously, and that is precisely why it has to be discussed before the percentages are set.

Who decides what? Including in the cases where you will not agree. Who gets paid, and when? A founder who needs an income by the third month and one who can wait two years are not building the same venture, even if they describe the same business. What happens if someone leaves? The most frequent answer at a start-up meeting: “we had not thought about it”. That is exactly what a shareholder agreement then translates into clauses, but the conversation comes before the document.

The obligations peculiar to your sector

The list above is universal. It says nothing about what your particular activity requires, and that is where the regulatory surprises hide.

Check four things every time. The municipal permit, required in a number of cities in order to carry on a commercial activity, including from home, where zoning may also limit certain uses. Sector authorizations, which exist in construction, food, transport, financial services, real estate, childcare and much of the health field. Membership in a professional order, which governs not only your practice but often your legal form and your shareholding. The rules particular to your clientele: consumer protection and the protection of personal information impose concrete obligations as soon as you sell to individuals or hold data.

These checks take an hour of research at the outset. Discovered after a complaint or an inspection, they cost infinitely more.

Employee or subcontractor: a characterization you do not get to choose

A structural and very widespread mistake. Drafting a contract that calls someone self-employed does not make that characterization accurate. The tax authorities and the courts look at the reality of the relationship: the degree of control over the work and the schedule, integration into the organization, ownership of the tools, the chance of profit and the risk of loss, the ability to send a replacement.

Recharacterization as employment brings the source deductions that were never made, the corresponding contributions, penalties and interest, often going back several years, and sometimes labour standards obligations as well. It is one of the most frequent reassessments among young businesses that wanted to stay light.

Prudence means examining each relationship honestly rather than generalizing. A freelancer with several clients, who sets their own methods and bills by the mandate, is generally a subcontractor. Someone who works for you alone, on your hours, with your equipment, under your supervision, rarely is, whatever the contract is called.

Contracts deserve careful reading before signature: our article on having a contract reviewed sets out the clauses to watch.

The first year’s calendar

Once you are launched it is the deadlines that structure the year, and they arrive without warning. Note now, in the calendar you actually look at: the date of your fiscal year-end, the filing period for your declaration to the registrar, the deadline for your federal annual return if your corporation is federal, the dates of your TPS et TVQ returns at the frequency assigned to you, the remittances if you have staff, and the moment when your annual resolutions will have to be signed, generally when the accountant finalizes the financial statements.

Six calendar entries. That, very concretely, is what separates a business in good standing from one playing catch-up.

Frequently asked questions

What are the legal steps to start a business in Québec?

Choose the legal form, search and reserve the name, register or constitute, organize the corporation with its registers, register for taxes if required, open the bank account, then set out in writing the relationships with partners, clients and freelancers.

Do you have to register for GST and QST right away?

Registration becomes mandatory as soon as your taxable supplies exceed $30,000 over four consecutive quarters. Registering voluntarily before that threshold is often worthwhile, since it lets you recover the taxes paid on your start-up expenses.

Which obligations come back every year?

The updating declaration to the registrar, the annual resolutions filed in the minute book, the tax returns and the remittances at the frequency assigned to you. Note those deadlines in the calendar you actually look at.

The current government amounts are set out in the government fees in detail.