Why should you register your independent teacher business?

Very often while perusing the chats and boards and comments of the sites I regularly visit I see the same question being asked, “Should I (or how do I) register my own private business?”. Equally as often I see this question being answered with inaccurate or misleading information, so in this article I’ll try to give an overview of the process as well as the benefits (and burdens) of an independent teacher business in Canada.

Please note that this guide is for informational purposes only. While every effort has been made to ensure the accuracy and currency of the information at date of publication, always do your own research and consult professional sources before making your business planning decisions.

You are already a registered business!

In Canada, if you have a name and a Social Insurance Number (SIN) then you can already operate as a private business. Any income you earn as a self-employed individual is claimed as self-employed income on your year-end taxes. You do not need a unique business name, or registration, or even a tax ID as long as your annual earnings are less than $30,000. That means that any expenses you incur as a self-employed individual (office supplies, vehicle expenses, travel, meals, etc.) may also be claimed in your annual tax filing. In addition, you do not need to collect any federal or provincial taxes from your clients… as long as your annual earnings are less than $30,000.

So, why should you bother to register?

Other than because you hope to one day (soon!) earn more than $30K a year, there are some other solid reasons to register your business activities in Canada.

Business identity and name protection

If you are not registered, you can only officially operate under your own exact legal name, e.g. “John Doe”. Should you wish to add anything at all to your operating name however, such as “John Doe Tutoring” or “Teacher JD” then you’ll need to register at least as a sole-proprietorship. Registering your independent teacher business allows you to brand your operations and to have that brand gain certain protections.

Offering services to other businesses

Sure, you can tutor or teach to private individuals without registering a business, but if you plan to be contracted to a school or provide teaching services to a government body then you need to be registered. In a number of municipalities you’ll need to have an official supplier number to provide services to the city or province, and you won’t get that without a business registration. Similarly, if your province or municipality requires any permits or licenses, then you’ll have to register.

A business bank account

Having a dedicated business bank account makes keeping track of payments, income and expenses so much easier. Should the government ever want to see an official record of your accounts (*ahem* audit!), then a business bank account will preempt a lot of pain. How do you get a business bank account? You guessed it – by having a registered business.

Subcontracting and employees

This might not be a consideration for most independent teachers, but if you imagine that one day you’d like to have your life partner or kid or friend help you out in your independent teacher business and you want to pay them as an employee, then business registration is a must. Perhaps you have no intention of ever having an employee, but could you ever see yourself outsourcing (sub-contracting) foreseeable tasks such as web site development, social media marketing or accounting? Be registered!

Collecting foreign payments

This one hits close to home. A great many independent teachers supply their expertise to foreign students. That means collecting your income in foreign currency often through foreign banks or payment processors. What do many, if not most, foreign payment processors require? Proof of a business registration!

The woes of business registration

Registering a sole-proprietorship is not as onerous as you might imagine. There are three big responsibilities you need to keep on top of:

1. Your business records. Keep your papers of registration safe and accessible. Keep your receipts and records of income & expenses neat and organized (see Business bank account above).
2. Tax filing. If you have registered business, you will have a few more pages to fill out on your annual tax forms. It’s a bit more hassle, but considering you can claim expenses it’s worth it. If you earn more than $30,000 a year and have a GST and PST/HST number, then you’ll also have to make a separate payment to the government for any taxes you’ve collected.
3. Recurring fees. Having a registered business incurs registration fees, not just at registration time, but often annually. Be sure to pay those!

Registration costs by region

• Alberta: Costs $10.00 to register a trade name / sole-proprietorship. Business name lookup / approval is optional and costs approximately $25.00.
• British Columbia: Costs $30.00 for business name approval, and $40.00 for registration.
• Manitoba: Costs $45.00 for business name reservation, and $60.00 for registration.
• New Brunswick: Costs approximately $25.00 for business name search report, and $112.00 for registration.
• Northwest Territories: Costs $75.00 to register a sole-proprietorship. Business name lookup and approval is included in the cost.
• Nova Scotia: Costs $61.00 for business name search report, and $68.55 for registration.
• Nunavut: Costs $50.00 for registration. Business name lookup appears to be optional.
• Ontario: Costs approximately $25.00 for business name search report, and $60.00 for registration.
• Prince Edward Island: Costs $40.00 for business name search report, and $90.00 for registration.
• Quebec: Costs $37.00 to register a sole-proprietorship (déclaration d’immatriculation d’une personne morale). Business name lookup / approval is optional and costs approximately $70.00.
• Saskatchewan: Costs $50.00 for business name reservation, and $60.00 for registration and $15.00 for new business announcement.
• Yukon: Costs $60.00 for business name reservation, and $25.00 for registration.

In Newfoundland and Labrador, there is no provincial government registration for a sole proprietorship.

^{Photo by Annie Spratt on Unsplash}