Legal Considerations When Starting a Home-Based Business in Ontario
Starting a home-based business can be an exciting and rewarding venture, whether as a primary or secondary income source, but it is important to be aware of some of the legal considerations and requirements that may be involved ahead of time. This post provides a brief checklist of some key legal issues to consider when starting a home-based business in Ontario.
Zoning Laws
Before starting a home-based business, you should check with your municipality to make sure that your business will be compliant with local zoning laws. Some municipalities have restrictions on the types of business activities that may be conducted from residential properties — it is important to be aware of these restrictions, if any, and whether there are ways to obtain exemptions from the restrictions.
Business Permits
Depending on the nature of the business you are starting, you may need to obtain various business permits and licences from the municipality, provincial government, or federal government. For example, if you intend to operate a food premises in Ottawa, you will need to make a food premise health review application to Ottawa Public Health.
Tax Obligations
When you start a home-based business, as with any business, you will need to register a business number with the Canada Revenue Agency (CRA) and start filing business tax returns. Depending on the type of business you are starting, and the volume of your sales, you may also need to collect and remit tax (HST) on your products or services.
Insurance
It is also important to review your homeowner’s insurance policy to ensure that it covers your home-based business activities and/or is not otherwise negatively affected by the operation of a home-based business. Depending on the nature of your business, you may also need to obtain additional liability insurance to protect yourself from legal claims.
Contracts and Agreements
As with any business, it is important to have clear contracts and agreements in place with your customers, suppliers, and other business associates. Clear contracts provide certainty, project a sense of professionalism, and help prevent misunderstandings and legal disputes down the road.
Employment Law
If you plan to hire employees for your home-based business, you must be aware of your obligations under Ontario employment law, such as minimum wage requirements, workplace safety regulations, and employment standards. Hiring employees will also require you to have available employment agreements and related contracts, as well as consider possible changes to your tax obligations.
In short, starting a home-based business can be an excellent way to turn your passion into a profitable source of income, but it is important to be aware of the legal considerations and requirements involved at every stage. By taking the time to understand these issues and seeking legal advice when necessary, you can help ensure that your home-based business is set up for success.
The above provides information of a general nature only and does not constitute legal advice. All transactions and circumstances vary and specific legal advice is usually required to meet your particular needs. Please consult with a lawyer if you have a legal question.
