Before you start your business, there are a few important legal concepts you should understand. Knowing what these legal terms mean will help you choose a business structure that meets your company’s needs the best. This section will cover some basic information about the different business structures in Saskatchewan. You will also learn about some of the laws in Canada that are important for business owners, such as: employee contracts, leases, insurance, public agencies, taxes, and business licensing.
Business Structures
The type of business structure you choose has an impact on:
- Protecting your business name
- Personal liability
- The way you report your income
- The likelihood the business will survive the absence of the owner(s)
- Ability to raise capital funds
There are three main business structures for entrepreneurs to choose from:
- Sole Proprietorship
- Partnership
- Corporation
You will need to choose which structure is the best for your business before you sign a lease, hire employees, collect payment from customers, or begin marketing your business.
For further information on these three structure types, visit our guide Choosing a Business Structure Guide.
Additional Structure Information:
- You can be a sole proprietor and use your own personal name to market yourself. There is no requirement for you to register yourself with Information Services Corporation (ISC) when you operate your business this way. Example: “Alana Pirbhai” is considered your personal name and does not need to be registered. “Alana Pirbhai Consulting” is considered operating under your personal name and will need to be registered. “Alana Pirbhai Consulting” is an example of a tradename.
- Incorporating federally gives your company exclusive rights to use its name across Canada. It does not give you the right to conduct business across Canada. A new corporation still must complete a second registration called “extra provincial registration”. You need to complete an extra provincial registration in any province the company does business in. Learn more about Federal Incorporation. Provincial incorporation is more popular choice for businesses that will only operate in one province.
Information Corporation Services (ISC)
Business registration services in Saskatchewan are overseen by Information Corporation Services (ISC). Visit ISC Corporate Registry to create an account and begin the registration or incorporation process all online. SK Startup Institute can assist you with this process should you need help. You can book an appointment with one of our business advisors here.
Contracts
A contract is a legally binding document or verbal agreement. Contracts are in the category of civil law. Contracts are used when there is an offer, acceptance, and consideration.
Pretend you want to sell your car. You offer to sell it for a certain price, and someone accepts your offer. Consideration is the value or price you and the buyer agree upon and exchange. It does not matter what the value of your car is. The value could be as little as $1.00. The Courts will not usually question the value if something of value is exchanged. The contract is legally binding once there is an offer, acceptance, and consideration.
Source: Calgary Legal Guidance.
Employment Contracts
Businesses can choose to hire people as employees or contractors.
If your business chooses to have employees, then you will have to have an employment contract in place. The purpose of an employment contract is to make sure that both you and your employee have a clear understanding of what is expected while you work together. Your business will be responsible for all government payroll deductions. Your business will also need to make sure it is following all the correct tax regulations. If you choose to hire someone as an “independent contractor”, you will need to have a different type of contract with that person.
There are strict guidelines in Saskatchewan that define the difference between an “employee” and “contractor”. It is important to know and understand the rules that apply. See the definition for employee and contractor by visiting The Government of Saskatchewan’s Employment Standards website.
When hiring employees and contractors, you’ll have to complete the step of registering with WCB. WCB is a type of insurance designed to help employees who get injured while on the job. If an employee gets injured in the workplace, he or she can apply for assistance from this program. Employees will only be able to get assistance from WCB if your business has paid the premiums into the program. Many industries are required to provide this coverage to employees. As an employer, you will be responsible for paying the premiums and cannot deduct this expense from your employee’s pay.
Leases
A lease is a legally binding contract between a landlord and tenant.
Your business may sign a commercial lease in Saskatchewan. Commercial leases must follow the rules of the Landlord and Tenant Act. Your commercial lease is one of the most complicated contracts you will sign. The monthly payment of rent for your business will probably be one of your biggest costs. Before you sign a lease, it is a good idea to have a lawyer review the document. A lawyer will help you make sure you understand all the conditions of the lease. You do not want to be taken by surprise by any conditions. It is important to remember that most commercial leases are written in favour of the landlord. A contract for a commercial lease will usually have the best interests of the landlord in mind, so be sure to understand all the conditions in the contract.
Learn more by viewing our Commercial Lease Guide.
Insurance
Insurance is a contract, called a policy, between you and an insurance provider. Insurance protects your business from financial loss. There are many kinds of insurance for you to choose from. The amount of insurance coverage you purchase depends on your risk level and the losses you think might happen if an accident or disaster happened.
If you are in a certified profession, such as medicine or law, you may be required to get additional insurance coverage that is specific to your profession.
Visit the Insurance Bureau of Canada 34 to learn more about the types of insurance that are specific to business operations. You will also learn how to determine which types of insurance are best for you and your business.
Learn more by visiting our guide: Small Business Insurance.
Business Taxes
All Canadians must pay personal taxes when they earn an income. Businesses are also required to pay taxes when they make a profit. Your business will be taxed based on the tax rates that are associated with the income made. It does not matter what type of business structure you choose; you will need to pay taxes on the money you make in your business. Learn more by visiting our What to Know About Taxes Guide.
To collect personal taxes, the Government of Canada assigns each person a Social Insurance Number. This 9-digit number is unique to each person. The Government of Canada uses a person’s Social Insurance Number to examine personal tax returns.
Similarly, businesses are assigned a Business Number. In Saskatchewan, a Business Number is automatically created for your business when you register as a sole-proprietor, partnership, or corporation through Information Services Corporation (ISC). This 9-digit number is unique to each business.
Collecting and filing taxes is tricky. It is worthwhile to get professional help from an accredited accountant. Accountants in Canada must maintain their professional designation as Certified Professional Accountants (CPA) on a regular basis. When you hire a professional with a CPA designation, it ensures you are getting expert tax advice. Hiring a CPA also ensures that your business is following the tax laws in both Canada and Saskatchewan.
To learn more and find an accountant, visit the Chartered Professional Accountants Saskatchewan website.
If you have to pay Corporate Income Tax, GST, payroll taxes, or conduct import/export activities, your business will need to fill out a secondary registration with the Canada Revenue Agency. After completing this registration, an additional two letters and four digits will be added to your Business Number. This is used for certain business activities that must be reported to the Canadian Revenue Agency. After completing this registration, an additional two letters and four digits will be added to your Business Number. This is used for certain business activities that must be reported to the Canadian Revenue Agency.
Municipal Licensing
A municipality can be a city, town, village, summer village or any specialized area in the province of Saskatchewan. Each municipality has a municipal government and their own bylaws.
The municipality where your business is located may require an additional license for your business to operate. The Government of Saskatchewan website lists the categories of businesses requiring licences.
Saskatchewan has 767 urban, rural and northern municipalities.
These include:
- 16 cities
- 147 towns
- 241 villages
- 42 resort villages
- 2 northern towns
- 11 northern villages
- 11 northern hamlets
- The Northern Saskatchewan Administration District (NSAD)
Source: Government of Saskatchewan.
