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Business 101

Important terms

Business licence: A permit issued by The City to operate a business.

Land use approval: City approval to operate a business at a given location.

Business ID (BID): A unique identification number required by all businesses operating within Calgary.

Before you start

This is information on starting a business and how operating a business in Calgary is regulated.

All business owners operating in Calgary are required to register the business, obtain a Business ID and land use approval for the business location. The required approvals vary for each business licence type. For more information on specific business types, please visit the New Business Guide.

Getting started

Planning your business

Starting a new business can be exciting but daunting. Taking time to plan what your business will do, how it will be owned and how you plan to maintain and growit will save you time and make your business more successful.

Creating a business plan

A business plan puts all of your business ideas into one place. It should lays out what your business will be called, what it will do and how it will profit and expand. While not a requirement, a business plan will help you to find a competitive advantage and understand your business in detail.

Here are resources for developing your business:

Choosing a name for your business

A business name or trade name, is used to represent your business to the public. Registering a trade name informs the province of your intended company name. Trade names can be registered at any Alberta registry.

While it is not a requirement to register a trade name for a municipal licence, it may be required to obtain a bank account in your company name. Corporations and registed partnerships will automatically register the tradenames when they register the corporation or partnership with the province.

While a trade name registration does not grant ownership of the name, it does allows you to have proof that the name you chose is associated with your business.

Federal taxes, provincial taxes and GST

Whether your business is a sole proprietorship, a partnership or a corporation, you need to pay taxes on your profits. A bookkeeper or accountant will be the best source of information on the tax process. Find out more information on provincial taxes at finance.alberta.ca.

For federal tax information, visit the Canada Revenue Agency.

GST for businesses

The Canada Revenue Agency has rules to determine if you are required to collect GST. If you are required to collect GST,  you need to register an account with the Canada Revenue Agency to receive a GST number.

Contact the Canda Revenue Agency:

You can also register by using Form RC1, Request for a Business Number and mailing or faxing it to your local tax centre.

Choosing how your business is owned

Determining your business ownership is something you must complete prior to registering a business with The City.

A business can be owned by one or more people, partnerships, corporations or a combination of these. The basic business ownership catagories are listed below.

Sole proprietorship

This is the simplest way to set up a business. A sole proprietor is fully responsible for all debts and obligations related to his or her business. A creditor with a claim against a sole proprietor has a right against all of his or her assets, whether business or personal. This is known as unlimited liability.

This type of business comes under provincial jurisdiction. If the proprietor chooses to carry a business under a name other than his or her own, he or she must register their tradename with the province.

If a sole proprietor establishes a business in his or her own name, without adding any other words, it is not necessary to register the business with the province at the registry office.

Partnership

A partnership is an agreement in which two or more persons combine their resources in a business. To establish the business terms and to protect partners/shareholders, an agreement should be drawn up with a lawyer. Partners share in the profits according to the terms of their agreement.

General partnership: All members share the management of the business and each is personally liable for the debts and obligations of the business. This means that each partner is responsible for, and must assume the consequences of the actions of the other partner(s).

Limited partnership: Some members are general partners who control and manage the business and may be entitled to a greater share of the profits, while other partners are limited partners and contribute only capital. Limited partners take no part in control or management and are only liable for debts to a specified extent.

Limited liability partnership: This type of partnership consists of partners in eligible professions such as optometry, medical practice, accounting or law. Unlike a general partnership, a limited liability partnership protects uninvolved partners from personal liability arising from the negligence, wrongdoing, or misconduct of a partner, employee, agent or representative of the partnership that occurs in the ordinary course of the practice of the particular profession. Partners in a limited liability partnership may be individual practitioners or professional corporations.

Corporation

A corporation is a legal entity that is separate from its owners, the shareholders. No shareholder is personally liable for the debts, obligations or acts of the corporation. This type of business can be incorporated at either the federal or provincial level.

A corporation is identified by the terms Limited, Ltd, Incorporated, Inc, Corporation or Corp. Whatever the term, it must appear with the corporate name on all documents, stationery etc., as it appears on the incorporation document.

Private corporation: A private corporation can be formed by one or more people. A majority of its directors must be Canadian residents. If none of the directors reside in the province in which it does business, the corporation must appoint a power of attorney who resides in the province. A private corporation cannot sell shares or securities to the general public.

Public corporation: A public corporation issues securities for public distribution. Besides filing incorporation documents, a public corporation must file a prospectus with the appropriate Securities Commission in the province, employ outside auditors and distribute semi-annual financial statements.

Federal corporations: Private and public corporations may be incorporated federally under the Canadian Corporations Act. A firm operating nationally or in several provinces may find this advantageous.

Extra provincial corporation

If a company is incorporated federally or provincially outside of Alberta, the Province of Alberta requires the business to be registered extra-provincially to conduct business. As per Alberta's Business Corporations Act, any corporation formed outside Alberta must register as an extra-provincial corporation within 30 days of commencing business.

This applies to:

  • Companies incorporated federally
  • Companies incorporated in a different province
  • Limited and limited liability partnerships
  • Companies incorporated in the United States

This does not apply to:

  • Sole proprietors
  • General partnerships

Business location

Determining where your business will be located directly affects a business licence application. All businesses operating in Calgary require a physical location. Your business could be located within Calgary at your home, a commercial location or outside the city. 

Home-based b​usiness

​Your business will be run from your home in Calgary. 

Home-based businesses have two different types of approvals, and can be found at calgary.ca/homebusiness​​.

C​ommercial

Your business will be located in Calgary's commercial or industrial areas.

Before committing to a long-term lease on a space for your business, it is important to know if The City will allow you to operate at your desired location. This is why a land use approval should be considered before any other licensing approval process. A business can investigate their land use approval by calling the Planning Services Centre. A planning services technician will take into consideration the land use district, proposed business activities and historical approvals for the address provided.

Based outs​ide of Calgary

Your business will be based outside Calgary, but you will be conducting business within the city.

Only certain business can operate this way. These businesses are called non-resident. Non-resident businesses are required to pay an additional surcharge on top of standard licensing fees.

Business planning resources

Here are some resources that may be useful for your business:

Your business and The City

The City of Calgary has a responsiblity to ensure businesses operating within the city are registered or licenced municipally. This is to ensure proper regulations and safety rules are being followed, that businesses are located appropriately and to ensure all businesses are treated fairly.

To regulate business activities within the city, bylaws define what businesses need to be licenced, what types of approvals and inspections are required. This provides customer protection and ensures that businesses are held to a fair operating standard.

When you are ready to Apply, The City will let you know your required approvals through the Planning Services Centre.

Business tax

Commercial businesses are assessed a business tax. This tax helps our community grow and ensures services are available for your business to take advantage of. In an effort to help businesses in our communities, this tax is planned to be phased out in 2019.

Data created when businesses open, move, change ownership or close is important in maintaining accurate assessment records  to determine the amount of business tax.

Businesses may be liable for two types of taxes: business tax and property tax.

Business tax

Business tax is billed annually to any business that occupies commercial space within Calgary for the purpose of conducting a business. It does not reflect a specific type of business or the profit of a business.

Property tax

Property tax is paid by landowners and is based on the assessed property value.

Special cases

Home-based businesses: Home-based businesses do not pay business tax, as they do not occupy a commercial space.

Non-resident businesses: Non-resident businesses do not pay business tax or Calgary property tax, as they are not located within the municipality. This is the primary reason for the non-resident surcharge being added to these business licences.

Subtenant businesses: Subtenant businesses may or may not be responsible for paying business tax, depending on the lease agreement.

For more information on the administration or collection of business and property taxes, please visit calgary.ca/businesstax or contact 311.​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​