Starting a Soap Business in Canada

[sudsy897]

Hi there,

Did any of you Canadian soap crafters know if I need to apply for a municipal license for permit to operate a home-based business in addition to the Health Canada/Federal application? I know that my husband works from home and had to register with the city first.

Once my products are approved can I then, sell them through retailers?

Thanks in advance, it's such an helpful and informative forum. I've been happily reading and learning so much

Shelley

 

[HomemadeBathGoodies]

I would like an answer to the previous question as well. What part of Canada are you from? I am from Quebec.

What insurance company are you looking to work with? I have been having a hard time finding one and the one I found is over $600 a year. And selling only in Canada.

 

[Babag]

I'm in Quebec and have been looking at insurance too. That price sounds about like what I was quoted. The woman I spoke to said it would be double to cover sales in the US since lawsuits are more common there.

She did say that another option would be to incorporate which I believe is about $200 - and then about $20 annually. Then, if anything happens, the corporation takes the hit and not you personally.

I have to research more, but it seems like an interesting option until your making enough sales to warrant the $600 + a year.

 

[Lindy]

Most communities require that you obtain a business license for home based businesses.

 

[HomemadeBathGoodies]

I want to do ONLY online sales for now atleast but I DO NOT like the fact that on each product you have to write your business address. Well for those who works at home....who really wants others knowing your address, you know what I mean. I don't want to be robbed one day. Is there a way to just include the website contact information, and email?

 

[Lindy]

Yes - we are only required to list out website on our labels. When we send out forms in we of course do have to tell Health Canada where we are working from.

Here's the kicker though. If you are making goods to sell on-line make sure you have commercial liability insurance as your home insurance does not cover cosmetics or candles. Soaps are cosmetics here in Canada and you if your home insurance catches wind you are doing this you will lose your home insurance, the small business clause doesn't cover us.

 

[Kadryann]

Starting a small business can be a real headache, especially from home.

You might have to register with your municipality for a small home business yes, for that you need to call your town hall. Certain town don't allow you to have small home businesses (go figure). Some towns will ask you to advertise, some others prohibit advertising on your own lawn... etc etc.

For your business address, I know that a while ago it was possible to have business mailboxes, so you could put that on your label. Now I don't know.

You can register your name in court (10 years ago it was 100$ for registration and 27$ yearly) I don't know if the price has changed, but that doesn't protect you and it is not a trademark, but the name belongs to you (only in Canada). You can also incorporate it or trademark it. You might wanna put the 200$ forward and incorporate your name, as it becomes an entity, and if anything happens, your personal name is safe, and when I mean anything it goes from lawsuits, to bankruptcy.

 

[Lindy]

I've been thinking about your comment Kadryann and I have to say that starting a home based business is usually not all that complicated or expensive. Even in a large city like Calgary, the business license is not that expensive. They don't have to post a change of use unless you are going to have customers coming to your home which creates traffic issues.

In Canada I don't think you would have any town or municipality that would veto a home business.

As stated before, in Canada you have to put a method of customers to track you down in case of a problem, Health Canada does accept a website address so post office boxes are not required, unlike in Europe where you have to put a physical address on your labels.

You also don't have to register a business name unless you want to create a sole proprietorship, partnership or corporation. So you can call your business whatever you like unless it is a name that has been taken and then just use your personal bank account to deposit your funds. That's not the best way to do it because you're not tracking your business all that well, but it can be done.

The biggies in Canada are insurance and filing your formulations with Health Canada, there are no short-cuts there, even if you are making melt and pour you must register your product formulation.

 

[Bubbly Buddha]

I'm in Quebec and have been looking at insurance too. That price sounds about like what I was quoted. The woman I spoke to said it would be double to cover sales in the US since lawsuits are more common there.

She did say that another option would be to incorporate which I believe is about $200 - and then about $20 annually. Then, if anything happens, the corporation takes the hit and not you personally.

I have to research more, but it seems like an interesting option until your making enough sales to warrant the $600 + a year.

I've been calling around for insurance here in Ontario and we have been quoted around $1000/yr. :shock: This is huge for someone like me who would only be doing this part time and on a very small scale.

To become incorporated would you need to have a minimum amount of sales per year? What else is involved in this process?

 

[Lindy]

Check with Co-operators Insurance. If you're not selling into the US then you should be able to get it for between 600 - 700/year and they will do monthly payments.

You don't need a minimum amount of sales to become incorporated. A lot of businesses incorporate long before they open their doors as part of their start-up.

 

[Kadryann]

Exactly like Lindy said. To be incorporated is to make your business a physical entity amongs other things.

And if you are incorporated, I know a few years ago there was this program where you didn't need to charge taxes to your client upto a certain amount of annual income generated by your business. (I think it was that as long as you didn't reach 30 000$ you didn't need to charge taxes). But I don't know how it works for internet business and taxes, and I don't know if that progtram still exists. That was for new business owners when I did my "how to start a small business course" but I think most of my info is quite outdated now. LOL

 

[Lindy]

If your business is grossing less than $30,000 a year you don't have to charge GST - depending on your province the ceiling may be lower for PST. That you need to check.

It doesn't matter if you're incorporated or not when it comes to charging tax. You can get your GST # just on your name with your Social Insurance Number. This is often to your benefit because it allows you to claim back all the GST/HST you have to pay on products and supplies giving you a nice offset. Once you are actually profitable you will end up paying some of the tax you are collecting. I strongly recommend you go on a quarterly payment for taxes as it is easier to stay on top of.

 

[HomemadeBathGoodies]

I'm in Quebec and have been looking at insurance too. That price sounds about like what I was quoted. The woman I spoke to said it would be double to cover sales in the US since lawsuits are more common there.

She did say that another option would be to incorporate which I believe is about $200 - and then about $20 annually. Then, if anything happens, the corporation takes the hit and not you personally.

I have to research more, but it seems like an interesting option until your making enough sales to warrant the $600 + a year.

I am in quebec too and was wondering if you inquired about a business license, and a resale license? I definately know we need to have liablity insurance and if we make over 30grand a year we to register for taxes. But I can curious to know if we need a business license here in quebec to sell online?

 

[Hafsah11]

Registering in Quebec

Hi! I'm new to the forum and looking for anyone who is registered in Quebec? I am new to the soap making world and am looking for someone to chat with regarding the rules and regulations! I feel a bit overwhelmed with all the things involved..the insurance etc! I'm in Laval!

 

[The Efficacious Gentleman]

Here are a couple of good things to read in general -

http://www.soapmakingforum.com/showthread.php?t=33144

http://www.soapmakingforum.com/showthread.php?t=16002

Here is one specific to Cananananananada

http://www.soapmakingforum.com/showthread.php?t=34139&highlight=selling+canada

As you can see, Lindy is pretty helpful with questions 'aboot' Canada and selling soap.

 

[inkyfingers]

I'm considering selling my soap also, but is the expense really worth it? It seems like such a deterrent, considering I have no idea how successful I'll be with selling soap.

 

[Lindy]

Hafsah we have very definite regs here in Canada about selling soap. It is a cosmetic and you need to file a Cosmetic Notification Form through the portal plus follow labeling guidelines. Not too hard, but you definitely need to learn them.

http://www.hc-sc.gc.ca/cps-spc/cosmet-person/notification-declaration/index-eng.php

http://www.hc-sc.gc.ca/cps-spc/cosmet-person/hot-list-critique/index-eng.php

http://www.hc-sc.gc.ca/cps-spc/cosmet-person/labelling-etiquetage/index-eng.php

 

[scottief]

I have a question about the tax. I know as Lindy stated that if you make under 30 grand you don't have to charge tax. When you do finally make over that with your soap, do you start charging tax on top of it, or do you incorporate it in your price from the start.

I had this same problem with my own business (not soap) where I finally made over 30 and had to start charging tax. Is it just easier to just charge the tax from the get go and send it to the government so you can write your expenses off?

 

[The Efficacious Gentleman]

I will be doing that. In something a service industry it might make sense not to do so, but as we buy a lot of materials, I want to be claiming that back!

 

[scottief]

Thats what I figured. On another topic for Canadians.

I just went to try to get the Cosmetic Notification Form and it won't let me get it. Ive tried on 3 computers and all are updated to the latest adobe. Anyone else having problems?