Importing Goods into Canada with eBay

http://pages.ebay.ca/help/sellerguide/shipping/importing.html

Shipments to Canada: As a Canadian buying from a US or international seller (the "exporter"), you are the "importer" of goods. Goods entering Canada will be inspected by the Canada Border Services Agency (CBSA) and assessed for applicable Customs duties, taxes and charges. It is the importer's responsibility to account for any duties and/or taxes, while ensuring compliance with Customs regulations in Canada. • Duties and Taxes Payment • Duty and/or Tax Free Items • Customs Brokers

What does the US or International Seller have to do?

Attach a Customs Declaration Form. The exporter must complete and attach a standard Customs declaration to all items they ship by mail to Canada, accurately describing the goods, stating their origin, and reporting their value. A false or incomplete declaration could result in unnecessary delays in processing your shipment. A Canada Customs Invoice or Commercial Invoice is the most common form used.

What does the Canadian Buyer have to do?

Pay Applicable Customs Duties and Taxes. You must pay for applicable duties and/or taxes before the goods can be released to you

• You pay duties based on the value of the goods in Canadian funds (duty rates vary according to the type of goods you are importing and the country they came from or were made in);

• You pay Goods and Services Tax (GST) on most goods you import into Canada. GST is 5%, calculated on the item's total value (in C$) plus any duties that apply;

• You pay Provincial Sales Tax (PST) on all goods that are taxable under the province's tax base if you live in BC, Ontario, Manitoba, PEI, Saskatchewan or Quebec. PST is charged according to the provincial tax rate that applies.

• You pay Harmonized Sales Tax (HST) instead of GST if you live in New Brunswick, Nova Scotia, Newfoundland or Labrador. HST is 14%, calculated on the item's total value (in C$) plus any duties that apply.

Here is an example of an invoice indicating a value of US$100:

US$100 x 1.16 = C$116 (Value for Duty)

C$116 (Value for Duty) x 4% (Rate of duty)= C$4.64 (Customs Duties)

C$116 (Value for Duty) + C$4.64 (Customs Duties) = C$120.64 (Value for Tax)

C$120.64 x 5% GST = C$6.03 (Amount of GST)

Total Taxes and Duty to pay: C$4.64 + C$6.03 = C$10.67

Pay a Canada Post C$5 Handling Fee. You pay a $5 handling fee to cover Canada Post's cost for performing Customs services on your behalf. If your mail item is duty- and/or tax-free, you do not have to pay the fee.

Ensure Canada Customs Compliance. Make sure your US or international seller provides accurate and compliant documentation with the shipment. You will enjoy faster release times and avoid unnecessary import penalties.

Understand NAFTA Duty-Free Rates. You are ultimately responsible for having a fully completed and valid NAFTA certificate on file for any goods claiming the duty free rate of duty under NAFTA. To learn how to complete an accurate and valid NAFTA certificate, click here.

What Items are Duty and/or Tax-Free?

Gifts Worth $60 or Less. A gift valued at C$60 or less is exempt from duties and taxes, as long as the gift is worth C$60 or less. For gifts worth more than C$60, you have to pay duties and taxes on the amount over the C$60 exemption.

• The Customs declaration form should clearly identify the good as a gift and should include a gift card to avoid any misunderstanding

Items Worth $20 or Less. Any good valued at C$20 or less is exempt from duties and taxes. For goods worth more than C$20, you have to pay duties and taxes on the entire value.

NAFTA-eligible Goods. Qualifying goods with a valid NAFTA Certificate of Origin will enter Canada duty free.

Can I Determine in Advance What Duties and Taxes I will have to pay?

Calculate Duties and Taxes Before Buying. You can determine the duties and/or taxes you will have to pay on the goods before buying or bidding by using the My BorderPro Landed Cost Calculator. It is important that you have a thorough description of the goods and know the value and country of origin.

Customs Brokers

As an importer, you can opt to hire a professional Customs broker, like A and A Contract Customs Brokers, licensed to carry out customs-related responsibilities on your behalf. This ensures the compliance and quick release of your product through Canadian Customs.

For more information on importing into Canada, please visit the CBSA's Step-by-Step Guide to Importing.

Register a Business in Canada

http://www.salehoo.com/education/business-setup/register-a-business-in-canada

Education » Business Setup » Register a Business in Canada

Step One: What type of business will you have?

Sole proprietorship: You have complete control over the business. This form of business has low start-up costs and few regulations, but you are personally responsible for any debts and obligations. If you operate under your own name you do not need to register, but if you earn more than $30,000 a year you will need to apply for a GST number.

Partnership: Each partner shares the obligations and profits. This requires a partner agreement.

Corporation: A legal entity. A corporation has higher costs and taxes and more regulations but shareholders have limited responsibility for debts and obligations.

Co-operatives: A corporation controlled by its members.

Step Two: Choose a Business Name

Deciding on a corporate name is not difficult, although it does have to meet certain requirements in order to be acceptable. Normally a search is made when you register to ensure that no other businesses have similar names in the state. You can also register as a numbered-name corporation, although most businesses will find a name useful.

A corporate name is usually made up of:

• A distinctive element
• Descriptive element
• Legal ending.

The distinctive element is the part of the name that makes it different from any other company, for example, in the name "Zebidiah Motors Ltd", Zebidiah is the distinctive element. This does not have to be a name, it can also be a coined word, a descriptive name (e.g. 'Quality', 'Budget'), a Geographic word (e.g. Sahara, Toronto), or a general name (e.g. 'General', 'Community').

The descriptive element of the name describes what the corporation does: e.g. "Electrics (as in Godwin's Electrics Ltd), while the legal ending is "Limited, Incorporated, Corporation" or abbreviations such as "Ltd, Inc. Corp."

You always need to include the distinctive name and a legal ending, however you do not necessarily need to include a descriptive element. So "DashFar Ltd" is an acceptable name.

If your company name uses common or popular names, the chance of it being accepted decrease. If the name is similar to, or the same as, another company in the same jurisdiction as you, then you may be prohibited from using that name.

There are several different name search options available, which will cost between $8-12 per search.

• Use the business names public record at the Companies Branch
• Search online through OnCorp Direct Inc.
• You can also get a NUANS report (New Upgraded Automated Name search), which is a Canada-wide corporate and business name registry. To search this you will need to contact a private service provider.

To register a business name you need the name and address of the business, a description of the business activity that will be performed, and your name and home address.

You can register your business name through the public office of Companies Branch in person or by mail. (Forms are available from the branch or at local Land Registry Offices). The fee for registering a business name by mail or in person at the Companies Branch is $80. You may also register your name at a Local Tax Service office.

Step Three: Choose whether you will incorporate provincially or federally.

Each province has different regulations and costs for registering a business so you will need to search for the name of your province plus register a business. Incorporating federally is a good idea if you wish to do business across the nation and/or wish to protect your company name Canada-wide.

Jurisdiction Current Government Incorporation Fees

• Federal $200
• Alberta $225
• British Columbia $352
• Manitoba $300
• New Brunswick $260
• Newfoundland $250
• Nova Scotia $390
• Ontario $360
• Prince Edward Island $260
• Quebec $300
• Saskatchewan $265

Step Four: Fill out the registration form

To incorporate in your province go to your local company office or website.

• Alberta
• British Columbia
• Manitoba
• Newfoundland
• Nova Scotia
• Ontario
• Prince Edward Island
• Quebec
• Saskatchewan

If incorporating federally, you may be able to do it online through the Corporations Canada Online Filing Center. You will need to register with Strategis Secure Server Facilities to be able to do this.

• Cost: $200
• Payment methods: American Express, Visa, Mastercard.
• Time: Same day service
• All business registration forms available here.

Step Five: Apply for your Business Number

A business number is used for tax purposes and as a business identifier. You may be able to apply for a business number at the same time as you register your business.

To apply for a business number you need:

• Full names and social insurance numbers (SIN) of all owners, directors, partners or officers
• Businesses physical & mailing address

Apply online for a business number here.

How To Set Up a Sole Proprietorship in Canada

How To Set Up a Sole Proprietorship in Canada | eHow.com

The sole proprietorship is the easiest business type to set up in Canada. In certain cases the provincial and territorial governments of Canada will view your business as self-employment for legal and tax purposes. Setting up a sole proprietorship in Canada involves registering a business name, purchasing liability insurance and filing for a federal tax number if necessary.

Difficulty: Moderate

Instructions

Things You'll Need:

• Small business attorney
• Business plan
• Business name

Registration, Insurance and Taxes

1. Step1

   Choose a name for your sole proprietorship and decide whether to apply for a trademark. A trademark is not a necessity, but it offers the highest level of legal protection. According to CanadianBusinessResources.ca, trademarked names for Canadian businesses must be descriptive, distinct and different from any other business name. An example of a name that meets these criteria is "Dave's Candy Factory." "Dave's" satisfies the distinction requirement and "Candy Factory" fulfills the descriptive requirement.

2. Step2

   Perform a name search to ensure that your chosen name has not already been registered. You can choose to allow the governing authority to perform the search for you, but according to amazines.com, submitting your own name search results with your registration paperwork will help to expedite your registration.

3. Step3

   Register your company with the appropriate authority in your province; offices and requirements vary for different territories. Most provinces now allow you to register your business online as well as in person. Follow the link in this article to find a list of provincial and territorial government websites that contain the exact requirements for your chosen province. If you will be doing business in more than one province, you must register your business name in each. Business name registration is good for three to five years, and must be renewed before or on the expiration date. Grace periods are allowed by certain provinces, but it is a good policy to submit your renewal fees early.

4. Step4

   Purchase business liability insurance. As a sole proprietor, you will be responsible for any claims against your business by creditors, which can result in personal financial difficulty if your business is not successful.

5. Step5

   File for a GST/HST registration number from the Canada Revenue Agency and begin to collect sales tax when your revenues pass $30,000. According to canada-esl.com, sole proprietorships in Canada do not have to file separate taxes until they reach $30,000 in annual revenue. As long as your revenue is under this level, all business income will be taxed as personal income, and all business losses can be included as personal tax deductions

What Form of Business Is Best for you?

Ask an Expert

Expert: Michael Fromstein

Dave asked:

I am aware that to register a business as a corporation is more complicated than as with partnerships and sole proprietorships, but how exactly? Also, concerning financial risks with corporations, is the entrepreneur personally liable for an outstanding startup bank loan should the business fail?

Michael Fromstein answered:

Dave's first question was: Registering a business as a corporation is more complicated than as partnerships and sole proprietorships, but how exactly?

"1. Sole Proprietorship
A sole proprietorship is a business owned and operated by one individual. It is not considered to be a legal entity under the law, but rather is an extension of the individual who owns it and therefore does not require any specific legal organisation, except of course, the normal requirements such as licenses or permits. The owner has possession of the business assets and is directly responsible for the debts and other liabilities incurred by the business. Any loans of the proprietorship are identical to personal loans of the individual. The income or loss of a sole proprietorship is combined with the other earnings of an individual for income tax purposes.

2. Partnerships
A partnership is a relationship between persons carrying on a profit-motivated business in common. That is, a defining characteristic of a partnership is that there must be more than one person involved in the business. Any number of individuals operating a business in common can establish a general partnership without any government approval. A general partnership is created by the partners and is routinely registered with the government within 60 days of creation. Registration is relatively easy and primarily involves paying a fee to the government. Determining and documenting the rights and obligations of the partners is much more involved. These rights, responsibilities and obligations are typically detailed in a partnership agreement. It is a good idea to have such an agreement for any partnership. A partnership is a legal entity recognized under the law and as such it has rights and responsibilities in and of itself. A partnership can sign contracts, obtain trade credit and borrow money. Any partner is responsible for all liabilities of the partnership. Creditors often "go after" the wealthier partners first when the partnership does not pay its obligations. When a partnership is small creditors may require a personal guarantee of the partners before granting credit. A partnership does NOT have to file income tax returns or pay income tax. The financial information from the partnership is combined with the personal income of the partners to determine their overall tax liability. Partnerships with more than FIVE partners have to comply with Revenue Canada's reporting requirements.

3. Corporation
A corporation is a separate legal entity which exists under the authority granted by either provincial or federal law. A corporation has substantially all of the legal rights of an individual and is responsible for its own debts. It must also file income tax returns and pay taxes on income it derives from its operations. Typically, the owners or shareholders of a corporation are protected from most of the liabilities of the business. However, when a corporation is small, creditors may and almost all banks will require personal guarantees of the principal owners before extending credit. The legal protection afforded the owners of a corporation can far outweigh the additional expense of starting and administering a corporation.
Corporations must file annual income tax returns with the Revenue Canada (federal) and the Ministry of Finance (provincial) and possibly other provinces in which it does business.
Legal fees for incorporating commonly run from $ 500 to $ 1,000, and government fees, vary depending on provincial ($ 315 in Ontario) or federal ($ 500 ) incorporation."

Dave's second question was: Does one form of operation provide more protection from creditors, that is is the entrepreneur personally liable for an outstanding startup bank loan should the business fail?

"In practice, there is no practical protection for the small business person from the banks. There is initial legal protection only when the business operates from a corporation. However, because banks do not want to assume the risks of carrying on the business when the owner assumes the benefits, banks virtually always require a personal guarantee from small businesses. All the assets of the guarantor are available to the bank to settle the original debt, regardless of whether or not the original loan was to a sole proprietor, partnership or corporation.

There is additional information on this and related subjects in the business resource library at our web site. Much of the above content is contained in our booklet "Starting Your Own Business" {in English and French} in the "Business" section of the Canadian portion of our library."

About the author

Michael Fromstein is a tax specialist with Integrated Professional Specialist Services.