Retail Business Info-Guide

The following document was prepared by the Canada-Ontario Business Service Centre (COBSC), a single point of access to information on federal and provincial government programs, services and regulations.  This guide is designed to help navigate through federal and provincial government programs, services and resources that may be of interest to those involved in retail-related industries in Ontario.  Although many questions will be answered in this guide, the list of resources given here is not exhaustive.

Need more information?

Click: Canada-Ontario Business Service Centre
Call: 1-800-567-2345
Visit: The Regional Access Program Location Index for a listing of offices in Ontario.

TABLE OF CONTENTS

1. Starting a Business
2. Starting a Retail Business in Ontario
3. Regulations
4. Financing
5. Taxation
6. Resources and Web sites of Interest

1. Starting a Business

Starting a business can be a rewarding undertaking, but it comes with its challenges. Before starting a business in Ontario, it is wise to conduct detailed research. One should thoroughly enjoy the retail field and believe in the product being sold. A retail business may consume a great deal of time, especially in the start-up phase. There are several issues to consider such as regulations, financing, taxation, business management, advertising and much more.

For further information:
see the documents:
Business Start-Up Info-Guide
Employment Regulations Info-Guide
Points to Consider When Starting Your Own Business
Checklists for Going Into Business
visit the Web site:
Your Guide to Small Business
http://www.sbe.gov.on.ca/ontcan/sbe/en/st_yrguide_en.jsp

Personal Information Protection and Electronic Documents Act
The Personal Information Protection and Electronic Documents (PIPED) Act sets out ground rules for how private sector organizations may collect, use or disclose personal information in the course of commercial activities. As of January 1, 2002, the personal health information collected, used or disclosed by these organizations is also covered. As of January 1, 2004 The Act extended to the collection, use or disclosure of personal information in the course of any commercial activity within a province.

For further information:
please call 1-800-282-1376
visit the Web site: http://www.privcom.gc.ca/information/guide_e.asp
see the document Protection of Personal Information - Your Responsibilities

2. Starting a Retail Business in Ontario

The retail industry is defined as the retailing of merchandise in small quantities to the general public generally without transformation, and rendering services incidental to the sale of merchandise. The retailing process is the final step in the distribution of merchandise.

The retail sector is one of the most important sectors of the economy. The Retail sector represented 6.4% of total gross domestic product (GDP) or value-added in the economy in 2000, with total sales exceeding $277 billion.

Source: Strategis; Retail Trade - Service Industries Overview Series; March 2001

Business Plan

The business plan is an essential planning and tracking tool. It can be used to assist in both start-up and day-to-day operating decisions, to obtain necessary financing, and to keep a retail business on track. The COBSC has a number of resources that can help you develop your business plan.

For further information:
see these documents:
Business Plan Guide
Interactive Business Planner - IBP
Business Plan for Retailers
Guide to Market Research and Analysis

Selling Products on Consignment

Selling goods on consignment is described as a situation whereby goods are shipped to a dealer who pays the consignor only for the merchandise which sells. The dealer, referred to as the consignee, has the right to return the merchandise which does not sell and without obligation.

For further information:
see the document: Selling Products on Consignment

Insurance

Insurance is a very important factor in any business. Insurance needs for businesses can vary greatly so it can be useful to choose an insurance agent or broker familiar with the specific type of retail operation in question. Some basic types of insurance include:

Marketing/Advertising

Word-of-mouth advertising and good public relations are often the best ways of promoting a retail business. Depending on the market and its size, also consider flyers, business cards, brochures, newspapers (especially for holiday promotions), radio, TV, the phone book and the Internet. Also bear in mind that a satisfied customer is good advertising - referrals are often a valuable way of making customers aware of products or services.

A Web site can also be an effective marketing tool. While Web sites can vary in scope and complexity, it is important to express such details as location (your address, telephone and fax numbers, and directions on how to get to your establishment), hours of operation, services offered, credentials and anything else may be of interest to potential customers. However, once a retail Web site has been created and launched, it is important to pay attention to updating information.

Participating in community events is another method of advertising the goods and services of a retail business. No matter what method is used, it is wise to track how clients became aware of the retail establishment - this may help determine future advertising strategies.

For further information:
see these documents:
Marketing Checklist for Small Retailers
Signs and Your Business
Plan Your Advertising Budget
Advertising Do's and Don'ts
Ways to Promote Your Product or Service
Guidelines for Developing a Company Brochure
Marketing Plan Outline
Advertising Guidelines for Small Retailer Firms

The Marketing Basics section of the Online Small Business Workshop covers the basics from developing your customer profile to promoting your business.

For further information:
visit the Web site Online Small Business Workshop

The Competition Act governs misleading advertising and deceptive marketing practices for all businesses in Canada. The Act, which is administered by Industry Canada, defines which marketing practices are illegal and the process of complaint investigation.

For further information:
please call: (819) 997-4282 or 1-800-348-5358
visit the Web site: Competition Bureau
see the document
Competition Act - Misleading Advertising and Deceptive Marketing Practices

Market Research

Successful businesses have extensive knowledge about their customers and their competitors. Acquiring accurate and specific information about potential clients and competitors is critical in developing a marketing plan.

A primary function of market research is to understand the needs and desires of clients, select or develop a service that will meet their needs, develop promotional material that will make them aware and ensure service delivery.

For further information:
see the document Guide to Market Research and Analysis

Selecting Professional Services

The use of professional services is essential to the success of a small business. Professionals can provide knowledge and expertise in the areas where a business owner may have little. They can round out a management team to ensure the business is operating efficiently.

For further information:
see the document Selecting Professional Services

Pay Systems

Pay administration is a management tool that enables you to control personnel cost, increase employee morale, and reduce work force turnover.

For further information:
see the document Setting Up a Pay System

Setting the Right Price

Setting the right price can influence the quantities of various items that consumers will buy, which in turn affects the total revenue and the profit in the store. In the end, the right price for the product is the price that the consumer is willing to pay for it. Hence, correct pricing decisions are a key to successful retail management.

For further information:
see the document Setting the Right Price

Basic Bookkeeping

A good record keeping system should be simple to use, easy to understand, reliable, accurate, consistent and designed to provide information on a timely basis. The legal requirement concerning financial records specify only that there be a permanent, accurate and complete record of your daily income and expenses. There are many types of record books and bookkeeping systems available. For example:

• double entry bookkeeping;
• commercial bookkeeping systems;
• one-write systems;
• computerized systems; and
• single entry bookkeeping.

For further information:
see the document Basic Bookkeeping

Counterfeit Currency Detection

It is very important that all staff working with cash should be trained to recognize counterfeit currency. The Bank of Canada offers free printed materials, tools, and information services to help retailers to quickly, easily, and reliably identify genuine bank notes.

For further information:
see the document Security Features for Canadian Bank Notes

Selecting Your Inventory

Keep ongoing, accurate inventory records in order to continually monitor the ratio between stock and actual sales. This helps to minimize lost sales and money tied up in inventory, as well as determine the demand for different products.

For further information:
see the document Departmentalizing and Inventory Management in a Retail Store

Suppliers

• General line wholesalers - Join a cooperative of independent store owners to purchase in groups to gain volume discounts. Approximately 25% of Canadian grocery stores belong to such cooperatives which give advice in merchandising, management and finance.
• Specialty wholesalers - Bakeries, delis and produce suppliers often offer lower prices than general line wholesalers. They may also stock shelves and help you estimate demand.
• Service merchandisers - Non-food items, such as health/beauty aids, housewares and magazines are sold by service merchandisers. They can also deliver, stock shelves, price items and help estimate demand.

For further information:
see the document Selecting Your Supplier

Cost Control

You must have procedures for controlling inventory and costs. Ask people in your industry for information about procedures for:

• Purchasing - Most of the time, purchasing is done over the telephone, by fax, or online. Therefore, often no contract is signed between the purchaser and the supplier; it is essential that you choose your supplier carefully.
• Receiving - Check all deliveries against the Purchasing and Receiving Form, in three ways: quantity, price and quality (that is, temperature: frozen goods must be frozen); packaging should be intact. Make sure specifications are met. Careful recording will show short shipments, price variations and weight differences.
• Budgeting and Projecting - Establish a cash budget and maintain cash flow projections on a continual basis.
• Storage - Ensure refrigerated and frozen products are quickly placed in a cold storage. Storage temperature for dry goods (between 10-21oC), frozen goods (-18oC or less) and refrigerated goods. Rotate your stock to ensure that oldest items are used first before the new stock.

Making a profit is the most important objective of a business. Profit measures success. It can be defined simply: revenues - expenses = profit. So, to increase profits you must raise revenues, lower expenses, or both. To make improvements one must know what's really going on financially at all times.

For further information:
see the document Checklist for Profit Watching

Winning Retail 2nd Edition
Winning Retail is a useful " how to" publication aimed at the retail industry. For a student of retail, you will find in its pages practical ideas from the real world of retail to help form your understanding of the business. For those exploring the possibility of establishing their own retail store, this publication presents an opportunity for you to assess the strength of your concept and state of readiness.

For further information:
visit the web site: Winning Retail 2nd Edition

3. Regulations

For regulatory or legal questions, it may be useful to contact a lawyer through the Law Society of Upper Canada's Lawyer Referral Service.

For further information:
please call (416) 947-3300 or 1-800-668-7380
visit the Web site: http://www.lsuc.on.ca/index_en.html
see the document Selecting Professional Services

Examples of licenses, permits and regulations that could apply when involved in the retail industry in Ontario may include, but are not limited to:

Municipal Requirements

One area that most retail businesses must comply with is that of municipal regulations, permits and licenses.

Each municipal government has the authority to issue its own business licenses within its jurisdiction. It is important to consult with the appropriate municipal government officials to determine whether the business will be affected by local regulations and licensing requirements. Businesses (including home-based businesses) must also meet the zoning by-laws that control property uses in specific municipalities.

For further information:
visit the Web site: http://www.amo.on.ca//AM/Template.cfm?Section=Home
see the document Municipal Requirements to Start a Business

Video/DVD Rental License
Businesses selling or renting videos directly to the public (including by vending machines) require a Film Exchange Retail Licence. Businesses distributing videos to other retailers require a Distributor's Licence. Application forms and information can be obtained through the Theatres Branch of the Ministry of Government Services (MGS).

For further information:
Please call (416) 314-3626 or 1-800-268-6024

Music Licence
Performances of music in public, i.e. offices, stores, etc., require a licence. This licence is necessary whether the music is performed by live or recorded means.

For further information:
please call (416) 445-8700 or 1-800-557-6226
visit the Web site: http://www.socan.ca/jsp/en/index.jsp

Selling Tobacco products
In order to sell tobacco products, retailers are required to have a retail vendor permit issued by the Retail Sales Tax Branch. The stocking or selling of cigarettes that do not bear an Ontario tax mark (yellow tear strip) is prohibited. Unauthorized possession of unmarked cigarettes may result in penalties, fines, imprisonment and forfeiture of the product.

For further information:
please call 1-800-263-7965
see the document Responsibilities Under the Tobacco Act
visit these Web sites:
The Tobacco Act - Health Canada
http://www.hc-sc.gc.ca/hl-vs/tobac-tabac/legislation/federal/tobac-tabac/index_e.html
Ministry of Finance
http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_2777_1.html

The Smoke-Free Ontario Act
As of May 31, 2006, the Ontario government is prohibiting smoking in all enclosed workplaces and enclosed public places. The legislation will also strengthen measures to ensure only those 19 years of age and older can buy cigarettes and will phase out the display of tobacco products, with a complete ban beginning May 31, 2008.

For further information:
please call 416-326-4846
visit the Web site:
Ministry of Health Promotion
http://www.mhp.gov.on.ca/english/health/smoke_free/legislation.asp
Smoke-Free Ontario Act
http://www.e-laws.gov.on.ca/DBLaws/Statutes/English/94t10_e.htm

Vendor Permits
Individuals and companies who sell goods or services that are taxable under the Ontario retail sales tax (also knows as "provincial sales tax" or "PST") require a vendor permit.

For further information:
see the document:
Vendor Permits and the Retail Sales Tax
visit the Web site:
Application for a Vendor Permit
http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_6695_1.html

Employment Regulations

What are the rules on working conditions in Ontario?
The Employment Standards Branch of the Ontario Ministry of Labour is responsible for the administration and enforcement of the Employment Standards Act, which provides for minimum terms and conditions of employment in most industries.

For further information:
please call (416) 326-7160 or 1-800-531-5551
visit these Web sites:
Employment Standards Claim
http://www.labour.gov.on.ca/english/es/claim/index.html
Employee Self Help Kit
http://www.labour.gov.on.ca/english/es/selfhelp/index.html
see these documents:
Employment Regulations Info-Guide
Employment and Training Assistance Programs Info-Guide
Are You an Employee or Self-Employed?

Related Legislation
Employment Standards Act
http://www.e-laws.gov.on.ca/DBLaws/Statutes/English/00e41_e.htm

Labelling

Most goods produced domestically or imported into Canada require some form of consumer package labelling. Retailers should become aware of these requirements before offering goods for sale in Canada. The Labelling act(s) are enforced and administered by the Competition Bureau.

For further information:
visit the Web site:
http://www.competitionbureau.gc.ca/internet/index.cfm?itemid=97&lg=e

Labelling of Textiles
Under federal legislation, most consumer textile articles offered for sale in Canada, including clothing, carpets and upholstered furniture must bear a label with information on fibre content and dealer identity. Fibre content information must be provided in English and French. Dealer identification may be provided in the form of a CA Number (for Canadian dealers only) or by listing the complete name and postal address of the responsible dealer.

For further information:
please call 819-997-4282 or 1-800-348-5358
visit the Web site: http://www.competitionbureau.gc.ca/internet/index.cfm?itemID=148&lg=e
see these documents:
Labelling - Textiles
CA Number Registration and Database

Labelling of Upholstered and Stuffed Articles
Upholstered and stuffed articles in Ontario must have labelling that indicates the type(s) of filling materials used in the article by a generic name.

For further information:
visit the Web site: http://tssa.org/regulated/upholstered/default.asp

Labelling of Food
The Canadian Food Inspection Agency administers the federal labelling requirements for pre-packaged food under the Food and Drugs Act and the Consumer Packaging and Labelling Act and Regulations, including requirements for ingredient labelling, durable life dates, nutrient content claims, mandatory nutrients declarations and foods for special dietary needs.

For further information:
see these documents:
Food Labelling
Fair Labelling Practices Program
visit the Web site: http://www.inspection.gc.ca/english/toc/labetie.shtml

Labelling of Consumer Products
Under the Consumer Packaging and Labelling Act, the Competition Bureau administers the packaging and labelling of pre-packaged non-food products at all levels of trade.

For further information:
see the document Labelling - Packaging Consumer Products (Non-Food)
visit the Web site: http://www.competitionbureau.gc.ca/internet/index.cfm?itemID=1248&lg=e

4. Financing

The COBSC has created documents, which provide an overview of some of the main financing options for individuals starting and operating a business in Ontario, including programs offered or supported by the government.

For further information:
please call 1-800-567-2345
see these documents:
Financing for Starting a Business Info-Guide
Financing for Established Businesses Info-Guide
Business Guides

Canada Small Business Financing Program
Business Financing Program can assist new and existing small businesses with annual gross revenues not exceeding $5 million (excluding farming and charitable or religious enterprises) in obtaining term loans and capital leases of up to $250 000 to help finance fixed asset needs.

For further information :
please call (613) 954-5540
visit the Web site:
Canada Small Business Financing Program
http://strategis.ic.gc.ca/epic/internet/incsbfp-pfpec.nsf/en/Home
see the document Canada Small Business Financing (CSBF) Program

Sources of Financing
Sources of Financing is an Internet resource for locating traditional and alternative sources of small business financing. This site provides interactive access to objective information on appropriate forms of public and private sector sources of debt and equity financing:

For further information:
visit the Web site http://strategis.gc.ca/sources
see the document Sources of Financing

Sources of Micro-Credit Financing
"Micro-credit" can be defined as small loans (under $25,000) made to individuals to undertake self-employment or to start small businesses. This type of financing may be provided through a number of different sources including independent non-profit organizations, community economic development programs, commercial financial institutions, etc.

For further information:
please call 1-800-567-2345 or (416) 775-3456
visit the Web site: http://strategis.gc.ca/sources
see the document Sources of Micro-credit Financing

5. Taxation

Dealing with Business Taxes

All retailers must be aware of the various taxes that may apply to their product and service. Depending on the type and location of products or services being offered, federal, provincial and/or municipal business taxes may apply.

For further information:
visit these Web sites:
Provincial Tax Forms and Publications :
http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_158_1.html
Small Business Tax Help:
http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_160_1.html
CRA Business Tax Web Page:
http://www.cra-arc.gc.ca/tax/business/menu-e.html
see the document Taxation Info-Guide

Income Tax Information

Retail business owners must be aware of the requirements of Income tax that may apply to their product or service. There are different tax implications for incorporated and non-incorporated businesses. For information specific to an organization, it may be beneficial to consult an accountant or financial professional.

For further information:
please call 1-800-959-5525
visit the Web sites:
Ontario Income Tax:
http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_2447_1.html
Canada Revenue Taxes Menu:
http://www.cra-arc.gc.ca/tax/business/menu-e.html
see the document Taxation Info-Guide

Below are links to publications that cover some of the general tax requirements for business owners in Ontario.

Ontario Small Business Guide
Provides guidance through various aspects of Retail Sales Tax, Corporations Tax and Employer Health Tax and answers some of the frequently asked questions of small business owners regarding tax obligations.

For further information:
visit the Web site: http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_24414_1.html

Employer Health Tax (EHT)
Describes the main features of the EHT, including taxpayer rights and responsibilities under the Employer Health Tax Act.

For further information:
see the document Employer Health Tax - EHT
visit the Web site: http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_2697_1.html

Retention/Destruction of Books & Records
Explains the retention period required for Ontario tax purposes, before books and records can be destroyed.

For further information:
visit the Web site: http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_20001_1.html

Voluntary Disclosure
Explains what voluntary compliance is and the basic principles under which Ontario's tax system operates.

For further information:
visit the Web site: http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_19999_1.html

6. Resources and Web Sites of Interest

The following resources can assist in locating detailed industry information for the retail sector.

Trade Data and Statistics
Statistics Canada maintains records related to sales, inventories and operating data for retail and wholesale businesses and the number and value of new motor vehicles sold in Canada. Statistics Canada also maintains detailed monthly trade data by commodity or industry and records related to exports and imports on a customs basis.

For further information:
please call 1-800-263-1136
visit the Web site http://www.statcan.ca/english/Pgdb/trad38a.htm
see the document Trade Data and Statistics

Business Information by Sector
Business Information by Sector features a listing of links which provide information on various industry sectors.

For further information:
visit the Web site http://strategis.gc.ca/sc_indps/engdoc/homepage.html
see the document Business Information by Sector

Retail Council of Canada
The Retail Council of Canada provides advocacy, research, education and services that enhance opportunities for retail success, and increase awareness of retail's contribution to the communities and customers it serves.

For further information:
please call (416) 922-6678 or 1-888-373-8245
visit the Web site http://www.retailcouncil.ca
see the document Retail Council of Canada

Centre for the Study of Commercial Activity (CSCA)
The CSCA is a university-based research body established to study the commercial and retail sectors. The CSCA conducts research, publishes reports, hosts seminars and offers training.

For further information:
please call (416) 979-5379
visit the Web site http://www.csca.ryerson.ca
see the document Centre for the Study of Commercial Activity

Scanner Price Accuracy Voluntary Code
The Competition Bureau has endorsed the Scanner Price Accuracy Voluntary Code, which evolved from the collaborative efforts of the Retail Council of Canada, the Canadian Association of Chain Drug Stores, the Canadian Federation of Independent Grocers and the Canadian Council of Grocery Distributors.

The purpose of the Code is to:

• Visibly demonstrate retailer commitment to scanner price accuracy;
• Provide retailers with a consistent national framework for dealing with scanner price accuracy issues; and
• Provide the retail industry with a mechanism for consumer redress in scanner price accuracy cases, to be managed by a Scanner Price Accuracy Committee.

For further information:
visit the website: Scanner Price Accuracy Voluntary Code 

Related Publications

You may find books, magazines and other relevant print material at business service organizations in your community that provide COBSC information. Contact the COBSC for the location nearest you.

Canadian Retailer - Retail Council of Canada
The official publication of the Retail Council of Canada, Canadian Retailer is the business publication of choice for retail decision-makers looking for the latest industry research, advice and analysis. Published bimonthly, each issue explores the key operational issues associated with running a successful retail enterprise, from computer systems and financing to supply chain management and store design.

For further information:
visit the Web site: http://www.retailcouncil.org/cdnretailer/

Statistics

Retail and Wholesale Sales - Statistics Canada
http://www.statcan.ca/english/ads/63-005-XIB/index.htm
http://www.statcan.ca/english/Pgdb/trad21a.htm

Quarterly Retail Commodity Survey - Statistics Canada
http://www.statcan.ca/Daily/English/041020/d041020d.htm

The "Daily" - Statistics Canada
http://www.statcan.ca/Daily/English/050817/d050817d.htm

Associations

There are many associations that may be of use to retail store owners. Although it is not necessary to join a retail-related association, there can be advantages in becoming a member because they:

• promote and exchange marketing and promotional ideas among members;
• establish and encourage high standards of quality and professionalism; and
• represent and advocate on behalf of members.

Examples of associations include, but are not limited to:

Retail Council of Canada
http://www.retailcouncil.org

Canadian Federation of Independent Business (CFIB)
http://www.cfib.ca

Ontario Convenience Stores Association
http://www.conveniencestores.ca

Retail Merchants' Association of Canada (Ontario) Inc.
The Retail Merchants' Association is run by retailers for retailers, and offers a broad range of programs designed to keep independent retailers strong and profitable and provides an online advertising initiative called Real-time Merchant Advertising. Association members can also be eligible for lower credit card merchant discount rates.

For further information:
please call (416) 293-2100
visit the Web site: http://www.rmacanada.com/index.html

Web Sites of Interest

Canadian Partnership for Consumer Food Safety Education
http://www.canfightbac.org

Electronic Commerce Council of Canada
http://www.gs1ca.org/Page.asp?intNodeID=208&intPageID=407

• Important Notices
• Business Guides Available at the COBSC
• List of Fact Sheets

DISCLAIMER
Information contained in this document is of a general nature only and is not intended to constitute advice for any specific fact situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.

Links Policy
Some of the hypertext links lead to non-federal government sites which are not subject to the Official Languages Act and the material is available in one language only.