Aboriginal Business Startup Checklist and Pathfinder

The Aboriginal Business Service Network (ABSN), a division of the Canada/Manitoba Business Service Centre, provides access to government information on business programs and services for individuals of First Nations, Métis or Inuit heritage. These free resources are tailored to meet the unique requirements of Aboriginal clients.

This guide is specifically designed for Aboriginal entrepreneurs.

TABLE OF CONTENTS

• Checklist for Starting a Business
• Self-Assessment - Am I an Entrepreneur?
• What is a Business Plan? Why Do I Need One? 
• Marketing 
• Business Structure
• Registering Your Business Name
• The Business Number
• Taxation 
• Hiring Employees 
• Financing  
• Business Licenses 
• Insurance
• Bonding
• Bookkeeping
• e-Business 
• Other Services    
• Web Sites for Aboriginal Entrepreneurs  

Start Up Checklist

One of the most common questions when starting a business is "Where do I begin?"  The checklist below will help answer that question and serve as a guide for the steps you need to take.

• To find out if your business idea is right for you, ask yourself is this something you're good at? Is this something you enjoy doing? 
• Are you an entrepreneur? Try an entrepreneurial self-assessment quiz such as "Am I an Entrepreneur?" located online at http://www.wd.gc.ca/tools/xindex_e.asp.
• If your business will be on First Nations land, check with your band council to see if your business fits in with the economic development plans they have for the land 
• Should you start a new business, purchase an existing business or acquire a franchise?
• Prepare a business plan. You can do all your preliminary research in the Canada/Manitoba Business Service Centre reference library.
• Choose the form of business organization most appropriate for your needs (sole proprietorship, partnership, corporation or cooperative) and register the business name.
• Ask for advice from other business owners as well as professionals such as your banker, accountant, or lawyer.
• Contact your band council or local municipal government office concerning zoning requirements as well as any licenses or permits that are required for your type of business.
• Contact Canada Revenue Agency in order to register for collecting GST/HST (if applicable) remitting employee deductions (EI, CPP and Income Tax), and import/export taxes (if applicable) and for information on business expenses that you can claim on your tax return.
• Decide if you will offer credit to your clients. If so, set up an appropriate credit policy.
• Open a business account under your company’s name with your bank or credit union. 
• Negotiate contracts with suppliers.
• Negotiate lease agreements for premises and/or equipment.
• Set up a bookkeeping system to monitor receivables and accounts payable.
• Develop an inventory control system.
• Establish credit terms with key suppliers (payment terms, credit limits, discounts and finance charges).
• If you need to register a Trade-mark, Copyright, Industrial Design or a Patent, contact the Canada/Manitoba Business Service Centre.
• If you are hiring employees, contact the Employment Standards Branch, Manitoba Department of Labour and Immigration, the Workers Compensation Board and Canada Revenue Agency.
• Arrange for business insurance.

Self-Assessment - Am I an Entrepreneur?

Deciding to go into business for yourself is one of the most important decisions you’ll ever make. Are you ready for it?

Rewards  There are many - the freedom to be your own boss, the personal satisfaction of a job well done, and the chance to earn an income that is only limited by your determination. Your business can be full-time or part-time.

Pitfalls   Going into business takes a level of effort and energy that many people underestimate. It can place incredible demands on your time, your family relationships and your finances. Many new businesses fail within the first three years. It’s rare for any new business to provide any significant financial return to the owner in the early years.

Improve the Odds  First, take an honest look at yourself. Are you ambitious, confident, energetic, persistent, creative, a risk-taker, a problem-solver, a planner? Successful small business owners often have many of these traits. Secondly, the ability to manage your time and resources is a key element of business success.

Considerations  Do you love what you’re doing?  Are you knowledgeable about the business you're going into? Do you have training in management, marketing, finance and production? If not, are you willing to take training courses in your weak areas?

Options  Can you bring someone else into the business who has the skills you lack?  Or have you considered a franchise, where someone else has already established the business model and can provide guidance, support and the recipe for business success? If you’ve decided to go into business with one or more partners, are you confident the relationship is strong enough to weather the storms ahead? 

Moral Support  Do you have the full support of your family?  They are probably the most important assets you will rely on as your plans progress. Your prospects for success can only improve when those close to you share your commitment, if through nothing else but their moral support and encouragement.

Do you have enough money?  Going into business is almost always more costly than you think.  You may find it a lot harder to raise capital for your business than you’ve experienced in the past for your personal needs.  Be thorough and realistic about how much you need right from the start so your business isn’t jeopardized after you’ve invested months of hard work.

What is a business plan? Why do I need one?

Most business experts will say that the most critical aspect of setting up a business is planning.  Unfortunately, this step often gets little or no attention, leading to the failure of the business and the loss of your investment or personal assets. This is why planning is so important.

A business plan:

• outlines your business idea and helps to focus your thoughts
• commits your plans to writing so you can refer back to them 
• is necessary to obtain financing
• helps you pinpoint your competition
• details your current financial position and estimates future profits and expenditures
• identifies opportunities
• uncovers potential weaknesses
• tests your commitment to the business
• helps you anticipate and adapt to change
• provides a method to evaluate your results

Where can you find more information about a business plan?

The Interactive Business Planner is an online tool that guides you through the business plan process, allows you to input your data, save and download it.  The site is located at:  http://www.cbsc.org/ibp.  The C/MBSC offers a seminar that guides you through this business planning tool. 

If you are looking for business plan templates or outlines, or undertaking preliminary research for suppliers, manufacturers, competitors, industry trends, licensing requirements, sector profiles, advertising rates or market information, the Canada/Manitoba Business Service Centre lilbrary has a wide range of resources to help you. 

If you need help with your business plan, business counsellors are available by appointment to review it with you and offer suggestions prior to going to a financial institution for a loan.  Call 984-2272 or 1-800-665-2019.

Marketing 

The marketing plan has two main components: the first is researching your market to determine what consumers want or need, and then develop a product or service based on that information. The second step is to develop an overall marketing strategy to meet your objectives.  The Canada/Manitoba Business Service Centre library has several publications to help you with this process.

Business Structure

One of the most common questions facing all new business owners is "What business structure is best for me?"  The four main types recognized in Canada are sole proprietorship, partnership, corporation and  cooperative. Each form has it's advantages and disadvantages.

People new to business may think that the structure is not important. However, consider that:

• investors or partners may only be interested in certain structures
• banks and funding organizations may be more willing to lend to certain business structures than others
• the appropriate form for your business depends on many factors, including the type of business, the number of persons involved, whether you want full control or prefer to share responsibilities, capital requirements, tax regulations and liability.

Sole proprietor

This is the simplest and the least expensive form of business organization. There is one owner, and this person is responsible for all aspects of the business. However, as a sole proprietor you are personally liable for business debts and must claim business expenses and revenues on your personal income tax return. Your business income is generally exempt from tax if the actual income-earning activities of the business take place on First Nations land. If some of your revenue-generating activities take place on First Nations land and the rest away from it, the tax exemption under section 87 of the Indian Act may be prorated. This means part of your income will be taxable, and part will be exempt from tax.

Partnership

A partnership is an agreement between two or more parties to combine their talents and resources in order to share ownership of a business. While a partnership is often less expensive to form than a corporation, other complexities arise. It is highly recommended that you seek legal advice to draw up a partnership agreement which clearly defines each partner's rights and responsibilities. The Canada/Manitoba Business Service Centre library has sample partnership agreements you can refer to. Generally, each partner is responsible for all aspects of the business, including any wrongful act or omission caused by the other partner(s) in the course of business. Each partner is also personally and jointly liable for all debts and other obligations incurred in the name of the company by any partner regardless of whether or not these were authorized by the other partners. In the matter of taxation, if all the partnership's income-earning activities are carried out on First Nations land, then all your income from the partnership will be exempt from tax. If one-half of the partnership's income-earning activities are carried out on First Nations land, one-half of your share of the partnership income will be exempt, and so on.

An alternate form of partnership, known as a limited partnership, is an arrangement wherein one partner is strictly an investor and liable only to the extent of their capital investment in the company. The limited partner, however, cannot participate in managing the company and may not withdraw the capital they invested during the term of the partnership.

Corporation

A corporation's main advantage is that it is a separate entity from its shareholders. This means the personal liability of the shareholders for the debts of the company is limited. Certain tax advantages are also available to corporations. There are, however, more regulations governing corporations, additional paperwork, and higher fees to startup and maintain the corporation's standing.

You can incorporate provincially or federally. However, Section 87 of the Indian Act does not apply to corporations, even if they are owned or controlled by First Nations people. A corporation is treated as a separate taxpayer and therefore would not be able to claim tax exemptions under the Act.

Cooperative

A cooperative is an enterprise, or business, owned by a group of people seeking to satisfy a common need. For example, a group of people such as independent entrepreneurs, artists or farmers will use this type of enterprise to cooperatively process and market the goods or services they have produced. A cooperative can be incorporated either provincially or federally. The cooperative's start-up capital usually comes from cooperative shares purchased by members.

Contact  the C/MBSC if you would like more information on the various business structures and the advantages and disadvantages of each.

Registering Your Business Name

No matter what form of ownership you choose (sole proprietorship, partnership, incorporation or business cooperative) for your business, you should register the name of your business with the Companies Office.  When you register your business name, you are assured that no one else is carrying on business under that name in the Province of Manitoba.  The Companies Office must first perform a Name Search ($40 for Manitoba-wide search) to ensure the name is not currently in use.  If the name you have chosen is not in use, the Companies Office reserves the name for you for 90 days, at which time you must register ($45).  Fees differ for incorporation.

You may obtain the forms for business name registration from the C/MBSC or from the Companies Office (visit them online at  http://www.companiesoffice.gov.mb.ca)

If you have any questions about the business registration process, please contact the Companies Office at (204) 945-2500 or toll free 1-888-246-8353. 

Business Number

You will need a Business Number from Canada Revenue Agency:

• To file your annual tax return if your business is incorporated
• If you are importing or exporting goods to and from Canada
• To remit payroll deductions (Income Tax, EI, CPP) for your employees (if applicable)
• To collect and remit GST/HST (if applicable) 

Taxation

In addition to the resources available from the Canada Revenue Agency, the C/MBSC library contains publications such as "First Nations and Canadian Taxation" which can help you better understand the complexities affecting First Nations people and taxation. 

Note: in the Taxation section, First Nations people and First Nations land are those defined under section 87 of the Indian Act.

FEDERAL TAXES

Goods and Services Tax (GST)

You must register for and charge the GST if:

• You sell or provide taxable goods or services in your commercial activities in Canada; and
• Your total taxable revenues are more than $30,000 in the immediately preceding four consecutive calendar quarters; or
• Your sales exceed $30,000 in a single calendar quarter

If your sales do not exceed $30,000 in four consecutive calendar quarters, you do not need to register nor charge GST. However, you still have the option of registering.

There may be instances when registering early can give you certain advantages, such as the right to claim the GST you pay on your business’s start-up expenses from the time you register.  For more information, contact Canada Revenue Agency at http://www.cra-arc.gc.ca

Treatment of GST for Businesses Located on First Nations Land

The GST will not apply to First Nations people, First Nations bands and unincorporated band-empowered entities for:

• goods acquired on First Nations land
• goods purchased off First Nations land if the goods are delivered to First Nations land the by the seller or its agent
• goods purchased for Band management activities either on or off First Nations land (with delivery to the First Nations land) 
• contracting services for work to be performed totally on First Nations land

Sellers, including First Nations sellers, must include their taxable sales to First Nations people, bands and band empowered entities in their calculation of annual revenue to determine whether they are required to be registered for the GST, even though they may not be required to charge the tax on these sales.  They must also keep proof that sales for which no GST/HST was payable were made to First Nations people, bands or band-empowered entities under the qualifying conditions.

GST and Imported Goods

The exemption under section 87 of the Indian Act does not apply to imported goods because the GST is collected at the point of import. This applies even when the goods are delivered to First Nations land by the seller's agent or Canada Post.

First Nations Goods and Services Tax (FNGST)

The First Nations goods and services tax (FNGST) is a 7% tax on taxable supplies (sale) of goods and services on certain First Nations lands. This tax applies when the band council or other governing body of a First Nation passes its own law imposing FNGST. The Canada Revenue Agency administers FNGST on behalf of the First Nation. Currently, none of the First Nations bands in Manitoba have imposed this tax.

Federal Excise Tax and Duty

This applies to tobacco, alcohol, gasoline, jewellery, and other products under the Excise Act and the Excise Tax Act.  Because the manufacturer or distributor, not the consumer, pays these indirect taxes there is no exemption. However, First Nations people can be exempt from paying GST on these items at the point of sale.

PROVINCIAL TAXES

Retail Sales Tax

Under Manitoba’s Retail Sales Tax Act, the provincial government imposes a tax on the retail sale of most goods and some services to consumers and users for the purpose of consumption or use and not for resale. All goods and services falling within the Act are taxed at 7%.  All retailers are required by law to register with Manitoba Finance. 

For more information, visit Manitoba Finance website at http://www.gov.mb.ca/finance/taxation.

Treatment of Retail Sales Tax on First Nations Land

A retail sales tax exemption is available to First Nations people and bands residing on First Nations land when the seller of the goods delivers them directly or by common carrier to an address located on First Nations land. In this case, the invoice for the goods being purchased must show certain information such as name or band name, Treaty Number, etc. 

If you are starting a business on First Nations land, you should register for Retail Sales Tax.  If you are purchasing products for resale, you will have to provide your Retail Sales Tax number in order to qualify for an exemption. 

For more information contact the Manitoba Department of Finance at (204) 945-5603 or 1-800-782-0318.

Corporation Capital Tax

A tax on the annual paid up capital of corporations which have a permanent establishment in Manitoba.  Corporations are required to register for this tax where the total taxable paid up capital of the corporation, including associated corporations, is $5,000,000 or greater.

Hiring Employees

Tax Deductions

You have to withhold income tax at the source from various types of remuneration such as salaries, wages, tips, gratuities, fees, commissions and bonus pay to name a few. For more information, contact Canada Revenue Agency at 1-800-959-5525 or visit the business tax section of their website at http://www.cra-arc.gc.ca/tax/business/menu-e.html. 

Tax Deductions and Income Earned on First Nations Land

If the employer or employee resides on First Nations land, exemptions may apply. Form TD1-IN, "Determination of Exemption of an Indian’s Employment Income" will help you decide if an exemption applies to the employment income of First Nations people. This form is available at any tax services office, online at http://www.cra-arc.gc.ca/E/pbg/tf/td1-in/README.html, or you can call 1-800-959-2221 to obtain a copy. 

Employers have to report on a T4 slip employment income that is exempt under section 87 of the Indian Act.

Canada Pension Plan (CPP) Contributions

If your net self-employment income and pensionable employment income is more than $3,500, you will have to contribute to the Canada Pension Plan (CPP). If you have employees, you will also need to deduct CPP from salaries, wages, commissions and other forms of remuneration.

Income from employment or self-employment (a business) that is exempt from tax under section 87 of the Indian Act is also exempt from CPP contributions. However, employers and employees can choose to participate in the Canada Pension Plan.

Employment Insurance (EI)

Most earnings, including tips and gratuities, as well as allowances that you pay completely or partly in cash to an employee are insurable.

EI premiums are not taxes and are not exempt under section 87 of the Indian Act. Accordingly, tax-exempt salary or wages paid to a First Nations employee are subject to EI premiums.

Payroll Tax (Manitoba Finance)

This tax is paid by employers with a permanent establishment in Manitoba who pay more than $1 million per year in remuneration to employees.  Employers who pay $1 million or less per year are exempt.

Employment Standards

Designed to promote fairness for employees and employers, these standards cover a wide range of areas such as minimum wage, overtime, holidays, meals, breaks, maternity leave and termination, to name a few. For more information, read the Employment Standards brochure online at http://www.gov.mb.ca/labour/standards/pdf/manual.pdf  or call Manitoba Labour and Immigration at 945-3352 (in Winnipeg) or 1-800-821-4307.

Workers' Compensation Board

In most cases, workers' compensation coverage is mandatory if you employ workers. To find out if your business requires workers compensation coverage or not, call the Registration Unit in Winnipeg at 954-4775. Outside Winnipeg, call 1-800-362-3340, extension 4775. Registration can often be done over the telephone.

Financing

There are many programs and services available from the federal and provincial governments as well as private organizations to help Aboriginal businesses. For more information, call the C/MBSC 984-2274 or 1-800-665-2019 or visit our web site  http://www.cbsc.org/manitoba.

Business Licenses and Permits

If your business is located on First Nations land...

Your local band council has the authority to pass by-laws that may affect the establishment, or operation of your business in a First Nation Community.

If your business is located in the City of Winnipeg...

You may need several licenses and/or permits depending upon the type of business you are operating. For information on licensing contact the City of Winnipeg at 986-6420.

If your business is located outside of Winnipeg and off First Nations land...

The Municipal Act of Manitoba empowers all rural municipalities to regulate certain trades and occupations carried on within their boundaries. Therefore, it is up to each municipality to set its own licensing requirements. These regulations vary among the 201 municipalities within Manitoba.  For more information, contact your local municipal office or, if you need help in determining where your municipal office is located, contact the C/MBSC.

Business Insurance

A wide variety of insurance products are available such as those covering fire, theft, or vandalism. Having the proper insurance coverage can offset a potentially serious loss of buildings, equipment, or inventory. It is likely that a lending institution will insist that adequate property insurance be carried as a condition for a loan.  Also, life insurance is often carried on a key individual(s) in an organization to minimize the impact of the absence of that individual(s).

Many specialized types of insurance are also available such as business liability insurance which protects your operations against legal action.  As well, certain assets of the business such as plate glass or boilers may be specifically insured against loss or damage. Other types of insurance include business interruption, crime coverage and broad form money and securities insurance. There is also insurance specifically for home-based businesses. Consult with your insurance professional to find out the coverage that is best for your type of business.

Bonding

Depending on what type of business you are in, you may be required (by law) to obtain bonding before any work can begin. There are contract bonds (used mainly in the construction industry) and commercial bonds which consists of five main bond categories that include license & permit, customs & excise, fiduciary, court and lost document bonds. Contact our Centre at 984-2272 or 1-800-665-2019 for more details on bonding or refer to our fact sheet on  Bonding.

Bookkeeping

Good records will help you:

• maintain accurate, up-to-date financial information on which to base management decisions
• identify the sources of your income
• maximize tax deductions
• eliminate a host of problems you might encounter if your income tax is audited or you have GST/HST returns
• keep informed about the financial position of your business
• obtain loans from banks and other creditors

A bookkeeper or an accountant can help you set up your records or you can do it on your own. For publications and videos on bookkeeping call the Canada/Manitoba Business Service Centre at 984-2272 or 1-800-665-2019.

Will You Be Conducting Business on the Internet?

The Canada/Manitoba Business Service Centre provides counselling, free publications and seminars on e-business topics such as online marketing, building a website, security and the internet, integrating e-business into a small business, internet payment processing, online legal issues and more.  

For more information, phone 204-984-2272 or 1-800-665-2019.

Other Services

Aboriginal Business Service Network

Manitoba was the first Province to establish regional sites geared toward Aboriginal entrepreneurs. Each of our Aboriginal Business Service Network sites contains a "core collection" of  publications geared towards Aboriginal entrepreneurs. Titles include Dreams do Come True (video), Forestry Business Planning Guide, In Business for Ourselves, Aboriginal Entrepreneurs on the Internet and The Spirit Lives (Aboriginal entrepreneurs in Canada).

The Canada/Manitoba Business Service Centre has established Aboriginal business sites in Churchill, Headingley, Lynn Lake, Norway House, Peguis, St. Laurent, The Pas and Thompson. In Winnipeg, our sites include Kitayan Community Futures Development Corporation, Louis Riel Capital Corporation, SEED Winnipeg Inc. and Southeast Community Futures Development Corporation.

For information on how to contact any of our regional offices, call the Canada/Manitoba Business Service Centre at  (204) 984-2272 or 1-800-665-2019. 

Small Business Development Branch - Manitoba Industry, Economic Development and Mines

The Branch offers free business counselling services and has designated one business consultant to work specifically with Aboriginal entrepreneurs and initiatives. Once you have completed a business plan, the consultant will meet with you to review the plan and suggest ways of improving it or point out anything you may have missed. For more information or to set up an appointment, contact Norma Spence at 945-8601 or 1-800-665-2019.

Services for Aboriginal Women

• Indian and Northern Affairs has created "Journey to Success: Aboriginal Women's Business Planning Guide" available on their web site at http://www.ainc-inac.gc.ca/ps/ecd/js/journ_e.html.

• the Women’s Enterprise Centre of Manitoba (Phone: (204) 988-1860 or toll free at 1-800-203-2343) offers financial assistance, mentoring and networking programs as well as business-related seminars targetted to women.

• Industry, Economic Development and Mines, Women's Entrepreneurial Initiative promotes entrepreneurship as an economic alternative for women.  Contact Margaret Kelly at (204) 945-7721 or toll free at 1-800-665-2019.

Services for individuals collecting Employment Insurance or Social Assistance who want to start a business

The Self-Employment Assistance Program provides income support, training and technical assistance to qualified Employment Insurance (EI) claimants to enable them to become self-employed.  Contact a Human Resources and Skills Development Centre near you, or the C/MBSC for more information.

The SEED (Support Employment and Economic Development) Program helps low income people establish their own business in Winnipeg. SEED provides financial and business planning assistance, consulting and mentorship services and business management training. Contact (204) 927-9930.

Services for entrepreneurs with disabilities

There are programs and services designed for individuals with disabilities who want to establish a business. The Canada/Manitoba Business Service Centre also offers specially equipped computers which allow individuals with disabilities to undertake business research on the Internet. Both the Centre and its washrooms are wheelchair accessible.  Any materials produced by the Canada/Manitoba Business Service Centre as well as any federal government department can be made available in alternative formats upon request.

Services for youth

There are many organizations and funding programs created for young Aboriginal entrepreneurs. Call the C/MBSC and ask for the Young Entrepreneurs Info-Guide.

Web Sites for Aboriginal Entrepreneurs

• Aboriginal Business Service Network
Aboriginal Business Service Network

• Aboriginal Business Canada
http://www.abc-eac.ic.gc.ca

• Aboriginal Canada Portal
http://www.aboriginalcanada.gc.ca/

• Aboriginal Chamber of Commerce
http://www.aboriginalchamber.ca

• Aboriginal Resource Guide
http://www.aboriginalresourcenet.com/

• Business Development Bank of Canada
http://www.bdc.ca/en/i_am/aboriginal_entrepreneur/default.htm

• Canada Revenue Agency - Indian Act Exemption for Employment Income Guidelines
http://www.cra-arc.gc.ca/aboriginals/guidelines-e.html

• Canada Revenue Agency - Information for Status Indians
http://www.cra-arc.gc.ca/aboriginals/status-e.html#heading13

• Louis Riel Capital Corporation
http://www.lrcc.mb.ca/

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.