New Business - Canada
New Business - Canada
I am currently employed by a contractor and I am considering starting a small business offering consulting services - area of practice would be structural and likely mostly in the residential market. The services I would offer would not overlap or conflict with my employers business and I have the blessing of my current employer. I have experience as a consultant.
Starting off, I don't expect to make much money with this business. I do not plan to look for work, but will take it as it comes. Not having an established business, I've turned away about $3,000-$5,000 worth of work in the last 6 months that has just happened to come my way - family, friends, friends of friends. I may also have the opportunity to provide some contract work for a larger firm. It's not a lot of money, but if I can make an extra $5,000-$10,000 a year working some weekends and evenings, I will gladly take it. Aside from a bit of extra money, this is a good chance to establish myself and maybe open the doors to more work in the coming years.
I have some questions about this - I am posing the same questions to my local association/accountant/insurance provider, but I'd like to hear the experiences of others as well.
- I know professional liability insurance is standard - but is it a legal requirement? Given that I may end up with exactly $0 in fees at the end of the year, I don't want to shell out for insurance upfront. For low risk residential work, can I provide services without insurance? What would be the approximate cost for low volume, low risk work? This is a question I will send off to some insurance companies, but again, your input is appreciated.
- Incorporated vs Sole Proprietorship - From what I've read so far, it seems like running my business as a sole proprietor may be the best option starting off. Startup costs are less and yearly dues with my association are lower. Is there any compelling reason not to go this route? If I end up billing very little, my biggest financial benefit to having this business is probably going to be claiming a portion of my expenses at home as business expenses. It appears that I can do this as a sole proprietor. Would I be exposing my family to any risk by having my business located in my own home? Could I mitigate this risk by incorporating and providing some separation between my business and home? Like I said, I'll be involved in low risk work, but I can't risk my family home no matter how low the risk. I've read the recent thread about putting assets in a trust - I may consider putting my house entirely in my wife's name or starting a family trust.
Those are the two biggest topics that have been on my mind. If anyone has any general advice or possible pitfalls to avoid, I'd love to hear what you have to say.