Home-Based Businesses

THE BASICS

Below please find brief answers to commonly asked questions regarding operating a home-based business.

What is a home-based business? – A "home-based business" is a business or occupation usually conducted in a dwelling unit for gain or profit by a resident of the dwelling unit. Use of the dwelling for business is subordinate to the primary residential use of the unit.

Can you operate a home-based business in the city of Pickering? – City Council recently adopted a program allowing residents to operate home-based businesses in their homes if they meet certain performance standards or criteria. If they meet these standards, they may obtain a license.

What are the rules for home-based businesses? – General and specific performance criteria were established to prevent home-based businesses operating in the City from creating a nuisance or adverse effect on the surrounding community. A detailed list of these rules is available in the Home-Based Business Information Booklet.

How do I obtain a license to operate a home-based business? – To obtain a home-based business license, the applicant must submit a completed application form and an annual license fee of $50.00 to the City Clerk. A license will be issued if the business meets the established criteria.

How long is a home-based business license valid for? – The term of a home-based business license is one year from the date of issuance, and must be renewed every year.

How can I get more information about operating a home-based business in the city of Pickering? – You may visit the Clerk's Division located on the first floor of the Pickering Civic Complex and obtain a copy of the Home-Based Business Information Booklet, or phone (905) 420-2222 or (905) 683-2760 during regular business hours. You may also visit the City's website 24-hours a day at www.cityofpickering.com

Durham Home & Small Business Association
700 Finley Avenue, Unit 5
Ajax, Ontario L1S 3Z2
David Swain, President
Tel: (905) 728-2899
Fax: (905) 426-2139
Email: dhsba@dti-web.com
www.dhsba.com

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STEPS TO STARTING A HOME BUSINESS

Starting a business from your home can be a very attractive idea. It can be a good way to set up a business as overhead expenses can be minimized. However, starting a home business requires several things to consider, such as careful financial planning, knowledge of government compliances and other administrative tasks. Here are some planning points that you should consider.

1. Business Registration – Make sure that your business is registered and the business name is searched, so that you are not using an existing business name. (note: you do not need to register the business if you operate under your own name).

2. Bank Account – Open a separate bank account for your business. This will help separate your personal transactions from your business transactions.

3. GST – You are not required to file returns if your income is below $30,000. However, it may be to your advantage to register if you make inventory or large equipment purchases, as you will be able to claim the GST that you paid on your purchases. If registered, you are required to keep track of the GST collected and paid separately.

4. PST – Determine whether or not your business should be charging PST. If so remember that you are exempt from paying PST when making purchases for resale.

5. Bookkeeping – Keep your records current and organized. Invest in a bookkeeping system that works for both you and your accountant. This ensures that you are able to obtain the information you need when you need it.

6. Local Bylaws – A summary of Durham's bylaws indicates that home occupations should not exceed 25 per cent of the floor area and that its purpose should be secondary to the residence. You can get a copy of the bylaws for home occupation at your local municipality.

7. Home Business Deductions – One of the advantages of having a home-based business are the expenses that you are allowed to write off. You can calculate your deductions based on the percentage of the overall square footage used. For example, if the space you are using for your business is one of 10 rooms, you can write off one-tenth of your rent or mortgage interest, utilities and property tax.

8. Insurance – If you are meeting clients or customers at your place of residence, you should contact your insurance company to see whether or not your home insurance has business liability coverage.

9. Professional Advice – Make sure that you get professional advice when setting up a business. A professional will help you with structuring your company, government compliance and future planning. This could save you a lot of money and grief in the long run.

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