Register the business and get a business number
Decide on a structure first. Many owners incorporate (provincially or federally) for liability protection and tax planning; others start as a sole proprietorship or partnership. This is a conversation to have with an accountant and, if you have partners, a lawyer, because it affects how you pay yourself, how you raise money and how you sell later.
Once the business exists, get a business number (BN) from the Canada Revenue Agency. The BN is the anchor for your CRA program accounts: RT for GST/HST, RP for payroll and RC for corporate income tax if you incorporated. In most provinces you can register for the BN and provincial accounts in one step through your provincial business registry.
Open a separate business bank account and business credit card on day one. Mixing personal and business spending is the single most common reason a restaurant’s first year-end turns into a scramble.
Sales tax registration
You must register for GST/HST once your taxable revenue passes $30,000 over four consecutive calendar quarters, but most restaurants register voluntarily before opening. Registering early lets you claim input tax credits on the GST/HST you pay during the build-out: equipment, renovations, furniture and opening inventory. For a new restaurant those credits can be significant.
Depending on your province, you may also need a provincial sales tax account: PST in British Columbia and Saskatchewan, RST in Manitoba, or QST in Québec. Ontario and the Atlantic provinces use a single HST, and Alberta and the territories charge GST only. Prepared food and restaurant meals are generally taxable, but rules on items like some take-away foods and alcohol differ by province, so confirm before you programme tax rates into your POS.
Our guide to PST vs GST vs HST explains how each tax works and which rate applies where.
Licences, permits and inspections
Requirements vary by city and province, but most restaurants need a municipal business licence, a health permit or food premises approval from the local health authority, and food handler certification for at least one person on every shift. Building, signage and occupancy permits come into play during the build-out. If you plan to serve alcohol, the provincial liquor licence often has the longest lead time of anything on this list.
Make a simple tracker with each licence, the issuing body, the application date, the inspection date and the renewal date. Inspections tend to cluster in the final weeks before opening, and a missed one can push your opening by weeks.
- Municipal business licence
- Health permit and pre-opening inspection
- Food handler or food safety certification
- Liquor licence (if serving alcohol)
- Fire inspection and occupancy permit
- Signage and patio permits where applicable
Set up payroll before you hire
Add a payroll (RP) account to your business number before your first pay date. For each new employee, collect their social insurance number, federal and provincial TD1 forms (TP-1015.3 in Québec), and banking details if you pay by direct deposit. Register with your provincial workers’ compensation board (WorkSafeBC, WSIB, WCB and so on) because restaurants are almost always covered industries.
Learn the employment standards for your province before you write schedules: minimum wage (some provinces have specific rules for liquor servers), overtime thresholds, break rules, vacation pay and statutory holiday pay. Getting these right from the first pay run is much easier than correcting them later.
Software matters here. SeroPayroll calculates CPP, EI, income tax, vacation pay, statutory holiday pay and overtime by each province’s rules, and starts at $25 USD a month for up to 10 employees. Our step-by-step payroll guide walks through a pay run if you are doing it for the first time.
Decide how you will handle tips
Write a tip policy before opening. Will tips be pooled? Who participates (servers, bartenders, kitchen)? How are card tips paid out: on each pay cheque or in cash at the end of a shift? Several provinces, including Ontario and British Columbia, restrict employers from withholding or deducting tips except for an employee tip pool, so read your province’s rules.
Tax treatment depends on who controls the tips. The CRA treats tips the employer controls (for example, card tips pooled and distributed through payroll) as controlled tips, which run through payroll with source deductions. Direct tips that guests hand to staff are generally the employee’s to report. Confirm the treatment for your setup with the CRA’s guidance or your accountant, and make sure your POS reports tips by employee.
Choose your POS and build the menu
Give yourself at least two weeks to set up the POS before soft opening. Enter the menu with modifiers and prices, set tax rates, map items to kitchen printers or the kitchen display, design the floor plan, create staff accounts with the right permissions, and connect the payment terminal. Then train staff on real scenarios: a split bill, a void, a refund, a comp.
If you want to track food cost from day one, enter recipes with ingredient quantities and costs as you build the menu. It is much harder to go back and do it once you are open and busy. SeroPOS supports recipes and ingredient-level food costing, kitchen display and floor plans, and has a 14-day free trial so you can set up before you pay.
Bookkeeping from the first receipt
Pick your accounting system before you spend your first dollar on the build-out so every invoice and receipt is captured. Set up a chart of accounts that separates food cost, beverage cost, labour, occupancy and operating expenses; you will want those lines to calculate prime cost later.
Connect your POS so daily sales, tax collected, tips and card fees post automatically, and reconcile the bank account every month. SeroBooks shares data with SeroPOS and handles sales tax returns, payroll on its Pro plan and year-end, but QuickBooks Online and Xero are also supported by SeroPOS if your accountant prefers them.
- Separate business bank account and credit card
- Chart of accounts with food, beverage and labour lines
- POS connected to accounting
- Receipts captured as you go, not at year-end
- Monthly bank reconciliation and sales tax reserve