How To Start An Online Business in Canada (2023)
Learning how to start an online business in Canada requires a reputable ecommerce platform, niche product ideas, and a suitable business structure for managing your business in the long term.
Touting the 9th largest ecommerce market in the world, and revenues growing above $58 billion in 2021, it’s clear that there’s plenty of room for new businesses and ecommerce growth in the sector.
Canada has several benefits as an ecommerce hub. First of all, it has a strong infrastructure, with high-traffic airports, rail lines, and direct access to both the Atlantic and Pacific Oceans. Furthermore, Canadians have been shown to embrace online shopping, both on desktops and mobile devices. Canada’s location is also advantageous, seeing as how it has direct trading access to the United States, and ties with Mexico for everything from manufacturing to online sales. Not to mention, Canada stretches far north, east, and west, giving ecommerce entrepreneurs accessible shipping routes to places like Alaska, Greenland, Europe, and Asia.
If you’re thinking about learning how to start a business in Canada, this is your guide. We outline all the essentials to launch, build, and manage your business.
Here’s what you’ll learn:
- How to figure out the best products to sell (and find manufacturers or suppliers to produce and fulfill the items)
- The best method to launch and design an online store
- How to choose the right business structure
- Deciding upon a business name and registering the business
- Obtaining a Canadian Business Number for things like taxes and insurance
- How to set up a Canadian-friendly payment processor
- Configuring other accounts (like social media and search engine accounts) to grow your presence online
- Obtaining funding to run your ecommerce business
- Getting a domain name that’s suitable for your business
How to Start an Online Business in Canada
The following steps assume you’ve just started contemplating building a business in Canada. So, you’ll learn how to think of a product and find suppliers. We also outline essentials like business licenses and tax numbers, all specific to Canada.
1. How to figure out the best products to sell (and find manufacturers/suppliers)
All Canadian businesses begin in the ideation phase, where you must look for gaps in the marketplace and solve the issues that consumers have in certain areas.
This is the first step for any online business, primarily because there’s no reason to launch an online store and get things like licenses unless you have a truly viable product to sell.
We encourage you to read our guide on choosing a great product to sell through your online store.
To pick a product, you must look at:
- Recent and past sales numbers of the exact, or similar, item (when sold by other merchants)
- The future potential for growth in the current marketplace
- The competition for that product and market saturation level
Following these three steps for each product will help eliminate items that may not sell well to begin with. You can also avoid products with far too much competition. The goal is to land on niche items that haven’t quite reached their market saturation levels, while also delivering high sales.
This way, you can still find potential customers without competing with the behemoths like Walmart and Amazon.
When researching what to sell in your Canadian ecommerce store, we suggest following these methods:
- Consider selling essentials: Necessities like shaving cream and clothing are tough markets to penetrate, so we recommend taking this method with a hint of caution. However, there are several companies that have managed to reinvent necessities. Take Dollar Shave Club or Stitch Fix as examples. Both entered extremely saturated markets, yet they offered unique experiences and curated subscription boxes to make an old, competitive product more enticing.
- Sell products people want: For this method, you must research trending interests and topics without committing too much to temporary fads. Widget spinners and massage guns were profitable for some, but they were rather gimmicky and prone to overselling (like any fad). Instead, seek out products that people want (but don’t necessarily need) with longer lifespans. Electronics, toys, and games are all product categories that people will continuously buy, for instance, even though they don’t need them to function on a daily basis.
- Find products with regional or global appeal: Some products sell very well in one country, but not so much in another. Since you’re starting a business in Canada, it’s worth committing a segment of research to how Canadians view certain products over other countries. As an alternative, you might try turning your brand into one that identifies with Canada (or another location), like how Coffee Crisps and Mountain Equipment Co-op are mainly known to Canadians. You might even research items specific to regions like Ontario or Toronto.
- Find products you’re passionate about: Although it’s not a guarantee that they’ll sell, a product you’re passionate about probably has some sort of following (if you like it). The tough part with this one is that you need to commit a significant amount of research to your competition. Selling hiking boots because you like hiking is too broad of a product. You must instead look for more niche products within the realm of hiking.
- Sell items based on your knowledge: Although not always, knowledge-based products are generally digital in nature. Learn a skill and teach it online, or tap into your current knowledge to sell eBooks, training seminars, or classes.
- Sell custom-made products: Custom-made items can be designed by you or the customer. You can opt for print-on-demand services to custom print and sell items like t-shirts and mugs whenever a customer buys something. Other options include inventions, crafts, Etsy-like products, eBooks, and more.
- Dropship products: Dropshipping is a fulfillment method that can be paired with many of the product types in this list. The process decreases upfront costs since you sell products that remain stored at the supplier’s warehouse. When a customer makes a purchase, the supplier receives a notification to ship it to your customer.
- Sell memberships: Memberships offer a powerful sales format to bring in recurring income and create committed customers, even though the customer acquisition cost is generally very high. With memberships, you can sell everything from physical goods to digital items, or even subscription boxes.
- Affiliate selling: Another product sourcing option is to not create your own items at all. Affiliate marketing works where you create an online store and promote products sold by other companies. This way, you don’t have to produce, store, or fulfill any of the items. Having said that, many consumers would rather not purchase from an affiliate website masquerading as an online store, so it’s usually best to format this type of website as an informational blog.
- Run a marketplace: Marketplaces like Amazon and Etsy facilitate the sales of goods between business owners and buyers. It’s another form of ecommerce that requires a site moderator. If you own that marketplace, a percentage of every sale goes to you.
Now that you have a stronger idea of the methods to find and sell products, let’s explore our favorite tools for identifying top products.
These tools are essential for researching and locating profitable items based on trends, popularity, competition, and sales volume:
- Reverse ASIN tools like Sellzone, Sellerapp, and JungleScout help you find items that perform well on Amazon. You can always find similar products to sell on your own store, but using Amazon is a sound product testing arena, since it represents a significant portion of the ecommerce market; if something is selling (and has low competition) on Amazon, you should do fine with the same product on your own website.
- Google Trends serves you well for identifying popular products and conversations about products. If you find a potential keyword on Google Trends, make sure you run a search on Google Keyword Planner as well. This helps to see if the keyword actually has potential, or if it’s just a fleeting fad.
- Sites like DSers and Spocket function as dropshipping apps, yet it’s also possible to use them for product research. Each has a robust product search area for examining sales, pricing, and profits from each product.
From Where Should You Source Your Products?
Researching and finding potentially profitable products is one thing, but what about locating a supplier to actually send you the products to sell?
This stage is called sourcing, and it means that you must partner with a supplier or manufacturer actually produces the item from scratch and sells it wholesale (or through dropshipping) to online retailers like you.
Sourcing comes in several forms:
- Wholesale buying
You’d partner directly with a manufacturer if you need to create a product from scratch. This is common for those who invent products that don’t exist yet.
Otherwise, you need a supplier who sells products currently on the market, where you’ll compete for customers with other retailers. In this situation, you’d opt for a wholesale supplier or dropshipper. Wholesale purchasing involves buying in bulk and storing those products in your own warehouse or through a 3rd party logistics company. On the other hand, the supplier stores and fulfills all orders if you go with dropeshipping.
It’s possible to partner with wholesale suppliers through sites like:
After choosing a supplier, you make purchase orders in bulk and fulfill items yourself or with a 3rd party logistics company. Learn about the distinctions between self-fulfillment, 3rd party logistics, and dropshipping before making your final decision. As a summary, 3PL (3rd party logistics) lets you purchase in wholesale orders. After which, you store products with a 3PL or in your own office/warehouse. It’s possible to either package and ship the products yourself or use the 3PL for that as well. 3PL providers often sync with your ecommerce platform to immediately process orders once they come in through your store.
Here are the top 3rd party logistics companies for when you start an online business in Canada:
If 3rd party logistics seems too expensive or overwhelming getting started, it’s common to opt for dropshipping. This helps keep upfront costs down and minimizes the amount of work in terms of storage, shipping, and overall fulfillment. Dropshipping is also a great way to partner with multiple suppliers at once, especially considering dropshipping apps like DSers and Spocket provide a marketplace to contact suppliers. For a dropshipping operation, the customer comes to your store and makes a purchase, after which, the dropshipping suppliers receive a notification to pick, package, and ship the item to the customer. Your main job as a vendor is managing your website, digital marketing, customer support, and choosing products to sell.
There are several dropshipping apps that integrate with your online store and link you to suppliers.
Our favorites include:
- DSers: Mainly suppliers from China; through AliExpress
- Spocket: Mainly products from the US and EU; also provides access to AliExpress products
- Printful: A print-on-demand service with dropshipping included
Print-on-demand offers another form of dropshipping, where you place designs on products like mugs, t-shirts, and pillows. You don’t spend any upfront money on production. Instead, the print-on-demand provider (like Printify or Printful) waits until you receive an order to print it on the product. They also package each item and send it to the customer (hence the dropshipping element).
Here are some excellent print-on-demand suppliers that service parts of Canada:
2. Pick an Ecommerce Platform to Design a Site and Sell Products Online
Learning how to start an online business in Canada means you need to launch an online store. To do so, you want a Canadian-friendly ecommerce platform or website builder that offers:
- A portal to design your website, with professional templates to get started
- A complete online store with a shopping cart, checkout module, and payment processing
- Fulfillment options and ways to sync with 3PL and dropshipping partners
- Customer, order, and inventory management tools
- Tax management features
- An App Store to extend the functionality of your store
- Online marketing tools for social media management, ads, email marketing, and more
- A blog
- Built-in security tools like SSL and brute-force blocking
- Shipment zones and other shipping features
- Various sale channels like social media stores, eBay, Amazon, and Google
- Analytics and reports
- Potential hardware and software for point of sale selling
- Optional coupons, discounts, memberships, subscriptions, and recurring payments
You can select a self-hosted or hosted ecommerce platform. We recommend getting one with hosting included (a hosted platform), since hosting is often complicated for first-time users, and you might as well have it managed by the ecommerce platform. Not to mention, platforms like Shopify and Bigcommerce are known for the speed of their hosting. This comes at a monthly cost, but the convenience is priceless; you can manage the entirety of your business—everything from taxes to products—from one online dashboard.
Which Ecommerce Platform Should You Use?
If you research ecommerce platforms while learning how to start an online business in Canada, you’ll find thousands of options. Which are the best for your business? Are some friendlier to Canadian online stores than others?
Take a look below at the ecommerce platforms with reasonable Canadian pricing, wonderful features, and some additional bonuses for small business owners.
Shopify was started in Canada, and it still caters to its home base. Not only does the Shopify Fulfillment Network have several Canadian warehouse locations, but the pricing is solid, you receive beautiful themes, and everyone from a beginner to an expert can make a beautiful online store.
You manage your entire online store from one Shopify dashboard. Upload products, sell on multiple marketplaces, and even tap into the Shopify POS system. With the click of a button, you gain access to thousands of apps to extend your store, along with built-in features for marketing, fulfillment, and taxes.
Here’s the Canadian pricing for Shopify:
- Basic Shopify: $29 per month
- Shopify: $79 per month
- Advanced Shopify: $299 per month
Shopify also offers a Starter plan for $5 per month. We recommend against that plan for real online stores, since it lacks a shopping cart, built-in checkout, and true online store. It’s more for influencers who want to create an Instagram link that leads to a short list of products they’d like to sell. They can also build a landing page and have Shopify process the payments for them. It’s a wonderful option for content creators who already have a blog but require payment processing, but not for more robust online stores.
For larger, scaling stores, look into the Shopify Plus plan; it starts at $2,000 per month and includes tools for high-volume businesses.
Some of the top Shopify features include:
- Support for hundreds of payment gateways, including Canadian processors and Shopify Payments (which gets you $0 transaction fees and selling in Canada)
- Access to several sales channels, like Instagram, Facebook, and eBay
- Free point of sale software; POS hardware is available for sale
- Multiple inventory locations and staff accounts for your plan
- Abandoned cart recovery tools
- Point of sale software and hardware for in-person business
- International business features
- Shipping and tax management
- Gift cards and discounts
- Manual order creation
- Reports and analytics
BigCommerce is an ecommerce platform made for rapidly growing stores, as its pricing and features are meant to expand with the growth of your business. It’s a solid competitor to Shopify; many people feel that BigCommerce has more built-in tools and stronger themes, but Shopify is a more user-friendly experience. It’s also worth mentioning that Bigcommerce is a go-to system for enterprise-level businesses; it’s incredible for expanding your business rapidly.
Everything you need to run your online store in Canada is included with a subscription to Bigcommerce, You receive templates, hosting, access to domain names, and marketing tools through Google and social media.
Here are the Canadian pricing plans for Bigcommerce:
- Standard: $29.95 per month
- Plus: $79.95 per month
- Pro: $299.95 per month
- Enterprise: Custom pricing
And here are the best features from Bigcommerce:
- Unlimited staff accounts for all plans
- A one-page checkout to boost conversions
- A mobile app for controlling your store
- Ratings and reviews for products
- Gift cards, discounts, and coupons
- A free SSL certificate
- No transaction fees for all plans
- Abandoned cart saving
- A persistent cart tool that pushes customers to finish shopping
- Multichannel selling on places like eBay, Amazon, and Facebook
- Several payment gateways friendly to Canadian merchants
- Real-time shipping quotes
- Segmentation and groups
- A faceted search module
- Storing of credit cards
With all the features, Bigcommerce is one of the best options to start an online business in Canada.
Squarespace sells subscriptions for merchants to access its beautifully structured ecommerce platform and website building system. You can make a standard business website without an online store, or pay for ecommerce functionality.
If website design prowess is at the top of your requirements, consider Squarespace. It offers the best online store templates on the market. They’re image-driven and beautifully designed for an artsy take on ecommerce. It even comes with unique features like email marketing, paid scheduling, online courses, and memberships.
Here are the Canadian Squarespace pricing plans:
- Personal: $16/mo (business or personal websites)
- Business: $25/mo (this is the first plan that gives you ecommerce functionality—for a 3% transaction fee)
- Commerce Basic: $34/mo for no transaction fees and a full online store
- Commerce Advanced: $52/mo for no transaction fees and a full online store
Finally, Wix is a wise choice for those learning how to start an online business in Canada. It’s perhaps the easiest interface to work with in terms of ecommerce platforms. Wix comes with a true drag and drop builder, meaning you need zero design experience to make something beautiful.
You can pay for a membership to make regular business sites or online stores when opting for Wix. It’s a monthly fee for a hosted site and all the design tools you require. That also comes with social media features, marketing, fulfillment apps, and templates to design the store.
- Combo: $16 per month; this plan is best for personal use
- Unlimited: $22 per month; recommended for freelancers and small business startups
- Pro: $27 per month; for non-ecommerce sites
- VIP: $45 per month; for non-ecommerce sites
- Business Basic: $27 per month; comes with ecommerce functionality
- Business Unlimited: $32 per month; comes with ecommerce functionality
- Business VIP: $59 per month; comes with ecommerce functionality
Here are the best features to expect from Wix:
- Custom domain names
- Customer accounts
- Secure online payments with multiple Canadian-friendly payment processors
- Customizable reports
- Automated sales taxes
- Product reviews
- Integrations with dropshipping providers
- Advanced shipping tools
- Multichannel selling
- Loyalty programs
We like Wix as one of the best platforms to start an online business in Canada due to its simplicity and apps.
After you’ve decided on an ecommerce platform, it’s time to construct the layout of your online store. This entails uploading products, designing a logo, and setting an overall template.
Use our guide on how to create a Shopify store in less than 15 minutes, or continue with this article to skip to elements like adding a payment processor or selecting a type of business.
3. Connect an Canadian-Friendly Payment Processor
You’ve started building your ecommerce store, and perhaps added a logo. Maybe you’ve even added some products and set your shipping zones. But in order to actually make sales, you need a payment processor. This is the piece of an online store that accepts and verifies credit cards, and you want one that’s accessible and affordable for Canadian online stores.
Much like in the United States, Canadian merchants mustn’t worry much about a lack of options when it comes to payment gateways. There are tons of them.
What are the best Canada-friendly payment processors?
It depends on which payment processors are supported by your ecommerce platform, but the big players like Shopify and Bigcommerce offer access to many of them.
These processors are just a taste of the options available for Canadian stores:
- Shopify Payments
- PayPal Express Checkout
- Crypto.com Pay
- Coinbase Commerce
You will notice, however, that some of the most popular US payment gateways actually aren’t available to Canadian vendors, like Stripe and Square.
Check out what each payment processor has to offer; look into pricing, fees, and extra features to understand which one may work best for your business.
4. Create Complementary Accounts to Grow Your Online Presence
A website is nice, but how do you intend to grow your online presence? People need to hear about your website in order to actually find it.
That’s where other platforms come into play, the ones that complement your store with free and paid marketing, SEO, analytics, and data gathering.
Here are some must-haves to expand your brand online:
- Google Analytics: Essential for understanding where your traffic comes from
- Email account: You need this to sign up for an ecommerce platform; a professional email address is also great for sending transactional emails and newsletters (instead of using your personal address)
- Email marketing service: Options like Moosend, SendinBlue, and Omnisend let you send automated ecommerce messaging and newsletters; they all have monthly subscriptions to do so
- Online directories: From Yelp to Google My Business, it’s wise to claim your business listings and replace the default information with things like hours, a business description, and pictures
- Social media accounts: Make pages for LinkedIn, Facebook, YouTube, Instagram, Facebook, and wherever else makes sense for your business
Finally, every app you add to an ecommerce platform may require a separate account.
5. Select a business structure that’s suitable for your company
You must establish a business structure in Canada in order to abide by tax regulations. A business structure also makes sense to maintain a certain level of control and remove personal liability from the business.
Canada has several business structures:
- Sole Proprietorship: The business is owned and operated by one person; the business liabilities are the same as the person’s
- Partnership: The business is owned and operated by two or more individuals who split shares in the company. Provinces dictate partnership law, so consult with a tax professional. Also keep in mind that partners still have to file their business taxes on personal returns. You can opt for a general, limited, limited liability, or undeclared partnership.
- Corporation: Canadian corporations have all legal abilities as a regular person, like owning property and borrowing. A corporation is separate from is shareholders.
Other business structures in Canada include branch operations and joint ventures, but those are less common (and usually unnecessary) in the ecommerce world.
As always, talk to a tax professional or lawyer before committing to a business structure.
6. Obtain a Canadian Business Number and Any Other Necessary Registrations
This process involves taking your business name and registering it with multiple entities.
As such, it’s important to come up with a business name before registering your company. And you should get a URL for your online shop.
In Canada, it’s required to sign up for a Canadian Business Number if you plan on collecting and paying taxes. That’s almost a guarantee for most online stores.
Use the Canadian Business Registration module to register for a business number.
With a business number, you can now partake in Canadian programs like import-export, corporate income tax, payroll deductions, and GST/HST.
7. Get funding for your Canadian small business
Canadian stores have several options to secure funding:
- Bootstrapping: Using your own network to receive contributions—like from friends and family
- Debt and equity financing: Going to a more traditional investor to raise capital
- Apply for Canadian business grants and funding
- Crowdfunding: Making a landing page where people contribute to your project before its launch (the contributors don’t become shareholders, but usually receive the finished product)
- Traditional bank loans and credit: Go with a line of credit, or something like asset-backed loans
8. Secure a Domain Name for Your Business
With a business name and tax number in hand, you can purchase a domain name to match.
Ecommerce platforms like Squarespace, Bigcommerce, and Shopify all sell domain names through their dashboard interfaces. As an alternative, you can go straight to domain name registrars for even cheaper deals. Many of these registrars also provide unique domain extensions (like if you wanted to opt for the .ca extension).
Purchase a domain name from popular domain name registrars, like:
- Google Domains
It’s wise to use a domain generator tool like this one from Shopify, which takes the keywords you type in and generates available domain names for you.
9. Register for Tax Payments in Canada
Ecommerce platforms like Shopify and BigCommerce offer robust tax management features, yet you still have to register for tax payments in Canada. This way, you can charge customers tax, collect that money, then use it to pay the government of Canada later on.
Tax registration helps the Canadian government track how much is owed, and it keeps you out of legal trouble. It’s rather easy to get hit with tax fees if you miss a payment or forget to register.
You can register for Canadian business taxes here.
GST/HST is the standard Canadian taxation program for businesses that make taxable sales (does not apply to very small sellers).
You may encounter less traditional taxation requirements, depending on the nature of your business and locale in Canada. But, in general, you can typically stick to the GST/HST registration for ecommerce sales.
Be sure to consult a tax professional before handling your taxes.
Are You Ready to Start an Online Business in Canada?
Learning how to start an online business in Canada begins with choosing the perfect product or products. Moving forward, you can build an online store, pick a payment gateway, and set up your incorporation structure. And, of course, it’s important to register for a business number in Canada!
For any clarification on how to start an online business in Canada, leave us a comment in the section below.