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How to open a restaurant in Canada

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How to open a restaurant in Canada

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Starting your own restaurant could be exciting and … process.

1. Lease of a place.

Although not the most important step, but if done incorrectly, this could result in tens of thousands of dollars of losses even before you have started your business operations. In addition to reading and understanding the proposed lease agreement, before you sing it, you should verify the Zoning of the place. Even when leasing a place with the existing food establishment, don’t underestimate the importance of this step. Many municipalities change or update their zoning, but would allow the existing business to operate despite their non-compliance. This process is called “grandfathering”. In such case, the current zoning of a place might prevent you from operating your new restaurant even in the same place where previous business was also a restaurant.

2. Incorporate your business

Restaurant operations impose many material liabilities on its owners – health and safety of employees, food poisoning, fire damages and more. We would never suggest operating a restaurant as a sole proprietorship and endanger your personal assets for the payment of potential liabilities and damages.

3. Licensing.

This is a general name for many aspects of running a restaurant: Municipal business license Health department approval for restaurant operations LLBO – license to serve alcohol for clients. The application process for LLBO is extensive and might be complicated. Please keep in mind that the process might take 8 – 12 weeks, so start it well ahead of time. WSIB -don’t forget to register for WSIB in Ontario to make sure your employees are covered by the mandatory government insurance. Pay attention to the provisions excluding executive managers from such coverage and plan your team accordingly (see below).

4. Organize your team

Have a proper determination of your relations with partners, employees and subcontractors. Prepare and sign proper documents and agreements to make sure each party understands their rights, responsibilities, obligations and entitlements. Partnership agreement, employment agreement and subcontractor agreement will assist you in organizing your relations with the team and making sure you do not have to deal with many unnecessary conflicts, disputes and claims in the future. Once you have 5-7 employees start preparing and implementing workplace policies and procedures to ensure your workplace compliance with the relevant laws and regulations.

5. Taxes.

In addition to a regular business registration, we suggest registering for HST as soon as you start your initial operations. Even when there are no sales yet and you hadn’t started your sales, it still makes sense to register since the HST registration will allow you to receive a refund of all HST payments you’ve made for renovation and purchase of equipment. So, talk to your accountant or to our team to make sure you have proper Tax registrations and ready to apply for HST refunds when the time comes.

6. Operating documents

Operating documents for a restaurant are relatively simple and do not require particular knowledge or skills. You do not need sales agreements or terms and conditions of service, but you still should pay careful attention to supplier’s contracts, website terms and conditions and privacy policy and more.

At CBES, we have an extensive experience in organizing and supporting business operations of a restaurant. From a small family owned establishment to a multiple locations chain of restaurants – we can assist you in organizing and developing your business in the most efficient and protected manner and will help you avoiding mistakes that might cost thousands of dollars in the future.


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