Web-based startups are some of the least expensive businesses to start in Canada. Online business expenses can often be limited to domain registration and website hosting, at least in the beginning.
What Does it Cost to Start an Online Business in Canada?
You can easily launch a basic online business in Canada (including domain & hosting) for under a hundred dollars, and have a pretty nice setup for under $200. If you require full or customized eCommerce functionality, you can get started for about $500. That’s assuming you’ll be able to do most of it yourself, as many do.
Part of the challenge of predicting startup costs, is no two businesses are the same. What we’ve tried to do here is give you a place to start your research. For example, you may not have thought of the cost of platform plugins. Now you can research them to figure out what you’ll need and narrow down the cost for your specific business.
You can start an online home business in Canada and simply claim your income as an individual to begin with. However, if you’ll have a business location or office or if liability could be an issue, it’s best to register as a business and purchase insurance. Your business will be registered at the municipal level, which varies in price among municipalities. Our local business registration costs $100. Registering a business name with the Government of Canada will cost about $80. Find the Canadian permits and licences you need for your business with BizPal.
Domain Name Registration & Web Hosting
Based on an average from 10 website hosts that serve Canadians, we estimate the cost of shared hosting for the first year is $75 to $100 CAD. We used the cost of their basic/cheapest plans, which can vary widely in what they include. Our website host, GreenGeeks, has an introductory plan for less than $3 USD/month.
I recommend going with the best website hosting package you can afford. Most dirt-cheap website hosts leave much to be desired in regards to reliability, speed, storage and critical functionality. They’re also more likely to charge extra for features that many reputable hosts include in their basic packages. Quite often, you’ll sign up for a cheap web hosting plan only to have your host throttle your traffic and even take your site offline, in an effort to make you upgrade to more expensive plans.
Note that most website hosts offer a low price for new customers, but it can go up considerably when you renew. Many will give you the low rate for up to three years, which can save you a lot of money if you can afford to pay for that many years in the beginning. You can keep an eye out for deals (like Black Friday & Cyber Monday).
To ensure you choose the best web hosting plan for your business, use our Checklist: How to Find the Best Website Host for your Canadian Business.
Your website host may include the domain free with your hosting package. If not, you can register a domain name anywhere (it doesn’t have to be through your host). Many go to NameCheap for the cheapest domain name registration. Most domain extensions (.com or what have you) cost about $20 CAD per year.
You will need an Ecommerce or other sales platform if you’ll be selling products. You can start with a free platform, like the WooCommerce plugin for WordPress if you only have a few products and don’t require any special functionality. It can be expanded at a cost if necessary. Otherwise, you’ll be better off using a fully-functional platform like Shopify.
Use the Canadian Guide to the Best eCommerce Platform Software to ensure you choose the best eCommerce platform for your business.
Most eCommerce platforms include payment processing solutions, but if not that will be an additional cost (usually around 3% + a flat rate per transaction).
Naturally, the cost of starting an online business in Canada will vary considerably depending on what kind of business you’ll be launching. Before you proceed, you should have a business plan so you can better predict the total cost. Even a general outline will help you narrow it down.
You have a choice to hire, buy or do it yourself. The learning curve is manageable for most who want to DIY, but it does take longer. You’ll save time and money later if you learn it, because you’ll be able to provide your own tech support and perform everyday tasks.
Expenses that may apply to your online business include:
- Website and Graphics Designers can cost hundreds or thousands of dollars, depending on what you need.
- Plugins are designed to add functionality to an existing platform, such as WordPress or Shopify. Many are free! Some are fully functional, others offer basic functionality for free but charge for increased functionality (upgrades). Paid plugins usually come with more features, updates, tutorials, and access to customer support.
- Inventory (unless you choose to have your products drop shipped)
- Physical Storage or Third-Party Logistics Services
- Marketplace fees (if you’re selling products via online marketplaces like Amazon or Etsy)
- Product Photography and Stock Photos (we use Deposit Photos)
- Customer Support
- Accounting Software
Billing in Canadian Dollars
Unfortunately, the vast majority of website hosting and other services will be billed to you in American dollars. There might be various reasons for that, but generally it’s due to the huge swings in the value of Canadian currency. Meanwhile, they’re still paying most of their bills in USD and will end up operating at a loss. If you need to budget in Canadian dollars, add about 30% and you’ll be quite close most of the time. You can still use your Canadian credit card or PayPal account to pay in converted US currency.
??? Do you have any questions about startup costs of online businesses? Please post in the comments below and we’ll do our best to help or discuss this and other online business topics in the Online Business Canada Facebook group!
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