How to Start an E-Commerce Business in Canada: A Complete Guide for Newcomers

E-commerce is one of the most accessible business models for newcomers to Canada. With relatively low startup costs, no requirement for a physical storefront, and access to millions of Canadian and international customers, launching an online store has become an increasingly popular choice for immigrant entrepreneurs. Canada's e-commerce market is projected to exceed $75 billion in 2026, with consumer confidence in online shopping at an all-time high.

This guide provides a comprehensive, step-by-step roadmap for starting an e-commerce business in Canada, covering everything from legal registration to platform selection, payment processing, shipping, taxes, and marketing. Whether you plan to sell handmade goods, imported products, or digital services, this guide gives you the specific information you need to get started.

Step 1: Choose Your Business Structure

Before you set up your online store, you need to decide on a business structure. In Canada, the most common options for e-commerce businesses are:

• Sole proprietorship — Simplest and cheapest to set up. You and the business are legally the same entity. Business income is reported on your personal tax return. Registration costs range from $60 to $100 depending on your province.
• Partnership — Similar to sole proprietorship but with two or more owners. Each partner reports their share of income on their personal tax return.
• Corporation — A separate legal entity offering limited liability protection and potential tax advantages. Costs $200–$400+ to incorporate. Recommended if you expect significant revenue or want to reinvest profits in the business.

For detailed information on incorporation, see our guide on federal vs. provincial incorporation.

Step 2: Register Your Business

Regardless of your business structure, you need to:

1. Register your business name — Register with your provincial registry. In Ontario, this costs approximately $60 for a sole proprietorship.
2. Obtain a Business Number (BN) — Register with the Canada Revenue Agency (CRA) to get a Business Number and open necessary program accounts.
3. Register for GST/HST — Mandatory once your annual revenue exceeds $30,000. Even below this threshold, voluntary registration allows you to claim input tax credits on business purchases. The GST rate is 5% federally, with HST rates varying by province (13% in Ontario, 15% in the Atlantic provinces).
4. Check municipal licensing requirements — Some municipalities require home-based business licences even for online businesses. Fees typically range from $50 to $200 annually.

Step 3: Choose Your E-Commerce Platform

Canada is home to Shopify, one of the world's leading e-commerce platforms, and newcomers have access to several excellent options:

See also: GST/HST Credit Guide for Newcomers

Shopify (Canadian-Founded)

• Basic plan: $39 CAD/month
• Shopify plan: $105 CAD/month
• Advanced plan: $399 CAD/month
• Transaction fees: 2.9% + $0.30 per online transaction (Basic plan)
• Best for: Most e-commerce businesses, especially those wanting an all-in-one solution

WooCommerce (WordPress Plugin)

• Plugin: Free (open source)
• Hosting: $10–$50 CAD/month
• Best for: Those with WordPress experience who want maximum customization

Etsy (Marketplace)

• Listing fee: $0.20 USD per item
• Transaction fee: 6.5% of sale price
• Best for: Handmade, vintage, and craft items; good for testing the market with low commitment

Amazon Canada (Marketplace)

• Individual plan: $1.49 per item sold
• Professional plan: $29.99 CAD/month
• Referral fee: 8%–15% depending on category
• Best for: Reaching a massive existing customer base; good for commodity products

Step 4: Set Up Payment Processing

Canadian customers expect multiple payment options. Key considerations include:

• Credit/debit cards — Visa, Mastercard, and American Express are essential. Interac debit is popular in Canada.
• Shopify Payments / Stripe — If using Shopify, their built-in payment processor eliminates additional transaction fees. Stripe is the most popular payment gateway for custom websites.
• PayPal — Widely trusted by Canadian consumers. Transaction fees are 2.9% + $0.30 CAD.
• Apple Pay and Google Pay — Growing in popularity, especially for mobile shoppers.

You will need a Canadian business bank account to receive payouts. Most major banks (TD, RBC, BMO, Scotiabank, CIBC) offer business accounts with monthly fees ranging from $5 to $50.

Step 5: Plan Your Shipping Strategy

Shipping is one of the most critical factors in e-commerce success. Canadian consumers increasingly expect fast, affordable (or free) shipping.

Canada Post

Canada Post is the most common carrier for small e-commerce businesses. Their Small Business program offers discounts of up to 47% off regular rates. A typical small parcel shipped within Canada costs $12–$20 depending on size and distance.

Third-Party Carriers

• UPS, FedEx, Purolator — Competitive rates for larger volumes. Purolator is partially owned by Canada Post and offers strong domestic coverage.
• Shipping aggregators — Services like Shippo, ShipStation, or Stallion Express negotiate bulk rates and can save you 30–60% on shipping costs.

Fulfillment Centres

If your volume exceeds 50–100 orders per month, consider a third-party logistics (3PL) provider. Canadian options include ShipBob, Fulfillment by Amazon (FBA), and smaller regional warehouses. Costs typically run $3–$8 per order plus storage fees.

Step 6: Understand Your Tax Obligations

E-commerce businesses in Canada have specific tax obligations:

• GST/HST collection — You must collect GST/HST on sales to Canadian customers once registered (mandatory above $30,000 annual revenue). The rate depends on the customer's province.
• Provincial sales tax (PST) — In BC, Saskatchewan, and Manitoba, you may need to collect PST separately. Quebec has its own QST system.
• Income tax — Sole proprietors report business income on their T1 personal tax return. Corporations file a T2 corporate tax return. The small business tax rate is 9% federally on the first $500,000 of active business income.
• US sales tax — If selling to US customers, you may have sales tax obligations depending on the state and your sales volume (economic nexus rules).
• Import duties — If importing products for resale, you will pay duties and GST at the border. Get an import/export account through your CRA Business Number.

Step 7: Market Your Online Store

With your store set up, you need customers. Effective marketing strategies for newcomer e-commerce businesses include:

See also: First-Year Tax Filing Guide

• Search Engine Optimization (SEO) — Optimize product pages with relevant keywords. Google Shopping is essential for product-based businesses.
• Social media marketing — Instagram, Facebook, TikTok, and Pinterest are powerful for product discovery. Focus on 1–2 platforms rather than trying to be everywhere.
• Email marketing — Tools like Mailchimp (free up to 500 contacts) or Klaviyo help build customer relationships and drive repeat purchases.
• Paid advertising — Start with a small budget ($10–$20/day) on Google Ads or Meta Ads. Test different audiences and ad creatives before scaling.

Funding and Support Programs

Several Canadian programs support newcomer entrepreneurs launching e-commerce businesses:

• Canada Digital Adoption Program (CDAP) — Grants of up to $2,400 for small businesses to adopt digital technologies, including e-commerce platforms.
• Futurpreneur Canada — Loans of up to $60,000 for entrepreneurs aged 18–39, including newcomers with permanent residency or citizenship.
• BDC (Business Development Bank of Canada) — Offers loans and advisory services specifically for small businesses. Visit bdc.ca for more information.
• Provincial programs — Many provinces offer small business grants, mentorship, and incubator programs. Check your provincial government's business support page.

Explore our comprehensive guide to grants and funding programs for newcomer entrepreneurs for more options.

Common Pitfalls to Avoid

• Underestimating shipping costs — Canada is a vast country. Factor in shipping costs from the start and consider how they affect your pricing.
• Ignoring bilingual requirements — If selling in Quebec, product descriptions and labels must be in French. Federal packaging regulations may also require bilingual labelling.
• Not keeping proper records — The CRA requires you to keep business records for at least six years. Use accounting software like QuickBooks or Wave (free, Canadian-made) from day one.
• Overlooking consumer protection laws — Canadian consumer protection legislation requires clear return policies, accurate product descriptions, and transparent pricing.

Starting an e-commerce business in Canada is an exciting opportunity for newcomers. With careful planning, the right platform, and a solid understanding of Canadian tax and business regulations, you can build a successful online store. Use the WelcomeAide Cost Calculator to estimate your startup costs and visit our newcomer checklist to make sure you have all the fundamentals covered.