If you're a first-generation immigrant thinking of starting your first business in Canada, this article is for you. We'll share the top 10 most common and costly mistakes immigrant founders make when launching their businesses here and how you can avoid them.

Thousands of immigrants start businesses in Canada every year. Many succeed. But many also struggle with challenges that could have been avoided.

To help you avoid these pitfalls, we share practical advice and clear steps you can take below. Whether you're just starting to explore a business idea or you're already selling, this guide will help you build a stronger, sustainable business.

Let’s dive in.

1. Starting Without a Clear Plan

Many new founders jump in without researching the market or creating a business model and plan. They pick a name, build a website, and start selling before knowing if people want what they're offering.

Why it matters: Without a model and a plan, it’s easy to waste time and money. You might miss key steps like understanding your customer, knowing your costs, or seeing how much competition you have.

Investing the effort upfront to plan and validate your business model increases the odds of your business succeeding.

How to avoid it: Start with a simple business model and a plan. The model doesn’t need to be long. Just answer these questions:

·Who is your ideal customer?

·What problem are you solving?

·How will you make money?

·What are your startup costs?

Use a tool like the Business Model Canvas to get started. We highly recommend the Lean Model version created by Ash Maurya.

Then, prepare a plan. How will you validate your idea and make your first sales? What steps will you take to scale and reach 6-figures of revenue?

We recommend spending a quarter doing market research and then another one focused on delivering your first product/service to your early buyers.

This is what we actually help our clients do in the Launch360 program.

2. Skipping Registration and Legal Setup

Some newcomers try to run a business "under the table." They don’t register their business or pay taxes. This can lead to big problems.

We personally know people who ignored paying taxes and ended up losing even their personal assets.

Canada has strict regulations, and not following them backfires badly.

Why it matters: Without a legal setup, you can’t open a business bank account, apply for loans, or get official contracts. You also face the risk of fines, lost trust with clients, and even lawsuits.

How to avoid it: Once you test your idea and get a few paying customers, register your business with your province. Get a Business Number (BN) from the Canada Revenue Agency (CRA) and learn what licenses you need.

Following the required steps keeps you out of trouble, and it also signals that your business is now real. Which unlocks opportunities for financing, support, and government programs. And, most importantly, gives you a confidence boost that you are now a business owner.

3. Mixing Personal and Business Finances

Using one bank account for everything is a big mistake.

Why it matters: It’s hard to track profits, manage taxes, or see if your business is working.

How to avoid it: Open a separate business bank account and use it only for business. If possible, get a business credit card too. We actually recommend following the profit-first framework and maintaining multiple business accounts.

If you haven’t yet registered your business and are still doing the initial validation with your early buyers, at least open a separate personal account to keep things visible and clear.

Once you register the business, open business accounts and move the funds there.

4. Ignoring Bookkeeping

Many founders save receipts in a box and try to figure it out at tax time. This causes stress and mistakes.

Why it matters: If you don’t track your income and expenses, you won’t know how your business is doing. You might also miss tax deadlines or lose deductions.

How to avoid it: If you can, use simple bookkeeping tools like Wave, FreshBooks, or QuickBooks. At least, track your income and expenses every week in a spreadsheet. And work with an accountant.

5. Doing Everything Alone

Starting a business can be lonely. Especially for immigrants, since we are away from family and friends. Yet, many immigrants don’t reach out for help because of fear, pride, or not knowing where to go.

Why it matters: Trying to do it all yourself leads to burnout and missed opportunities. It can also result in taking wrong steps since you don’t get critical advice from fellow founders & business owners, and don’t see local market insights.

How to avoid it: Connect with local business groups, newcomer entrepreneur programs, a business coach, and join our free community here. Ask questions, learn from others, and share your journey.

We are personally members of the Richmond Hill Board of Trade (RHBOT), the local chamber of commerce, and we know of free programs and workshops available at the local library and Small Business Enterprise Center.

6. Relying Only on Your Cultural Community

It’s natural to start with people who speak your language or share your background. But staying only in that group can limit your growth.

Why it matters: You might miss bigger markets or better advice.

How to avoid it: Build relationships outside your own community, too. Go to local events, workshops, and business meetups. Aim to serve a wide range of customers.

Unfortunately, even in Canada, there are people who still carry the old mindset from their home countries, and instead of really helping their fellow countrymen, they actually exploit them. Yes, rely on your cultural community, but take advantage of the fact that you are now in a multi-cultural country like Canada. A place where people from all over the world come to create more prosperity.

Seeking experienced local mentors and advisors, including Canadian-born business owners, is one of the best things you can do as a founder.

7. Not Adapting to Canadian Business Culture

Every country has its own business style. What works back home might not work here.

Why it matters: If your way of selling, negotiating, or marketing doesn’t match local expectations, you could lose trust or sales.

How to avoid it: Learn about Canadian business habits. Take a workshop or ask a local mentor. Improve your English (or French) if needed. Respect how things are done here while bringing your own strengths.

8. Not Exploring Financing Options

Many immigrants use their own savings or borrow from family. They think banks won’t lend to them.

Why it matters: Without enough money, your business might grow too slowly or fail early.

How to avoid it: Look into newcomer business loans, grants, and microloans. Some banks have special programs for newcomers. Build your credit score early by paying bills on time and using a credit card wisely.

The key is not to disqualify yourself before trying. Yes, rejection sucks. But, according to one report, lack of financing is often due to not knowing how to obtain it rather than being ineligible.

So, explore options. You’ll be surprised and how much funding is available for various business needs.

9. Missing Out on Free Help

There are many free or low-cost resources for entrepreneurs in Canada, but many newcomers don’t know about them.

Why it matters: You could waste time or money solving problems others have already figured out.

How to avoid it: Visit your local Small Business Enterprise Centre. Join free training or mentoring programs for newcomers. Search for government support online. And did we mention joining our free community?

We would also highly recommend joining our newsletter and coming back to our website to stay informed on everything related to building a business in Canada as an immigrant. Here’s the link, if you are interested.

10. Expecting Quick Success

Some founders think they’ll grow fast or get rich quickly. When that doesn’t happen, they feel frustrated.

Why it matters: Business in Canada takes time. Trust, partnerships, and sales grow slowly.

How to avoid it: Be patient. Plan for long-term growth. Celebrate small wins. Give yourself time to learn and adjust. Many successful business owners took years to get where they are.

That’s why starting your business as a side gig might be the best path to business ownership. Because it allows you to build the foundations and grow sustainably while your full-time job pays the bills.

Final Thoughts

Starting your first business in Canada is a big step. It takes courage, planning, and patience. By learning from others and avoiding these common mistakes, you give yourself a better chance to succeed.

And remember, you don’t have to do it alone.

As we mentioned before (twice already, if we are counting), join the Newcomer Business Canada community to connect with others, get helpful tips, and stay inspired on your journey.

And if you already have experience with starting a business in Canada as an immigrant, share some of the lessons you’ve learned so far.