I was wondering about having my online business registered in Canada. My biggest concern about having my business registered is does the governments rules really matter when it comes to online businesses. For example, even though the government of Canada's website says that "if your making $400+ per month then your business is not considered a hobby and it needs to be registered", are there actually people that work for the government that scour the internet looking for websites that "might" be making $400+ per month and that belong to a specific Canadian citizen? Would they be able to go after you for possible tax evasion or something like that?
Canada's pretty strict about taxes.
A friend of mine did not go through the proper bureaucratic channels, figuring the same as you: "What will they care about my little extra buck or two a month? What are the odds?"
Nope! -- His carelessness resulted in a painful three-month audit + back-taxation process that could've costed him a lot. He had to produce full records, and even people he hired for odd jobs were interviewed.
Registering a small business (at least from my experience here in Ontario) is cheap and it's easy (no need to incorporate if it's not big: just register it and claim your earnings); they might as well hold your hand through the process.
And if you don't make a lot of money, you won't be paying a lot of taxes anyway. Not worth the risk.
You also get the benefits of claiming costs like laptops, internet, business lunches, gas, etc.
And also, might sound corny, but a few years in a corrupt South American country where nobody pays their taxes and public services are available only to those who can bribe their way to them will leave you quite grateful to pay your share and pitch in for the betterment of a society that is actually functional and there to help you when you need it.
In my experience, governments aren't always known for being the most flexible entities. Unlike the startup, where rules haven't yet been formed, governments have a long history of bureaucracy, and the people who work in these organizations may not be in positions to overlook certain oversights once you've been introduced to their legal or criminal systems.
Now, since Canada is a really huge place, and since you didn't mention specifically what part of Canada your business is located in, we'll just assume Ontario. From About.com - Business Registration in Ontario:
Assuming these same penalties apply in your province, you may want to take a risk management approach to this. The longer you're in business, the greater the chances that you'll get caught. Given and infinite amount of time, everyone will eventually reach the threshold of getting caught. Thus, if you expect to be in business for more than a few months to a year, then it may be in your best interests to get your business registered.
Another thing to factor in might be your revenue. If your business can't afford a $20,000 penalty, then you may want to register sooner than later.
If your business is very public and one that tends to draw a lot of attention, you may want to consider registering sooner rather than later.
In short, use the information from your province's laws on business registration, combined with your risk factors, to make a decision that works best for you. Good luck!