How to Register an Ontario Incorporation: A Complete Guide
If you want to Incorporate in Ontario, Canada, you need to understand the process of registering a business. Incorporation in Ontario is straightforward but has a number of steps that must be undertaken for the business to be in compliance with the law. This article will explain how to incorporate an Ontario Corporation step by step.
Why Register a Business in Ontario, Canada?
Incorporation in Ontario is the first step toward establishing a legal entity that can operate within the province. Irrespective of the nature of your business—a sole proprietorship, partnership, or incorporation—the process will establish the fact that the name of your business is unique and that your company complies with local laws and regulations. This not only enhances your credibility but also ensures the protection of your personal assets from business liabilities.
Step 1: Decide on the Type of Business Entity
Before you move ahead with registering your business in Ontario, Canada, you need to zero in on the type of business entity that you will be setting up. The most common types are:
Sole Proprietorship: This is the simplest form of business registration in Ontario. It involves registering your business name and operating under your own name or a trade name.
Partnership: This describes an association of two or more persons who share the business’s profits and liabilities.
Incorporation: This is the most complicated way of registering; it has immense benefits like limitation of liability and possibly some tax advantages if you operate in Ontario.
Step 2: Choose a Business Name
The second step toward incorporation in Ontario, Canada, is selecting a business name. A business name is very important as it is an identification for your brand; in fact, it appears on each and every document legally prepared. During the incorporation for your Ontario business, you should take consideration to provide a name which does not exist with any other business.
How to Choose a Business Name:
- Uniqueness: The name should not be too similar to existing Ontario businesses.
- Descriptive: The name should describe the nature of your business.
- Compliance: The name should meet Ontario’s incorporation naming requirements, so you have to avoid prohibited terminology.
Step 3: Name Search
Before being able to proceed with incorporation, the name must be approved. The business will be allowed to register only when it is possible to confirm its name via the Ontario Business Registry.
How to Perform a Name Search:
- Open the Ontario Business Registry website.
- Use the “Name Search” tool to determine if your proposed business name is available; once the name is available, you can reserve it for a specified period before continuing with the incorporation.
Step 4: Business Name Registration in Ontario
Once you have picked a name and verified its availability, the next step involved in incorporating your business in Ontario is to officially register it with the appropriate authorities. How this is done, of course, varies depending on what type of business entity you are about to register.
Registering a Sole Proprietorship or Partnership
- Business Name: Your business name can be registered online through the Ontario Business Registry.
- Fees: The registration fee is quite minimal in the case of a sole proprietorship or partnership.
Incorporation in Ontario
- Articles of Incorporation: For incorporation in Ontario, one is expected to file the Article of Incorporation. This document lays down the organizational structure of your incorporation, including names of directors and shareholders.
- Ontario Business Number (BN): When your corporation is registered you will be issued an Ontario Business Number for your corporation.
Ontario Standard Corporation
An Ontario Corporation is a company registered with Service Ontario under Ontario Business Corporations Act (OBCA). It can legally carry out business activities in Ontario. One of the key benefits of incorporating as an Ontario Standard Corporation is limited liability protection for shareholders and corporation name protection in Ontario.
What are the benefits of Ontario Corporation?
- One of the primary benefits of incorporation is limited liability protection. Shareholders of an Ontario corporation are typically not personally liable for the debts, liabilities, or obligations of the corporation. This means that personal assets of shareholders are generally protected from business-related risks and creditors.
- You can easily make changes in your corporation: change the name, change corporation structure, etc.
- Ontario incorporations may benefit from certain tax advantages, including the ability to access the small business deduction rate on active business income, which is lower than the general corporate tax rate.
- The incorporated company can continue to exist even if shareholders change or pass away.
- Incorporated businesses may find it easier to raise capital and attract investment compared to sole proprietorships or partnerships. Investors and lenders may be more willing to invest in a incorporation due to its limited liability structure and potential for growth.
- One or more individuals above the age of 18 can conduct an incorporation in Ontario.
- Must have a physical address in Ontario. If you don’t have a local provincial address, we provide registered address and mail scanning service.
- No residency requirement to incorporate in Ontario.
What are the incorporation steps?
Step 1. Name your corporation.
Choose if you want a numbered or a named corporation:
- A numbered name is the simplest way to name your incorporation because the government assigns the number (for example, 12345678 Ontario Inc.).
- Your company can be named and have a unique name that sets you apart from your competition.
- Please include the legal suffix like Inc./Ltd./Corp. at the end of your name. It is vital for incorporation.
- An Ontario NUANS Reservation Report is required to register a Named Corporation. You can obtain a NUANS Reservation Report.
Other recommended service providers that are registered NUANS members:
For further details on the regulations for naming a corporation.
Step 2. Select your articles of incorporation.
This step establishes the structure of your incorporation. Choose the right share structure:
- Basic one with unlimited common shares with no specific share class.
- Standard: common shares with class A voting and class B non-voting.
- Custom: this share structure allows to categorize shares into many types such as common, preferred, voting, non-voting etc.
Step 3. Establish the office address.
- Registered office address must be a physical address in Ontario.
- Mailing address can be a P.O. BOX.
- You are allowed to have a legal land description address too but must have a P.O. Box connected to it.
- If you don’t have a local provincial address, we provide a registered address and mail scanning service:
Step 4. Decide who will be a director, shareholder, officer and Incorporator.
- Director – is the head of the incorporation. You can add up to 10 directors.
- Shareholder – owns the incorporation and receives profit from the business as dividends and shares.
- Officer – is anybody including an employee, no decision making power.
- Incorporator – is the person under whose authority the incorporation is made. Is not changeable.
Mandatory items to incorporation
- Minute book: consists of bylaws, share structure, minutes & other legal sections. Without it, an incorporation is not possible.
- Initial Return: It’s a mandatory filing with Service Ontario for each new incorporation. It has to be filed within 60 days of Incorporation. It confirms the details of the corporation. It is not a tax filing with CRA.
- Business Number. It is a unique identification of your business with the Canada Revenue Agency. It is required to register accounts like GST/HST, Payroll, Import/Export accounts.
- Corporate Tax ID. It is like a SIN number for a incorporation.
- HST Registration. Harmonized Sales Tax. If you are selling goods and collecting HST you must have an HST account. every time a business incurs an expense – be it rent or paying for goods – it pays HST, if you set up the account, you can claim it back.
- Payroll Account: If you have employees, including yourself, you must set up a payroll account.
- Import/Export. If your goods or raw materials cross the Canadian border, you are required to clear customs using the Import/Export account.
- WSIB Account: It’s the Workplace Safety and Insurance Board registration. If your corporation has employees (except directors and shareholders) you must register for WSIB.
- Annual Return: A corporation must file its Annual Return with the Government every year to keep it active. You may add Annual Return to your package to avoid the risk of forgetting it. We will take care of it!
You can find out more information about annual returns.
Documents Required
- Sole Proprietorship/Partnership: Form for business name registration, Proof of ID
- Corporation: Articles of Incorporation, Proof of ID, and Particulars of shareholders.
Step 5: Licensing and Permits
Once you have your incorporation, you will need to obtain a few licenses and permits based on the type of business and location in Ontario, Canada.
Some common kinds of Licenses and Permits:
- Business License: This is for the majority of businesses operating within Ontario.
- Other Licenses: Depending on the type of industry or business, there are other licenses required, such as health licenses for businesses related to food.
Step 6: Register for Taxes
Registering for the Business Number is an important step for your business registration in Ontario, Canada. It lets you be all set for operating a legal business without any tension.
Types of Taxes to Register For:
- Harmonized Sales Tax (HST): If your business has annual revenue greater than certain threshold amounts, you are required to register to collect HST.
- Payroll Taxes: Payroll taxes will be associated if you have any employees.
- Corporate Income Tax: If you are incorporated, your incorporation is required to be registered and file corporate tax returns each year.
Step 7: Open a Business Bank Account
After going through the incorporation processes above for your business in Ontario, you are strongly encouraged to open a business bank account. It’s incredibly easier to keep track of your accounts and taxes when personal finances and business finances are separated from each other.
How to Open a Business Bank Account:
- Choose a Bank: Choose a bank specializing in small business accounts.
- Submit the required documents: You will be required to provide proof of business registration, identification, and in some cases other necessary documents, such as Articles of Incorporation.
Step 8: Register for Workplace Safety Insurance
If you employ any worker, it’s statutory that you register with a workplace safety insurance based in Ontario, known as the Workplace Safety and Insurance Board (WSIB). This is another important step for your incorporation in Ontario, Canada, because it ensures that your employees are protected in case of injury at work.
Register with WSIB:
- Account Creation: You can register your business with the WSIB through their website.
- Pay Premiums: The premium amount you will pay depends on the industry you are in and the size of your payroll.
Step 9: Maintain Records and Stay Compliant
Once the incorporation is complete and operational, one needs to keep up-to-date records and stay compliant with all regulations. This includes maintaining proper financial records, paying your taxes when due, and renewing any licenses or permits that are required of you.
Corporate Compliance:
- Annual Returns: A corporation needs to be registered, and an annual return must be filed with the Ontario Business Registry.
- Keeping Records: Records must be kept for all business transactions, employee data, and tax filings.
- Renewals: Ensure renewal for business name registration or other necessary license renewals.
Some Usual Issues in Incorporation in Ontario, Canada
There is a general ease in the process of incorporation in Ontario; however, there are some usual issues that any entrepreneur may have to face. Knowing about the problems would help you prepare better and save from the potential pitfalls.
Some Common Issues:
- Selecting the Right Business Form: It might prove a little difficult to decide whether to set up a sole proprietorship, partnership, or corporation. All have their own pros and cons.
- Name Availability: To come up with a unique business name which hasn’t been used by any other person in the market is quite a challenging task.
- Compliance with Legality: It could be quite overwhelming to have knowledge about and comply with all relevant laws of tax registrations, permits, and licenses.
Conclusion on Successful Incorporation in Ontario, Canada
Registration of Business in Ontario, Canada, is one of the most vital first steps towards setting up a successful business venture. Whether it’s the initial start-up of a small sole proprietorship or a major corporation, using the following steps to guide you will aid in handling things rather simply.
When you understand the importance of every step you need to follow, from which business structure is best for you, down to registering your tax obligations, your business will be in a position to be legally compliant and in good standing when it comes to operation in Ontario. Do remember that the process of incorporation of business in Ontario is not only by law but also foundational for a reputed and successful business.
Last-minute checklist for registering the business:
- Type of business structure—sole proprietorship, partnership, incorporation.
- Name search and reservation of the business name.
- Registration of the business in the Ontario Business Registry.
- Licenses and permits.
- Register for taxes (HST, payroll, corporate income tax).
- Open a business bank account.
- Register for workplace safety insurance (if applicable).
- Keep detailed records and stay compliant with regulations.
With these steps in this comprehensive guide, you will be on your way to successful incorporation in Ontario, Canada. This establishes the road for long-term success.
