Register My Personal Business in Ontario
If you want to register your business, then Ontario is a promising and supportive place for entrepreneurs. Whether you are about to launch your small, home-based business, or looking to scale up a bigger enterprise and incorporate in Ontario, registration of the business is a very important step toward success. In this article, we’ll cover everything there is to know about registering your personal business in Ontario, from available legal structures to key steps involved and examples of businesses in Ontario. We will also look at incorporating in Ontario, a comprehensive guide through the incorporation process, the benefits, and why it might just be a wise move for your new venture.
Why Incorporate an Ontario Business?
Ontario is the most vibrant and economically strong province of Canada; hence, it’s an ideal place to start a business. Registering your business will provide legal recognition and protection. It will also open up opportunities for business loans, grants, tax incentives, and establish credibility with the customers and suppliers. Whether you want to operate a sole proprietorship, partnership, or Ontario corporation, business registration is the first formal step to lay a solid groundwork.
Legal Requirements and Benefits of Registering
In Ontario, registering your business name is a legal requirement if you are operating under an identity that is not your own. This is applicable in case of the following business structures:
- Sole Proprietorship – Registration of business name is imperative, provided the person does not intend to operate on their personal name.
- Partnership – Registration of a business name with relevant authorities is a must in case of operations carried out in association with one or more partners.
- Ontario Corporation – A corporation must be incorporated and registered with a unique business name.
Apart from legal compliance, registering your business can help you:
- Apply for a Business Number (BN) from the Canada Revenue Agency (CRA).
- Collect and remit HST/GST.
- Open a business bank account.
- Be eligible to apply for business loans and some government grants.
Step-by-Step Process on How to Register a Personal Business in Ontario
The process of registering a business can sometimes vary based on the nature of the business you want to create or whether it is a:
To set up the following structures, below we will detail on how: sole proprietorship, partnership, and Ontario corporation.
1. Register a Sole Proprietorship in Ontario
A sole proprietorship is the simplest type of business. You run a business under your name or a business name, but there’s no legal separation between you and the business. Registration process is a relatively easy one:
Step 1: Choose a Business Name
The first process involves the choosing of the business name. One needs to be quite careful as to whether the name would be in such a way that it is not being used by others. In this respect, doing a name search is recommended to avoid trademark issues even though a NUANS (Newly Upgraded Automated Name Search) report is not required for sole proprietorships.
Step 2: Register your business name
The registration of your business name can be done online with ServiceOntario, or this can be facilitated by an authorized service provider such as Online Business Registry. The process is simple and might just take a few hours to complete.
Step 3: Obtain a Business Number (BN)
When your business name is registered, you shall obtain a Business Number (BN) from the Canada Revenue Agency if you are going to hire employees, collect HST, or engage in import or export activities.
Step 4: Apply for Licenses and Permits
Based on the type of business you are starting, there may be a need for additional licenses or permits. For example, if you were opening a food service business, you would need a permit from your local public health unit.
Example: Sole Proprietorship in Ontario
One of the most common types of sole proprietorship businesses in Ontario is freelance graphic design. A freelance graphic designer might register their business under a name like “Bright Design Studio” and work from home, taking clients from across the province and even outside the country.
2. Registering a Partnership in Ontario
A partnership is like a sole proprietorship but for two or more individuals that share ownership of the business. The process is almost the same as for sole proprietorship, with a few more thoughts to add:
Step 1: Draw up a Partnership Agreement
Although not a legal requirement, the partnership agreement will hopefully cut down on partner conflict by setting out roles, sharing profit and loss arrangements, and action required if a partner leaves the business.
Step 2: Register the Partnership Name
You are required to register the partnership name through ServiceOntario or its authorized provider.
Step 3: Get a Business Number (BN) and Open a Business Account
Similar to the above example of a sole proprietorship, in case you are willing to hire employees or collect HST, you will require BN also in this case.
Example: Partnership in Ontario
One of the most common examples of a partnership business in Ontario is the law firms. For instance, “Johnson & Associates” could be a practice with two attorneys, formed as a general partnership.
3. Incorporating Your Business in Ontario
If your aim is to benefit from complete personal liability protection and tax considerations, then the best thing is to incorporate in Ontario. When you incorporate a business in Ontario, then your business becomes an independent legal entity. This means that you are going to have limited liability; your personal finances are kept apart from the business.
Step 1: Obtain a NUANS Search
A NUANS Report is a name search report that shows potential conflicts with other corporate names and trademarks. It is a requirement when incorporating in Ontario in order to make sure that the business name you are incorporating is unique.
Step 2: Articles of Incorporation
Incorporate your business in Ontario by filing Articles of Incorporation through ServiceOntario. Online service such as Online Business Registry. There are basic structures, which the articles will contain, such as the name and address of the company and share structure.
Step 3: Register for Business Number (BN) and Open Corporate Accounts
When you incorporate, your corporation will require a BN number with CRA to do taxes, payroll, and HST as well as corporate bank accounts.
Example: Ontario Corporation
An example of an Ontario corporation is a tech startup that develops mobile apps. “InnovApp Inc.” could be incorporated in Ontario, allowing its owners to limit personal liability and raise capital through shares.
Advantages of Incorporating in Ontario
There are several benefits to incorporating in Ontario relative to the other business structures of the sole proprietorship or general partnership:
- Limited Liability: The business is a distinct legal entity from its owner. Therefore, you are not personally responsible for the liabilities and debts of the business.
- Tax Advantages: Corporation tax rates are generally lower than personal tax rates, and there are numerous deferral strategies in terms of taxes by retaining profits inside the company.
- Credibility and Growth Potential: More particularly, incorporation in Ontario gives your business a more professional image, meaning that you are more likely to attract funding and business partners or investors.
More Things to Consider for Registering a Business in Ontario
To register your sole proprietorship in Ontario, you should be aware of a few other issues:
- HST Registration: You are required to register for Harmonized Sales Tax (HST) if your business revenues exceed $30,000 during any four consecutive calendar quarters. If your business earns less than this limit, the registration is optional, but it will still allow you to recover input tax credits on HST.
- Business Insurance: This is not a mandatory requirement, but it is advised to take insurance for your business to avoid unexpected threats, such as legal claims and property damage.
- Intellectual Property Protection: If you are using an original business name or logo, you may want to consider registering it as a trademark in order to protect your intellectual property. You can register your trademark through the Canadian Intellectual Property Office (CIPO).
Common Business Types in Ontario
Ontario is home to a wide variety of businesses, across a host of industries. Here are a few examples of businesses that you might consider starting:
- Retail Businesses: Ontario is a retail hub with thousands of small shops and e-commerce businesses. You may start an online clothing boutique, food truck, or specialty store selling handmade products.
- Professional Services: If you are a professional in a particular field, say accounting, law, or real estate, you can run a business that offers professional services, for instance, an accounting firm or a law practice.
- Tech Startups: The tech industry in Ontario is vast. An entrepreneur who has skills in software development can develop tech startups that engage in the creation of apps, developing software solutions, or offering IT services.
- Health and Wellness: The health and wellness industry is one of the fastest-growing in Ontario. You could open a yoga studio, do personal training, or even run your own natural health product business.
- Creative Industries: Ontario offers an inspirational arts and cultural landscape. Creative entrepreneurs can set up businesses in areas such as graphic design, video production, or event planning.
Conclusion: Choosing the Right Business Structure for You
Before you decide whether or not to incorporate your business as a sole proprietor, partnership, or corporation in Ontario, think about your long-term objectives for your company, the level of protection from personal liability you require, and any tax advantages you would like to leverage. Of course, there are benefits to incorporating in Ontario, but such advantages also mean increased legal obligations and administrative requirements.
Most entrepreneurs typically start with a sole proprietorship and later incorporate when their business grows in Ontario. Whichever structure you decide to run your business under, registering your business in Ontario is your first step toward building a legal and reputable enterprise.
