How to Start My Day-Care Business in Ontario: A Comprehensive Guide
Starting a daycare business in Ontario is one of the best decisions you can make, as it is very rewarding and at the same time promising. For quality child care services have been on rising demand because most parents are working to balance their career and raising up a child. If you like working with children and have been looking for a way to transform this into a successful business, follow the step-by-step guide below. We will look at the option of incorporation in Ontario or operating as a sole proprietorship, including the registration process, the necessary licenses needed, and the practice requirements needed to operate a day-care business in Ontario.
Choosing the Right Business Structure: Incorporation vs. Sole Proprietorship
Before proceeding with all the details to set up your day care business in Ontario, you need to understand the various types of business structures and how they will affect your operations, liability, and taxation.
Sole Proprietorship
The simplest and most common structure is the sole proprietorship. In a sole proprietorship, the owner himself runs the business. This form is easy to set up and involves very few or even no registration formalities. Nevertheless, consider the following aspects:
- Liability: As a sole proprietor, you personally will be liable for the debts and obligations of the business. Your assets will be at risk if the business experiences financial troubles or is taken to court.
- Taxation: The income earned from your day-care business in Ontario is reported on your personal tax return, and you’ll pay taxes at your personal income tax rate. That may be an advantage if the business earns relatively modest earnings, but it could lead to higher taxes if your business income grows substantially.
- Management: You have total management control of the business decision and operations, which enables flexibility and speedy decision-making.
Incorporating in Ontario
Forming business in Ontario involves incorporation, which will be described as making a separate body of the law for your business—the corporation. Here are the benefits of this structure specifically to a day-care business:
- Limited Liability: The greatest benefit of incorporation in Ontario is the ease of limited liability. You and your personal assets are shielded from all debts and liabilities incurred by the corporation, and this happens simply because nobody expects an unfortunate incident or lawsuit to happen.
- Tax benefits: Lower corporate tax rate in Ontario compared to the personal income tax rate. In addition, the possibility of dividing your income between a salary or dividend in order to save income tax.
- Credibility: Forming your day care business in Ontario can ensure your credibility with parents, lending institutions, and suppliers. Being incorporated proves that you are serious about business and it may be comforting to potential customers.
- Continuity: A business enjoys what is known as perpetual existence; the business does not stop or fail with every change of ownership. This can be critical in a case where one may wish to dispose of the business or bring on board partners in the shortest time possible.
While there are good reasons to incorporate a business in Ontario, it does complicate the accounting, record-keeping, and compliance with regulation somewhat. Incorporation should be weighed in light of long-term business goals, risk tolerance, and financial position in making the decision to incorporate versus being a sole proprietor.
Business Registration Process in Ontario
Now that you have chosen the right kind of business structure for a day-care centre, the next step is to register the business in Ontario. The process varies slightly depending on whether you decide on registering as a sole proprietor or on incorporating your business.
Registration of the Sole Proprietorship
- Daycare Business Name: Select an original and fitting name for your daycare business in Ontario. Do research to make sure that the name you have in mind is not already in use. In case of Ontario, go ahead with a NUANS (Newly Upgraded Automated Name Search) report to check the availability of your business name.
- Business Name Registration: If you run a business in Ontario under any name other than your personal name, it is important to register the business name with the Ontario government. One can register online through the Online Business Registry or make in-person registration at any Service Ontario location.
- Get a Business Number: If you plan to hire employees or collect sales tax (HST), you’ll need to enroll with the CRA for a business number (BN). A BN is a unique identifier for your business and is used when dealing with other Canadian government departments.
- Register for HST: If your day-care business expects to earn more than $30,000 in annual revenue, you must be registered to collect the Harmonized Sales Tax (HST). This can be done through the CRA website online.
- Secure Needed Permits and Licenses: Depending on where one is located, and the kind of day-care services they would offer, they will be required to get a certain type of permit or license from the local municipal office.
Incorporating Your Day-Care Business
- Choose a Corporate Name: As with a sole proprietorship, you’ll need to choose a unique name for your corporation. Conduct a NUANS report to ensure the name is available.
- File Articles of Incorporation: The articles of incorporation is a legal document filed to create a corporation in Ontario. It is necessary to file and register this document with the Ontario Ministry of Government and Consumer Services. The information found within the Articles of Incorporation includes the name, address, share structure, and names of initial directors of the corporation.
- Filing Articles of Incorporation: Articles of Incorporation can be filed online using Ontario Business Registry’s services or by postal mail. It attracts a certain filing fee.
- Get a Business Number: If the business is incorporated in Ontario, register for a Business Number with the CRA. This number is necessary to have for tax purposes, and other government filings.
- Register for HST: If your Ontario corporation expects to earn more than $30,000 in annual revenue, you must register for HST. This could be done online through the website of the CRA.
- Get Necessary Permits and Licenses: Your day-care business could require other additional licenses or permits based on locality and type of service.
Licensing Requirements for Operating a Day-Care in Ontario
Running a day-care business in Ontario requires meeting specific regulations and licensing requirements intended to assure children’s safety and well-being. The type of license you’ll need varies according to
Licensed Child Care vs. Unlicensed Child Care
In Ontario, a day-care may be established as either a licensed or unlicensed child care provider. Each option comes with its own set of requirements and restrictions.
Licensed Child Care
- Regulated by the Ministry of Education: Licensed day-care centres operate under the guidance of the Ontario Ministry of Education and follow the requirements of the Child Care and Early Years Act, 2014. This ensures that your day-care meets the necessary standards for health, safety, and programming.
- Capacity Limits: Licensed day-care centers can care for more than five children under the age of six, including the children of the caregiver.
- Licensing Procedure: You shall apply to the Ministry of Education, and this application shall contain details concerning the day-care facility, staff qualifications, and programming. Inspections of your facility shall be made in order to satisfy this requirement.
- Compliance: Licensed day-cares are subject to strict requirements for staff-to-child ratios, health and safety conditions, as well as educational programming. Continuous enforcement is carried out by means of regular inspections.
Unlicensed Child Care
- Self-Regulated: Unlicensed home daycares are self-regulated, while not under the purview of the Ministry of Education, they must adhere to a number of standards set out in the CCEYA.
- Capacity Limits: An unlicensed day-care provider is allowed to care for a maximum of five children under the age of six years, including their own children.
- Absence of Licensing Process: Daycares Business that do not have licenses do not fall under the Ministry’s regulation, meaning they do not have any type of formal licensing process. However, unlicensed providers also need to abide by certain regulations, such as ensuring that their premises are safe and upholding the number of children in care to a defined level.
- Parental Trust: Running an unlicensed day-care requires complete trust from the parents, since there is no one to cross-check the quality of care provided to their children.
Licensed Child Care vs. Unlicensed Child Care
In Ontario, a day-care may be established as either a licensed or unlicensed child care provider. Each option comes with its own set of requirements and restrictions.
Steps to Obtain a Child Care License in Ontario
If you decide to operate a licensed day-care, you’ll need to go through the following steps to obtain your license:
- Determine Your Day-Care Type: Decide whether you want to operate a child care center, a home-based day-care, or an in-home multi-age day-care. The licensing requirements will vary depending on the type of care you plan to offer.
- Prepare Your Facility: Ensure that your day-care facility meets all health and safety standards as outlined by the Ministry of Education. This includes having adequate space, proper ventilation, fire safety measures, and appropriate equipment for children.
- Develop Policies and Procedures: Create comprehensive policies and procedures for your day-care, including emergency preparedness, health and safety protocols, and child care programming. These policies will be reviewed as part of the licensing process.
- Hire Qualified Staff: If you’re operating a child care center, you’ll need to hire qualified staff who meet the educational and experience requirements set by the Ministry of Education. Ensure that all staff members have up-to-date first aid and CPR certifications.
- Submit a Licensing Application: Complete the Child Care Licensing System (CCLS) application online through the Ministry of Education’s website. The application will require detailed information about your day-care, including your facility, staff, programming, and policies.
- Undergo an Inspection: Once your application is submitted, the Ministry of Education will conduct an on-site inspection of your day-care facility. The inspection will assess your compliance with health, safety, and programming standards.
- Receive Your License: If your day-care facility passes the inspection and meets all regulatory requirements, you will be issued a child care license by the Ministry of Education. This license must be renewed annually, and your facility will be subject to regular inspections to ensure ongoing compliance.
