Incorporate in Ontario: A Complete Guide to Business Success
Starting a business is a big deal, and deciding to incorporate in Ontario can be one of the most important choices you make. By incorporating in this booming province, you gain access to many opportunities and protections. Whether you’re just starting out or already have experience, this guide will help you understand everything you need to know about incorporating in Ontario.
Incorporated Business: The Definition
An incorporated business is a legal entity that is separate from its owners. This means that the business may own property, borrow money, sue or be sued, and pay taxes independent of its owners. Following are some of the characteristics:
- Ownership of Property: The business can own and operate its property.
- Financial Independence: It can borrow and take on debt independently.
- Legal Standing: The business can sue other entities or be sued itself.
- Tax Obligations: It pays taxes separately from its owners.
The Benefits of Incorporation
There are numerous benefits that come along with incorporating your business. Some of the reasons you should make this step include:
- Limited Liability: You are not personally responsible for the company’s debts or legal troubles. If your company owes money or gets sued, you only risk to lose money you invested in the company, but your personal assets, like house and car are protected.
- Tax Advantages: when you register a corporation in Ontario, you can claim tax deductions and deferrals that a sole proprietor cannot. The corporate tax is lower than your personal income tax. As a small business you can only pay a 3.2% tax rate, find more information about Ontario small business deduction.
- Credibility: Having “Inc.” or “Ltd.” after your business name increases your status with customers and investors.
- Endless Existence: An Ontario corporation exists beyond the lifetime of its original founders.
- Access to Capital: A corporation can access capital by the sale of stocks or shares.
Steps to Incorporate a Business in Ontario
Incorporation in Ontario can be done through a number of steps. Here is a detailed breakdown:
1. Select Your Business Name
First, to incorporate a company, you will need to select a unique business name. The unique name makes you distinctive and helps avoid some legal issues. Choose between a numbered or a named corporation:
- A numbered name is the simplest way to name your corporation 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.
2. Ontario Business Name Search
It is very important to perform an Ontario business name search before finalizing a name for your business to ensure that the desired name is not already in use; otherwise, potential litigation or branding issues could arise. An Ontario NUANS Reservation Report is required to register a Named Corporation.
Find more rules and regulations of naming a corporation.
3. Prepare Your Articles of Incorporation
This step establishes the structure of your corporation. 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.
The Articles of Incorporation include your business 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 registered address and mail scanning service.
Also, Articles include the information about the directors and the shareholders of the company. Please provide the information about the following designations:
- Director – is the head of the corporation. You can add up to 10 directors.
- Shareholder – owns the corporation 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 corporation is created. Is not changeable.
4. File Your Documents
File your Articles of Incorporation with the Online Business Registry to legally set up your business. You can incorporate a business in Ontario online for convenience:
5. Obtain a Business Number
After your incorporation has been approved, you will have to register for a business number with the CRA, which is very important for tax and other legal purposes. 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.
6. File the Initial Return
The Initial Return is a mandatory filing with Service Ontario for each new corporation. 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.
7. Prepare Corporate Records
The keeping of proper corporate records is a legal requirement for any Ontario incorporation. This includes the minutes of meetings, share registers, and financial statements. Minute book consists of bylaws, share structure, minutes & other legal sections. Without it, a corporation is not complete.
8. Mandatory Items to Run a Business
- Corporate Tax ID: It is like a SIN number for a corporation.
- HST Registration: Harmonized Sales Tax. If you are selling goods and collecting HST you can 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!
Types of Businesses You Can Incorporate in Ontario
1. Federal Corporation vs. Provincial Corporation
You can incorporate at either the federal level or the provincial level. Each has its own set of regulations and advantages. Learn more about the differences between federal and provincial corporations.
2. Professional Corporation
Certain professions, such as doctors and lawyers, are allowed to create professional corporations, which provide special tax advantages and liability protection.
3. Not-for-Profit in Ontario
These are organizations in Ontario that operate for the benefit of the community rather than for making a profit. They can provide services, support causes, or address social issues. Non-for-profits can include charities, community groups, and other organizations dedicated to helping people and improving society.
Incorporate a Business in Ontario Online
With modern technology, you can easily incorporate a business in Ontario online in a few business hours.
- Visit the Online Business Registry website: This portal offers comprehensive tools and resources for business incorporation.
- Complete a simple online form: fill out the information about the corporation’s directors and shareholders, company’s address.
- Pay the Filing Fee: The current fee for online incorporation is about 399 CAD + TAX. Prices may have changed, so check for the current rate.
- Apply Now: After filling out the forms and making the payment, submit the application. You will get a confirmation email and incorporation documents on your email address.
Common Mistakes to Avoid When Incorporating
Even in such a simple process, there are a number of common pitfalls to be aware of:
- Failure to Conduct NUANS Name Search: Make sure your business name is unique and does not violate the existing trademarks.
- Neglecting Corporate Records: Accurate and timely record-keeping is vital for legal compliance and future audits.
- Ignoring Tax Obligations: Familiarize yourself with the tax requirements for an Ontario corporation to avoid penalties and interest.
- It would be a mistake to overlook the benefits of professional advice: a consultation with a filing expert or accountant can help navigate you through the process of incorporation. Give us a call at 416-628-9349 and we will be happy to help you.
Frequently Asked Questions:
1. What is an Ontario business name search?
An Ontario business name search shows you if a desired business name is taken, or too similar to already existing names. This process ensures the proposed name is distinct and passes the requirements of the province. You can conduct a search through the Ontario NUANS (Newly Upgraded Automated Name Search) database.
2. How much does it cost to get incorporated in Ontario?
The cost to register a corporation in Ontario varies, depending on whether you file online or by mail. Incorporation online through the Online Business Registry costs 399 CAD + Tax, whereas incorporating by mail may cost a little more. Other services, such as NUANS name searches, may be an added cost. Prices may have changed, so check for the current rate.
3. How long does it take to incorporate in Ontario?
Incorporation in Ontario will take a few hours if done online and there are no problems, but it can take up to weeks depending on filing by mail and the processing times of the government.
4. How can I incorporate myself in Ontario?
To incorporate yourself in Ontario:
Choose a unique business name and perform a NUANS search if necessary.
Fill out the Articles of Incorporation form.
File your articles of incorporation and pay the filing fee to the Online Business Registry.
Obtain a business number from the Canada Revenue Agency (CRA) to handle taxes.
5. Do I need a lawyer to register a corporation in Ontario?
No, you don’t need a lawyer to incorporate in Ontario; you can do this yourself through the Online Business Registry. You will need to consult a lawyer or a professional advisor if you are seeking specific legal or financial advice, especially with more complicated business structures. You can also give us a call at 416-628-9349 and our business registration specialists will be happy to provide you with a free consultation.
Conclusion: The Path to Business Success
Incorporating your business in Ontario is a smart move that can help you to succeed in the long run. By following the steps to incorporate a business in Ontario and taking advantage of the benefits, you can stand out in a competitive market. Whether you’re looking to open a corporation in Ontario or seeking guidance on Ontario corporations, this complete guide equips you with the knowledge and tools to make informed decisions. Start your incorporation journey today and unlock the full potential of your business. For further details, don’t hesitate to consult with professionals, give us a call at 416-628-9372 to ensure a smooth and compliant incorporation process.
