Forming a corporation is a big step, but also an exciting one. Incorporating a business in Ontario may seem complicated, but don’t worry, we’ve got you covered. This guide will walk you through everything you need to know to get your business off the ground in no time. Starting with choosing a business structure and name, to obtaining licenses and permits, filing documents with the government, and opening a business bank account. By the end of this, you’ll be ready to hit the ground running as an official corporation. The process may require some paperwork, but think of it as laying the foundation for your company’s success. With the right tools and information, incorporating in Ontario can be straightforward. So take a deep breath and dive in – your new business adventure awaits!
- Deciding on a Business Structure in Ontario
- Choosing a Business Name
- Registering Your Business in Ontario
- Obtaining a Business Number
- Opening a Corporate Bank Account
- Drafting Articles of Incorporation
- Filing for Incorporation in Ontario
- Understanding Ontario Corporation Tax Requirements
- Next Steps After Incorporation: Licenses, Permits, Etc.
Deciding on a Business Structure in Ontario
When starting a business in Ontario, one of the first decisions you’ll need to make is which business structure is right for you. The options include:
The simplest structure where you operate as an individual. Easy to set up but you’re personally liable for business debts and legal claims.
Team up with one or more partners and share profits. Also easy to establish but each partner is liable for the business. Partners should have a legal partnership agreement to prevent issues down the road.
A separate legal entity that can issue shares, protect your personal assets, and allow for public trading of shares. More complex to set up and maintain but provides the most flexibility and protection. Corporations are either public or private, with private being more common for small businesses.
For organizations with a social or charitable purpose. Also protects members from liability but has restrictions on distributing profits.
Choosing a business structure depends on your needs and goals. If limiting personal liability is important, a corporation is probably your best choice. But for a simple side business, a sole proprietorship could work fine. Speaking with a lawyer and accountant can help determine what makes sense for your unique situation. With the right business structure in place, you’ll have a solid foundation for success.
Choosing a Business Name
Choosing a business name is an important first step. You want something memorable, catchy and meaningful.
Think about keywords that reflect your brand and products. Aim for a name that’s easy to pronounce and spell. Check that the web domain is available and snag social media handles too.
Do some research to make sure your top picks aren’t already taken or trademarked. You can search business name registries, conduct internet searches, and check social media sites. It’s best to avoid names that are too generic or common.
Once you have some options, get input from others. Run them by friends and family to see what they think resonates most. Look for a consensus on the strongest, most distinctive choices.
When you settle on a name, register it with the Ontario government to officially establish your business. You’ll need to submit incorporation forms along with the name approval request. The process typically takes 4 to 6 weeks.###
After your business is incorporated, you can open business bank accounts, apply for licenses and permits, build your website, and more – all under your new company name. Congratulations, you now have an identity for your venture!
Promoting your new name is key. Use it on all your business stationery, marketing materials, products, services, and correspondence. Register social media accounts to help raise brand awareness and engage with your audience.
With a memorable name and promotion to match, your company identity will be off to a great start. Staying power comes from building a reputation of trust, value and service to your customers over the long run.
Registering Your Business in Ontario
To register your business in Ontario, you’ll need to follow a few key steps.
Choose a Business Structure
The first decision you need to make is what type of business structure you want to operate under. The three most common options for small businesses are:
- Sole proprietorship – Simplest structure where you are solely responsible. Easy to set up but you have unlimited liability.
- Partnership – Two or more people share ownership. Also easy to establish but partners have unlimited liability.
- Corporation – Separate legal entity that limits your personal liability. More complex to set up but offers tax and legal benefits. Most new businesses in Ontario incorporate.
Register Your Business Name
If you want to operate under a business name other than your personal name, you need to register it. You can register the name through the Ontario Business Information Center. The name needs to be unique and not deceptively similar to another registered name.
File Incorporation Documents
To incorporate your business, you need to file Articles of Incorporation with the Ontario Ministry of Government and Consumer Services. This establishes your business as a legal corporation. You’ll need to pay a registration fee, currently $375. The ministry will review and process your documents, usually within 3 to 4 business days.
Obtain Business Licenses and Permits
Depending on your business activities, you may need specific licenses or permits to operate legally. Requirements vary in different cities and counties, so check with your local municipal government. Common licenses include business licenses, building permits, and occupancy permits.
Register for Taxes
You need to register your corporation for sales tax, income tax, and payroll tax accounts. You can register for all tax accounts through the Canada Revenue Agency Business Registration Online service. Most small businesses will need to charge and remit sales tax (HST), and corporate income tax. If you have employees, you’ll also need to withhold and remit payroll taxes.
Following these steps will ensure your business is properly registered and ready to operate legally in Ontario. Be sure to also keep good records, stay up to date with annual government filings, and keep your business information current.
Obtaining a Business Number
To legally operate your business in Ontario, you’ll need to obtain a Business Number (BN) from the Canada Revenue Agency (CRA). The BN is a single number to identify your business for various government programs and services.
Registering for a BN
Registering for a BN is free and can be done on the CRA website. You’ll need some information about your business ready, like the legal name, ownership details, business activity, and contact info. The CRA will review your application and if approved, will mail you a BN confirmation letter in about 2 weeks.
Once you have your BN, you can register for other government accounts like:
- A GST/HST account (if applicable) to charge sales tax
- Payroll accounts to remit income tax, CPP and EI for employees
- Import/Export accounts if you buy or sell goods internationally
These programs will require your BN to link them to your business profile.
Using Your BN
Your BN serves as your business’s identification for various CRA and government interactions. You’ll need to provide it when:
- Filing tax returns like GST/HST, payroll, corporate income tax
- Making payments for the above tax types
- Registering for government procurement
- Applying for business grants and financing
It’s important to note your BN on all correspondence with the CRA and keep it in a safe place. If you have multiple business accounts (for divisions or locations), you’ll use the same BN for each but with a program identifier to differentiate them.
A BN is mandatory for operating a business in Ontario, so obtaining one should be a top priority when you’re setting up your company. While the process is fairly straightforward, the CRA help line or an accountant can assist you with any questions. Your BN will open the door for your business to fully function legally and access valuable government resources.
Opening a Corporate Bank Account
Now that your business is officially incorporated, it’s time to open a corporate bank account. This will keep your business finances separate from your personal accounts.
Find a Business Banking Institution
Do some research to find a bank that offers business accounts with low fees and competitive interest rates. The “big five” banks in Canada—RBC, TD, BMO, CIBC and Scotiabank—all offer business banking services, as do smaller banks like Tangerine. Compare account options like low-fee daily banking, high-interest savings, lines of credit and business credit cards.
Once you’ve chosen a bank, set up an appointment to open your business account. Bring the following documents:
- Your business registration and incorporation papers
- Government-issued photo ID for the account signatories
-Avoid confusion by determining who will be the main signing authorities on the account in advance. Typically business owners and directors have signing authority.
-To initially fund your account, bring a void cheque or pre-authorized debit form from your personal account. This will allow you to electronically transfer money between your personal and business accounts.
-You can also deposit cash, cheques and wire transfers into your new business account.
Using Your Account
-Use your account for all revenue and expense transactions. This includes depositing sales, paying bills and payroll, and any other business financial activities.
-Set up pre-authorized payments for recurring bills. This ensures bills are paid on time each month.
-Apply for a business credit or debit card to make purchases for your company. Use these cards only for legitimate business expenses.
-Review account statements regularly to monitor for any errors or unauthorized transactions.
Opening a corporate bank account is a key step in establishing your business. Keeping business revenue and expenses separate from your personal finances will make accounting and tax filing much easier. With the right bank and account, you’ll have access to useful tools to help your new company thrive.
Drafting Articles of Incorporation
Drafting your Articles of Incorporation is an important step in the incorporation process. This legal document establishes your corporation and allows it to conduct business. To draft your Articles of Incorporation in Ontario:
Determine your corporation’s name
Choose a name that reflects your business and is distinguishable from existing names. Check availability on the Province of Ontario’s website.
Select your corporation’s objectives
Outline the general objectives and purposes of your corporation. Keep this broad to allow flexibility in your business activities. For example, “to carry on the business of ecommerce and online retail services.”
Appoint first directors
List the individuals who will serve as your first directors on the board. Directors oversee and govern the corporation. You must have at least one director who is 18 years of age or older.
Indicate the number of shares your corporation is authorized to issue, as well as the number of shares that will be issued and distributed among the initial shareholders. For example, “The corporation is authorized to issue 100 common shares without par value.”
Choose a registered office
The registered office is the official address where legal documents are served and records are kept. Provide the office’s street address, city/town, and postal code.
File the Articles of Incorporation
Submit your completed Articles of Incorporation, Form 1 – Initial Return for Newly Incorporated Corporations and the registration fee to the Companies and Business Names Branch of the Ministry of Government Services. The typical processing time is 3 to 4 weeks.
Obtain final documents
Once your application is approved, the Branch will mail your Letters Patent or Certificate of Incorporation, which officially brings your corporation into legal existence. They will also provide details to access your corporation’s Business Number and register for tax accounts.
Following these key steps carefully will ensure your new corporation in Ontario gets off to a great start. Let me know if you have any other questions!
Filing for Incorporation in Ontario
To officially incorporate your business in Ontario, you’ll need to file articles of incorporation. This involves submitting the necessary documents to the Ministry of Government and Consumer Services.
Prepare Your Documents
The two main documents you’ll need are:
- Articles of Incorporation: This establishes your corporation and includes information like your corporation’s name, the number of directors, share structure, and your corporation’s registered office address.
- Initial Return: This notifies the ministry of your corporation’s directors and officers. You’ll need to provide names, addresses, and the number of shares held by each director.
You can find template articles of incorporation and initial return forms on the ministry’s website to help you prepare these documents. Fill them out carefully and be sure all information is accurate.
Submit Your Documents
Once your documents are ready, you can submit them via mail or in person at a ServiceOntario location. The required fees are $360 if submitting by mail or $375 if submitting in person. These fees cover the cost of incorporating your business and processing your documents.
Receive Your Letters Patent
If your documents are accepted, the ministry will issue Letters Patent, the official document that legally establishes your corporation. Your Letters Patent will be mailed to you within 4 to 6 weeks of the ministry receiving your documents. Congratulations, your business is now officially incorporated in Ontario!
Be sure to also apply for a Business Number from the Canada Revenue Agency so you can register for tax accounts like GST/HST, payroll, and corporate income tax. You should also open corporate bank accounts and set up bookkeeping to properly manage your corporation’s finances. By following all the necessary steps, you’ll be up and running as an incorporated business in no time!
Understanding Ontario Corporation Tax Requirements
To legally operate your business in Ontario, you’ll need to register as a corporation and stay on top of the necessary tax filings. The province requires all incorporated businesses to pay an annual corporate tax on income, as well as keep records and submit tax returns.
Ontario Corporations Tax
The Ontario Corporations Tax (OCT) applies to all corporations that have a permanent establishment in Ontario. The OCT is calculated based on the corporation’s taxable income or loss for the year. The current general OCT rate is 11.5%.
To determine your OCT liability, you must file an annual Ontario Corporation Tax Return (T2). The T2 return summarizes your corporation’s income, expenses, taxable income, and the amount of OCT payable for the year. You’ll need to report income from all sources, including business, property, and investments. Make sure you deduct all eligible business expenses.
The OCT is paid in monthly or quarterly installments, with any remaining balance due when you file your T2 return. Late or missing payments will result in penalties and interest charges.
Corporations in Ontario must maintain adequate books and records to support the information in their tax returns. This includes records of income, expenses, assets, and liabilities. Records must be kept for a minimum of six years from the end of the last tax year they relate to.
The province can audit your corporation’s records at any time to verify the information in your T2 returns. Thorough and organized records will make the audit process easier. Failure to keep adequate records can result in penalties.
Ontario corporations may also have additional filing requirements such as employer health tax returns, sales tax returns, and WSIB reports. Make sure you stay up to date with all provincial filing deadlines to avoid late fees and interest charges.
Paying attention to these Ontario tax requirements and keeping detailed records will set your new corporation up for success. But don’t hesitate to consult an accountant to ensure you comply with all laws and optimize your tax liability.
Next Steps After Incorporation: Licenses, Permits, Etc.
Once your business is incorporated, there are a few more steps to complete to properly set up your company. These include obtaining necessary licenses and permits to legally operate, and establishing proper accounting procedures.
Business Licenses and Permits
Depending on your business activities, you may need special licenses or permits to operate legally. For example, if you plan to sell food or alcohol, build structures, or work in healthcare, check with your municipal government regarding permits. You may also need professional licenses for occupations like engineering, teaching, or accounting. Make sure you understand all licensing requirements before operating.
Register for Taxes
As a corporation, you must register for a business number (BN) and goods and services tax/harmonized sales tax (GST/HST) to charge and remit sales taxes. You will file GST/HST returns periodically to remit the taxes you’ve collected. You must also register for corporation income tax and file T2 corporation income tax returns annually.
Set Up Accounting
Establish a proper accounting system to track revenue, expenses, assets, and liabilities. You’ll need to keep records like invoices, receipts, and financial statements. Consider using accounting software like QuickBooks to help manage your books. You may also want to work with an accountant, at least initially, to set up your system and ensure you meet all reporting requirements.
Open a Business Bank Account
Open a separate bank account for your corporation to properly track business income and expenses. Deposit any investment or revenue into this account and pay for all business expenses from it. This will make year-end accounting and tax filing much easier. Shop at different banks to find an account with no or low monthly fees that also suits your needs.
The steps after incorporating may seem tedious, but properly establishing your business will set you up for success in the long run. Dotting all the i’s and crossing all the t’s may require some patience up front, but will give you peace of mind that your company is operating legally and efficiently. If at any time you feel overwhelmed, don’t hesitate to consult an expert like an accountant, lawyer or business advisor. They can help ensure you get your new corporation off on the right foot.
So there you have it – the essential steps to incorporate your business in Ontario. While the process can seem complicated, if you follow the guidelines and fill out the necessary paperwork properly, you’ll be up and running as an incorporated business in no time. Think of incorporation as an investment in your company that provides protection and opens up more opportunities for growth. Though it requires an initial financial outlay and time commitment, incorporation gives you credibility and peace of mind. You’ve put in the work to build your business – now it’s time to make it official and reap the rewards. Congratulations, you’re on your way to big things! Go forth and prosper.