How to incorporating a business in ontario: Don’t Make These 7 Costly Mistakes
Incorporating a business in Ontario is a crucial step for entrepreneurs looking to establish a legal entity that offers liability protection, tax benefits, and enhanced credibility. Whether you are starting a small business or planning a large-scale enterprise, understanding the incorporation process is essential to ensuring compliance with provincial laws and maximizing business success.
If you’re planning to incorporate in Ontario, understanding the legal process is crucial to ensure compliance and long-term success. Entrepreneurs looking to establish a corporation must go through several steps, including filing the Articles of Incorporation Ontario, selecting a business structure, and registering with government authorities. Fortunately, modern technology makes it easier than ever to incorporate a business in Ontario online, streamlining the process for new business owners.
Key Takeaways
- Incorporation in Ontario provides liability protection and tax advantages.
- Business owners can choose between federal and provincial incorporation.
- The process involves selecting a unique business name, filing Articles of Incorporation, and obtaining necessary permits.
- Corporations in Ontario must adhere to annual filing and tax obligations.
- Seeking legal or professional guidance can simplify the incorporation process.
Why Incorporate a Business in Ontario?
Incorporating a business in Ontario offers numerous advantages, such as:
- Limited Liability Protection: Shareholders are not personally responsible for corporate debts.
- Tax Benefits: Corporations may benefit from lower tax rates and income splitting.
- Increased Credibility: Incorporated businesses often appear more professional and trustworthy.
- Business Continuity: The business structure allows for easier ownership transfer.
- Access to Capital: Corporations can raise funds by issuing shares.
Step-by-Step Process to incorporating a business in ontario
| Step | Process | Details |
|---|---|---|
| 1 | Choose Between Federal and Provincial Incorporation | Decide if you want Ontario-only incorporation or federal-level registration for broader name protection. |
| 2 | Select a Unique Business Name | Conduct a NUANS name search to ensure your business name is available and compliant with regulations. |
| 3 | Prepare and File Articles of Incorporation | Submit Articles of Incorporation via the Ontario Business Registry and pay the required fee. |
| 4 | Obtain a Business Number (BN) | Register with the Canada Revenue Agency (CRA) to receive a unique Business Number. |
| 5 | Register for Tax Accounts | Set up HST/GST, payroll, and corporate tax accounts as needed for compliance. |
| 6 | Acquire Necessary Licenses and Permits | Use BizPal to identify and obtain industry-specific business licenses and permits. |
| 7 | Create a Corporate Minute Book | Maintain records of incorporation documents, director details, and shareholder agreements. |
| 8 | Open a Business Bank Account | Provide incorporation documents and business number to set up a corporate bank account. |
| 9 | File Annual Returns and Maintain Compliance | Submit annual corporate returns and tax filings to stay compliant with Ontario regulations. |
| 10 | Seek Professional Assistance (Optional) | Consider hiring a lawyer or accountant for legal structuring, compliance, and tax planning. |
Step 1: Choose Between Federal and Provincial Incorporation
Ontario entrepreneurs can incorporate their businesses at either the federal or provincial level.
- Federal Incorporation: Provides nationwide name protection and greater business flexibility.
- Provincial Incorporation: Limits name protection to Ontario but simplifies compliance requirements.
Step 2: Select a Unique Business Name
Your business name must be unique and comply with Ontario’s naming regulations. You can choose between:
- A Named Corporation: Requires a NUANS (Newly Upgraded Automated Name Search) report to ensure name uniqueness.
- A Numbered Corporation: The Ontario government assigns a numeric designation (e.g., 1234567 Ontario Inc.).
Step 3: Prepare and File Articles of Incorporation
To legally establish your business, you must file Articles of Incorporation with the Ontario Business Registry. This step involves:
- Defining the business structure and share distribution.
- Listing directors and officers.
- Paying the incorporation fee (typically CAD $300 for online filing).
Step 4: Register for a Business Number and Tax Accounts
Once incorporated, you must register for a Business Number (BN) with the Canada Revenue Agency (CRA). This allows you to set up:
- Corporate Income Tax Account
- HST/GST Account (if applicable)
- Payroll Account (for hiring employees)
Step 5: Obtain Necessary Licenses and Permits
Depending on your industry and business activities, you may require additional licenses and permits from municipal, provincial, or federal authorities. The BizPal online tool can help identify necessary permits.
Step 6: Create a Corporate Minute Book
Maintaining a Corporate Minute Book is mandatory and includes:
- Articles of Incorporation
- Shareholder and director records
- Annual meeting minutes
Step 7: Open a Business Bank Account
A corporate bank account is necessary to separate personal and business finances. Banks typically require:
- Articles of Incorporation
- Business Number (BN)
- Business license (if applicable)
- Identification for authorized signatories
Step 8: Fulfill Ongoing Compliance Obligations
Top legal firms in Canada that can assist with incorporating a business in Ontario:
| Law Firm | Description | Website |
|---|---|---|
| Blake, Cassels & Graydon LLP | A leading Canadian law firm with extensive experience in corporate law and business incorporations. | blakes.com |
| Davies Ward Phillips & Vineberg LLP | Specializes in corporate and M&A services, offering tailored solutions for business incorporations. | dwpv.com |
| McCarthy Tétrault LLP | Provides comprehensive legal services, including corporate structuring and incorporation assistance. | mccarthy.ca |
| Osler, Hoskin & Harcourt LLP | Offers expertise in corporate law, guiding clients through the incorporation process. | osler.com |
| Stikeman Elliott LLP | Renowned for its corporate law practice, assisting businesses with incorporation and compliance. | stikeman.com |
| Torys LLP | Provides strategic legal advice on business incorporations and corporate governance. | torys.com |
| Bennett Jones LLP | Offers a full range of corporate legal services, including business incorporation guidance. | bennettjones.com |
| Goodmans LLP | Specializes in corporate law, assisting clients with efficient business incorporations. | goodmans.ca |
| Fasken LLP | Provides comprehensive corporate law services, including assistance with business incorporations. | fasken.com |
| Norton Rose Fulbright LLP | A global law firm offering extensive services in corporate law and business incorporations. | nortonrosefulbright.com |
These firms are recognized for their expertise in corporate law and can provide valuable assistance in incorporating a business in Ontario.
After incorporation, businesses must:
- File an Annual Return with the Ontario Business Registry.
- Submit Corporate Income Tax Returns to the CRA.
- Maintain updated corporate records and meeting minutes.
Costs Associated with Incorporation in Ontario
| Expense Type | Estimated Cost |
|---|---|
| NUANS Name Search | $13 – $50 |
| Incorporation Fee (Online) | $300 |
| Incorporation Fee (Paper Filing) | $360 |
| Legal/Professional Assistance | $500 – $1,500 |
| Corporate Minute Book | $100 – $500 |
Benefits of Hiring a Professional for Incorporation
While business owners can incorporate independently, seeking assistance from lawyers or accountants provides:
- Expert guidance on corporate structuring.
- Compliance with provincial and federal regulations.
- Assistance with tax planning and business strategy.
Common Mistakes to Avoid When Incorporating
- Choosing a name without NUANS verification: Ensuring name availability prevents rejection.
- Neglecting to register for tax accounts: Failing to set up HST/GST accounts can lead to penalties.
- Skipping corporate record-keeping: Incomplete documentation can cause legal issues.
- Not filing annual returns: Missing filings can result in corporation dissolution.
To incorporate a company in Ontario, you must first choose between a federally or provincially incorporated business. If you decide to register incorporation Ontario, provincial incorporation is ideal for businesses that plan to operate primarily within Ontario. Once you’ve selected a unique name and ensured it complies with regulations, the next step involves submitting the required documents through the Ontario Business Registry. Many entrepreneurs prefer to incorporate online Ontario, as it is a faster and more convenient option compared to traditional paper filing.
For those wondering, “How do I incorporate my business Ontario?” the process involves completing official forms, appointing directors, and paying the necessary incorporation fees. Whether you aim to incorporate your business Ontario for liability protection or tax benefits, taking the right legal steps ensures a smooth registration process. After you open incorporation in Ontario, you must also obtain a Business Number (BN) from the Canada Revenue Agency (CRA) to comply with tax obligations.
If you’re ready to get incorporated Ontario, consulting with legal professionals or using online incorporation services can simplify the process. By setting up a corporation in Ontario correctly, you ensure your business is legally recognized, protecting your personal assets and providing credibility in the competitive marketplace.
Conclusion
Incorporating a business in Ontario is a strategic decision that offers numerous legal and financial benefits. By understanding the step-by-step process, fulfilling compliance obligations, and seeking professional assistance if needed, entrepreneurs can successfully establish and grow their incorporated business.
FAQs
How long does it take to incorporate a business in Ontario?
Online incorporation typically takes 1-2 business days, while paper filings may take a few weeks.
Can a single person incorporate a business in Ontario?
Yes, a corporation can have a sole director and shareholder.
Is a lawyer required to incorporate in Ontario?
No, but legal assistance ensures compliance with all regulations and structuring best practices.
What are the ongoing costs of running an incorporated business?
Annual returns, corporate tax filings, and potential legal or accounting fees contribute to ongoing costs.
Can I change my corporation’s name after incorporation?
Yes, but you must file Articles of Amendment and obtain a new NUANS report.
