Starting your business in Ontario’s thriving economic landscape can be an exciting and rewarding experience, as it presents countless opportunities for growth and success.
However, it can also be overwhelming, especially regarding business registration.
Registering your business is essential to ensure legal compliance and the protection of your enterprise.
Whether you’re starting a sole proprietorship, partnership, or corporation, this guide will walk you through the process and equip you with the necessary knowledge to lay a strong foundation for your business.
Below are step-by-step instructions on conducting a successful business registration in Ontario.
Step One: Determine The Business Structure
The business structure directly impacts various aspects of your company, such as legal liability, taxation, management, and growth potential.
Hence, it is essential to choose one that is compatible with your needs.
Here are the options you can choose from:
- Sole Proprietorship: It is a simple and cost-effective structure where a single individual owns and operates the business. The owner has unlimited personal liability for the business’s debts and obligations, and profits are taxed as personal income.
- Partnership: It is a business structure where two or more individuals or entities share ownership and management responsibilities. In a general partnership, partners have unlimited personal liability. In contrast, a limited partnership includes at least one general partner with unlimited liability and one or more limited partners with liability limited to their investment.
- Corporation: It is a separate legal entity owned by shareholders and managed by a board of directors. Shareholders have limited liability, and the corporation pays taxes on its income separately from its owners. Corporations can be either provincially or federally incorporated.
By carefully analyzing the kind of ownership, tax implications, and liability, you can select a suitable business structure that aligns with your goals and facilitates the success of your venture.
Step Two: Choose A Business Name
Choosing a business name is an essential step in business registration in Ontario, as it will represent your brand and affect how customers perceive your company.
The title should reflect the nature of your enterprise while being unique, memorable, and easy to pronounce.
As a registrant, you’re responsible for any risks associated with confusing your business with an existing corporation, company, or trademark.
Hence, verifying the name’s availability is essential by checking Canadian business registries and databases.
It is also helpful to remember that Canada has regional naming regulations, so it is crucial to adhere to them.
Some of these require avoiding obscene words, names implying a government connection, restricted words, and specific suffixes.
Ultimately, a well-chosen business name will set the foundation for a successful brand that resonates with customers.
Step Three: File Your Application Online
Filing your application for business registration in Ontario can be accomplished by accessing the Ontario Business Registry online.
You’ll need an email address and a debit or credit card for payment.
After ascertaining that your business name is available, you can create a ONe-key account and register for a ServiceOntario account, which you can use to register your business under the appropriate ownership structure.
The fees depend on the type of business structure you’ve chosen:
- Sole Proprietorship: CAD$60
- General Partnership: CAD$60
- Ontario Limited Liability Partnership: CAD$60
- Extra-Provincial Limited Liability Partnership: CAD$60
- Limited Partnership: CAD$210
- Business Corporation: CAD$300
If you’re registering a business corporation, you need to obtain an Ontario-biased Nuans name search report.
After registration, you’ll receive a 9-digit Ontario Business Identification Number (BIN) from ServiceOntario, which you’ll need to request a Canadian Revenue Agency account.
Step Four: Get Your Business License And Permits
Your businesses must obtain permits and licenses to operate in Ontario legally.
Typically, you must register your business with the Ministry of Government and Consumer Services to acquire a Master Business License (MBL), which serves as evidence of the registration and authorizes them to operate within the province.
Other permits include but are not limited to the following:
- Zoning Permits: If your business is in a commercial or industrial area, you may need to obtain a zoning permit to ensure that your business complies with local zoning bylaws.
- Building Permits: If you plan to build or renovate a commercial building, you must obtain a building permit from your local municipality.
- Health And Safety Permits: Depending on your business’ nature, you may need to obtain permits related to health and safety.
- Environmental Permits: If your business has the potential to impact the environment, you may need to obtain various permits related to environmental regulations.
Research the specific licenses and permits required for your business and location to ensure you comply with all applicable laws and regulations.
Step Five: Understand Tax Regulations
It’s advisable to research and understand the tax regulations that apply to your specific business to ensure compliance and avoid any legal issues.
Some business taxes and their regulations include:
- Corporate Income Tax: Ontario businesses must pay corporate income tax on their profits, currently set at a rate of 12.5%. The federal government also levies a corporate income tax at a rate of 15%, bringing the total to 27.5%.
- Sales Tax: Ontario has a Harmonized Sales Tax (HST), which combines the federal Goods and Services Tax (GST) and the provincial Retail Sales Tax (RST). The current HST rate in Ontario is 13%. Some goods and services are exempt from HST, while others are subject to a reduced rate.
- Employer Health Tax: Employers in Ontario must pay an Employer Health Tax (EHT) based on their total payroll. The current EHT rate is 1.95% on the first CAD$1,130,000 of annual payroll and 4.95% on any amount over that.
It’s important to note that tax and regulatory requirements vary depending on the type and size of the business, as well as its location and industry.
Registering a business in Ontario requires careful consideration and attention to detail.
By researching and seeking professional guidance, you can confidently and seamlessly navigate registering your business in Ontario.