As your business grows, incorporating could be a logical next step. If you choose to incorporate your business in Ontario, you’re essentially creating a legal entity. Similar to a person, a corporation will have its own rights and responsibilities, including liability and protection. This includes all personal assets.
The process of incorporating a business can be quite arduous. A high level of detail needs to be taken into account which is why a number of business owners choose to hire a lawyer. However, hiring a lawyer can be quite pricey and is not the only route you can take. It’s possible to incorporate your business without one.
Key takeaways
- Choose the right business structure (sole proprietorship, partnership, or corporation) to align with your goals and minimize tax liabilities.
- Conduct a name search using Ontario’s NUANS Name Search tool to ensure your business name is available and compliant with legal rules.
- Register your business for tax accounts with the CRA, including GST/HST and payroll accounts, to avoid compliance issues after incorporation.
Step-by-step instructions on incorporating your business in Ontario
In this section, you’ll find a clear, actionable guide to incorporating your business in Ontario. We’ll cover each essential step, from selecting your business name to setting up tax accounts, so you have everything to get your business legally established in the province.
1. Choose business structure and name
The first decision you’ll need to make is selecting the right business structure. Whether you choose a sole proprietorship, partnership, or corporation, this decision is crucial for tax purposes, liability, and how your business will operate. Each structure has its own set of legal and financial implications, so it’s important to choose the one that aligns with your long-term goals.
Next, you’ll need to choose a business name.
Get creative, but make sure it’s relevant to your business. You’ll also want to check that the name is available. Use the Ontario Business Name Search tool to ensure no one else has already taken it. Also, confirm that your chosen name doesn’t infringe on any trademarks.
Finally, ensure the name complies with Ontario’s business naming rules. It can’t contain offensive language. And if you’re incorporating, the name must include a corporation indicator like “Inc.” or “Ltd.”
2. Do a name search (if using a name)
A name search helps you confirm that your chosen business name isn’t already in use or confusingly similar to another business. This step protects you from legal issues and helps you avoid problems when registering or incorporating your business.
You can run a name search through Ontario’s NUANS Name Search tool or use a trusted third-party service. NUANS provides a report showing existing business names and trademarks. It’ll give you an idea of whether your business name idea is unique.
If you plan to use a unique business name, especially when incorporating, you must complete a name search. Your registration could be delayed without it.
3. Prepare your incorporation details
Before you can incorporate, you’ll need to gather the following details to process your documents.
- Corporate Name: Only if you’re not using your personal name. This is the name you want your corporation to go by.
- Registered Office Address: This is the location where your corporation’s official documents will be stored.
- Director Information: You’ll need the names and addresses of the individuals who will sit on your corporation’s board of directors.
- Share Structure: Decide how shares will be distributed among shareholders, including the number of shares and their classes.
Accuracy is key when filling out these details. Mistakes can lead to delays or even rejection of your incorporation process. Make sure everything is correct to avoid unnecessary setbacks.
4. File online with the Ontario Business Registry
To file your incorporation documents, visit the Ontario Business Registry website.
First, choose the correct incorporation form based on your business structure (corporation, partnership, etc.). Then fill in the required details, including your business name, directors, and share structure.
The filing fee for incorporation in Ontario is $300. Additional fees may apply if you’re filing other documents, like the NUANS report.
Once you complete and submit the filing, you’ll receive an immediate confirmation that your documents have been processed and accepted.
5. Handle tax accounts and set up
Once your corporation is formed, it’s important to set up your tax accounts with the Canada Revenue Agency (CRA). This is essential for complying with tax obligations and running your business smoothly.
- GST/HST Registration: If your taxable revenue exceeds $30,000 annually, you’ll need to register for GST/HST.
- Payroll Account: If you plan to hire employees, you’ll need a payroll account to handle employee deductions.
- Corporate Income Tax Registration: If you’re filing corporate taxes under your business name, you’ll need to register for corporate income tax.
If you’re operating in a regulated industry, it’s wise to consult with a tax professional. Specialized advice can ensure you’re following the best tax planning practices for your business.
How much does it cost to incorporate in Ontario?
The costs to file the incorporation materials in Ontario run anywhere from $300 to $360 and can be done online, by mail, or in person.
How to incorporate your business in Canada
The advantages of incorporating federally are much the same as incorporating in Ontario, but doing both can protect your corporation name across Canada, not just in Ontario.
Choosing a business name is the first step, which can be done through NUANS for a fee (you get unlimited NUANS searches free with Ownr). If you are incorporating in both Ontario and federally, it’s wise to search both.
Your business name should satisfy three legal requirements: a distinctive element, a descriptive element, and a legal ending. A distinctive element can be a word or a name; something that is unique to your business. A descriptive element describes the business, such as “flower shop.” A legal ending defines your business structure, like Inc. or Ltd. For example, a satisfactory business name will look something like this:
[Distinctive] + [Descriptive] + [Legal Ending] = Mabel’s Flower Shop Inc.
As with incorporating in Ontario, you will need to file Articles of Incorporation. This is probably the most complex step and where outsourcing help is beneficial.
How much does it cost to incorporate in Canada?
Incorporating at the federal level usually costs $200 CAD, which makes it a cheaper option than a provincial incorporation.
Read more about the cost of incorporating in Canada
Why incorporate your business?
While many entrepreneurs and small business owners choose to be sole proprietors or partnerships, there are some circumstances when incorporating your business is beneficial and maybe even necessary.
There are two types of incorporations: not-for-profit and for-profit businesses. Business owners generally fall under the latter category. While incorporating isn’t for everyone, there are a few important reasons why sole proprietors choose to incorporate. There are also things you should be aware of before deciding to incorporate.
Limited liability
A sole proprietorship is not a legal entity in and of itself and therefore, cannot be held liable for any debts or litigation independently. This falls squarely on the shoulders of the business owner. For some, this can be a significant worry as all their personal assets, including savings, real estate, and vehicles are exposed.
Since a corporation is a legal entity apart from its owner(s), all liability is under the purview of the corporation, protecting the owners from any personal asset exposure. For some business owners, this is an attractive option.
Tax advantages of incorporating your business
As a sole proprietor, all business earnings are declared on their personal income tax return and taxed under the personal tax rate. But as your business grows and you start bringing in more income, you run the risk of meeting a higher tax bracket threshold. While there are business expense tax advantages to being a sole proprietor if revenue ends up putting you over the higher tax bracket threshold, incorporating your business can be an advantage.
Incorporating your business means a corporate tax rate, which is usually lower than personal income tax rates. Travel and health insurance costs are also protected under corporate tax rates.
By incorporating your business, you can draw a salary, which can also safeguard you from hefty personal income taxes. Whereas your personal income tax might be significantly higher in a sole proprietorship, despite much of the earnings going back into the business, as a corporation you will be able to lower your tax bracket to more accurately reflect your actual earnings.
Securing funds is easier
By incorporating, your business becomes eligible for business loans and grants that are geared only for incorporated companies. These grants and loans can be of a significantly higher value as well. Conversely, sole proprietors and partnerships might have challenges securing funds, either through loans or grant programs.
What is required after incorporating your business?
Incorporating your business isn’t the last step of the process. There are a few legal requirements in order to keep your incorporation status, both federally and in Ontario.
- A minute book and share records
- Company updates
- Annual return and resolutions
Most of the official record of documents and activities that are not included in the original application for incorporation is included in the minute book. This will include:
- Initial Corporate Bylaws
- First Director Resolution
- First Shareholder Resolution
- Director Consent
- Subscription for Shares
- Shareholder Register
- Shareholder Ledger
- Digital Notices of Uncertified Shares
- Any other documents required under Ontario and/or federal law
Frequently asked questions
Do I need a lawyer to incorporate in Ontario?
No, you are not legally required to hire a lawyer to incorporate in Ontario. Many small business owners successfully incorporate on their own using the Ontario Business Registry or online platforms. However, a lawyer can be very helpful if your situation is more complex, such as having multiple shareholders, custom share classes, investors, or plans for a future sale.
Can I incorporate my business myself?
Yes. You can incorporate your business yourself by selecting a name or numbered company, preparing your incorporation details, and filing through the Ontario Business Registry. First-time founders should review official guidance or use a trusted platform to avoid filing errors.
Can a non-resident incorporate in Canada?
Yes. Non-residents can incorporate in Canada, but director residency rules vary by jurisdiction. Some federal and provincial corporations require at least one Canadian-resident director, while several provinces allow incorporation with no residency requirement.
Is it necessary to register for HST immediately after incorporating?
No. Register for HST only after your business exceeds $30,000 in taxable revenue within 12 months. Incorporation alone does not trigger mandatory registration, but you can register voluntarily at any time.
Is a NUANS report required for every incorporation?
No. Skip the NUANS report when you incorporate a numbered company. Use a NUANS report only when you create a named corporation to confirm the name is unique.
What’s the difference between incorporating in Ontario vs. federally in Canada?
Incorporating in Ontario limits your legal rights to Ontario only. Federal incorporation provides name protection and legal recognition across Canada. Ontario incorporation is governed by the OBCA and requires filing Articles of Incorporation (Form 1).
Let Ownr incorporate your business
Using Ownr’s services to incorporate your business will save you time and money, we walk you through all of the steps to incorporate a business in Ontario. Plus, if you incorporate with Ownr, you’ll get access to exclusive entrepreneurial perks that help set your new corporation up for success.
Do you need help registering your business as a sole proprietorship or as an incorporated business?
Get in touch with Ownr and see how we can help.
This article offers general information only, is current as of the date of publication, and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Ventures Inc. or its affiliates.