Do you dream of using your entrepreneurship skills to own your own business? If you’re a would-be entrepreneur looking to start a business in Ontario, we’re here to help you take the plunge.
Before we dive in, it’s important you understand what you’re signing up for. Entrepreneurs often work long hours, face steep learning curves, and juggle a wide variety of tasks. You’ll also take on new financial responsibilities and will likely face stiff competition. So, it’s important to do your research and plan carefully before you launch a new business.
There are many legal requirements and steps to follow when starting a business in Ontario. And, we’re here to help. We’ve put together this complete step-by-step guide, packed with essential information and resources to help you get started as a business owner.
Legal Requirements for Starting a Business in Ontario
To start your business off right, there are a few legal requirements you’ll need to consider.
Registering your business
- Sole proprietorship — You are the sole owner and responsible for assets and liabilities personally.
- Corporation — Incorporating a business creates a separate legal entity, so all assets and liabilities are tied to the professional corporation and not you personally. It’s the most complex of business structures.
- Partnership — You and one or more partners own the business and share responsibilities, assets and liabilities personally.
Registration requirements differ based on the business structure you choose.
If you’re a sole proprietor operating a business under your own legal name, you don’t need to register your business. However, if you want to operate under a different business name, or if your business is a partnership or corporation, you have to register your business with the province. Businesses registered in Ontario are automatically registered federally, too.
If you choose to incorporate your business, you’ll need to incorporate in Ontario and every other province or territory you plan to do business in. It’s worth noting your business name will only be protected in the jurisdictions you incorporate in, but incorporating federally ensures your name is protected and recognized across the country and globally.
Incorporating protects your business name — no other business is legally allowed to use the name. But the legal protection is jurisdictional, meaning if you only incorporate in Ontario, the business name is not protected outside Ontario. When you incorporate federally, it protects the name across the country, even if you aren’t incorporated in every province or territory.
Incorporating is complex, and many entrepreneurs turn to a lawyer for help, but Ownr can help you incorporate your business at a fraction of the cost.
Applying for a GST/HST number
You’ll also need to decide whether to apply for a GST/HST number. Most sole proprietorships, partnerships and corporations with total revenues under $30,000 per year are defined as a small supplier by the CRA, and they don’t have to collect GST/HST. Once your worldwide business revenues total $30,000 in a single calendar quarter, or in four consecutive quarters, you have to register for a GST/HST number and begin collecting sales tax on all goods and services.
There can be a financial benefit to voluntarily registering to collect GST/HST before you hit the $30,000 revenue threshold. How much GST/HST you remit to the government will depend on how you report your GST/HST (there’s a quick method and long method), so take some time to weigh the potential bump to your income against the time it will take you (or the cost for your accountant) to file your GST/HST returns.
Obtaining licenses or permits
You may need specific licences or permits to operate your business. You can quickly and easily get a detailed list of all the licences and permits you may need for your type of business with BizPal, an online tool jointly managed by all levels of government.
Now that we’ve covered the basic legal requirements of starting a small business in Ontario, let’s dive into our 12-step checklist for getting your business off the ground.
12 Steps to Starting a Business in Ontario
1. Come up with a business idea
If you’re reading this, you may already have an awesome business idea in mind and need some guidance to turn it into a reality. But if you’re an aspiring entrepreneur struggling to nail down the right business to start, we have some suggestions to get the ideas flowing.
Some of the most successful business ideas come from entrepreneurs trying to solve a problem. Apps, for example, can help people track their habits, conduct business, order food and so much more. Cleaning services, junk removal companies and professional organizers all help people bring order to their homes. Consultants tackle organizational challenges for businesses and governments.
The problem might even be relatively small. When Tina Nguyen, the founder of XXL & CO, made an extra-extra-large scrunchie for a cousin with super-long hair, it sparked a business idea. She started making XXL scrunchies in her parents’ basement, and within a year, she had hired a team of 15 and moved her operations to a warehouse.
Do you have a creative skill that can be monetized? Or can your professional experience be transferred to a side hustle or full-time service? Perhaps you have a passion for a product, or simply an idea on how to do something more efficiently.
Keep in mind how and where you want to work. If you want to sell products but don’t love working face-to-face with customers, then an e-commerce store would make a lot more sense than opening a bricks and mortar shop.
2. Research the market
Conducting market research is an important starting point that helps you understand your customer, the demand for your products or services, and your competitors. It’s a key component to building a successful business.
Your market research should answer the following questions:
- Who are your potential clients or customers?
- Do they want your product or service?
- Who is your hero client—the person most likely to buy your product/service?
- What are people looking for in the product or service you’re offering?
- How much are people willing to pay for your product or service?
- How much does it cost to make or source your product, and ship it to customers?
- Is there enough demand to build a successful business?
- What sets you apart from competitors?
A tremendous amount of market data is available online. Statistics Canada is a great resource for consumer demographic information, and you can find industry trends in the Canadian Industry Statistics database. If you’re opening a business with a physical location, local BIAs can be helpful, and your municipality may have demographic data for neighbourhoods (Toronto’s is very extensive). Finally, Small Business Enterprise Centres (SBECs) are also a great resource that offer entrepreneurs tools, resources and workshops.
You may also want to survey or poll potential customers. Online tools such as Survey Monkey, Google Forms, as well as polling features available on social media platforms make it relatively easy to do this.
3. Choose a business name
Before you register or incorporate your business, you’ll need to decide on a business name, and it’s well worth taking the time to choose one that’s unique and memorable.
As you brainstorm, Google your potential business names and do a domain search to ensure they’re not already being used by other businesses. A registered sole proprietorship or partnership doesn’t automatically have legal protection for its business name, so it is possible for two or more businesses to have the same name—however, that can lead to customer confusion.
Next, you should search your potential business names on the NUANS database of incorporated businesses and the Canadian trademark database to make sure you choose a distinct name that’s not protected. When you’re incorporating a business in Ontario or federally, you’ll also need to get a NUANS report from a registered search company. With Ownr, you can pre-search up to 30 unique names, which helps you save on search fees.
You can incorporate with an English and/or French name. If you choose to have an English form and a French form of your business name, you must have a separate NUANS report for each name. You may also add a version of your business name in any other language.
All incorporated businesses in Ontario must have a legal entity at the end of the name—either Limited, Limitée, Incorporated or Corporation (Ltd., Ltée, Inc. or Corp. for short).
As an alternative, you can choose to incorporate with a number name (which doesn’t require a NUANS search), and then register a business name with the province and trademark it to protect your brand.
4. Choose a business structure and register or incorporate
As we outlined above, the three main types of business structures are sole proprietorships, partnerships and corporations. There are several factors that go into determining which is best for you and your business, including liability, tax rates and funding needs.
In general, sole proprietorships and partnerships are simpler business structures with fewer set-up and reporting requirements. The potential downside is business owners are responsible for any liabilities, so your home, vehicles and personal investments could be at risk. Additionally, your business income is taxed at personal income tax rates. Sole proprietorships operating under a name other than your own and all partnerships have to be registered with the province.
Corporations have the advantage of being distinct legal entities, so liability is attached to the business, not you, ensuring your personal assets are protected. Should your company grow highly profitable, there’s a tax advantage to incorporating and drawing a salary from the company. Lastly, there are more funding options available to corporations, including raising money through the sale of shares and loans with lower interest rates.
Incorporating your business is complex and requires a lot of paperwork to obtain your articles of incorporation, but Ownr simplifies the process. We walk you through the process of registering, compiling documentation, and filing your incorporation to ensure no details are missed. We also store all your important documents in one place. Plans are available for ongoing corporation management, which can save you time and money.
5. Purchase a domain name and set up social media accounts
With your business name and structure set, it’s time to purchase a domain for your business page and set up social media accounts.
In a perfect world, your business name will be available for your domain (e.g., yourcompany.ca) and social media handles (@yourcomapny). You may want to check for domain availability before even registering your business name to make sure you can get the .com or .ca at a reasonable price.
If your exact name isn’t available, there’s no need to panic. Consider different variations using abbreviations, acronyms, punctuation or some sort of identifier, such as location. Keep your naming convention consistent across all digital and social media platforms for a strong brand presence.
Don’t be afraid to have fun and get creative with your domain and social media handles. Ontario-based workplace design consultancy Bloom opted for a sophisticated action phrase with the domain buildwithbloom.com, and social media handles, @buildwithbloom. Meanwhile, Toronto-based wellness clinic Wellbe opted to add “hello” to the beginning of its domain (hellowellbe.com) and social media handles (@hello.wellbe), reinforcing the warm, welcoming tone of the brand.
Once your domain is purchased and social media accounts are created (and set to private or unpublished until you’re ready to launch your business), you can start building a website and then begin to strategize around your social media posting plan. You’ll need to be clear on your company’s value proposition and target market, as well as have a broad strokes marketing strategy to create an effective website. Web development often goes hand-in-hand with writing your business plan. To reduce development and web maintenance costs, consider using a website building service. If you have the budget, consider hiring a designer to create a logo and visual branding for your website, and a copywriter that specializes in small business websites.
Tip: Even if you’ll only be using one or two social media platforms for your business, we recommend securing your handle across Instagram, Facebook, Twitter, TikTok, YouTube, Pinterest, Snapchat and LinkedIn to protect your brand.
6. Write a business plan
A business plan provides you with a roadmap for your business, so be sure to dedicate some time to develop it. If you’re not sure where to start or are feeling overwhelmed by the scope, a business plan template can help.
As you craft your business plan, you’ll sense where you’re in good shape and where you need to allocate more time or financial resources. Speaking of finances, your business plan can help you secure funding from banks or investors. While you may have startup costs covered, it often takes one to two years for many businesses to turn a profit.
You may feel there’s no need to develop a business plan. Especially if you’re a sole proprietor who is established in your field with an extensive network of potential clients. But the process can be invaluable for any business owner. It can help identify new or niche opportunities, define growth goals, or find alignment with clients who have similar values—all of which can boost your bottom line.
Keep in mind your business plan is not set in stone. Your vision will change as your business, and the market, evolves, so aim for a solid plan, not a perfect one.
7. Open a business bank account
Keep your business finances straight by opening a business account to separate any of your business’s financial dealings from your personal expenses. For corporations, it’s a legal requirement to have a bank account open under the corporate name. Without one, vendors and customers will not be able to make payments to the corporation. However, even if you’re operating your business as a sole proprietorship or partnership, opening a separate business bank account has many benefits. It helps with bookkeeping best practices and you’ll be grateful for it come tax season. Opening a business bank account will also likely make any potential audits easier to deal with, plus any fees associated with the account can be deducted as a business expense. Depending on your banking priorities, there are plenty of options to explore for different business accounts you can open with RBC.
Opening a business bank account with RBC is easy and quick. You can apply online, and in less than 15 minutes, you’ll receive your business bank account number. To activate and finalize your account, you may need to visit a branch to verify your identity. See more details on opening an RBC business account.
One of the many benefits of registering your business with Ownr is that you’ll get money back when you open a business account. Sole proprietorships can receive $100 and corporations can receive $300 if they open a business bank account with RBC within 60 days. See full details on the offer here.
8. Secure funding for your business
While some businesses are launched on a shoestring budget, others need capital to get off the ground. Here are some of the places you can find funding.
Federal government business grants and financing
The Government of Canada has a range of grants, tax credits, financing programs, wage subsidies and other types of funding and resources for small business owners.
If you need short-term support in specific areas—for example, a digital marketing team, web design, programming or event management—the federal student work experience program offers wage subsidies when you hire a student for a work term. This can be an affordable way to accelerate projects and build a network of potential future hires.
Ontario business grants
The province of Ontario has small business funding programs to support Indigenous businesses and small businesses in Northern Ontario, as well as training grants for current and future employees. You can also look into whether your municipality or regional innovation centres offers grants or funding programs for local startups. Learn more about the small business grants available in Ontario.
Angel investors generally provide funding (and in some cases mentorship) for a stake in your company.
Crowdfunding sites like Kickstarter, Indiegogo, GoFundMe, and Patreon (for creators) harness the power of people and networks to contribute small amounts to meet a big fundraising goal. Too many choices to choose from? Read this guide on how to choose a crowdfunding platform that’s right for your small business.
9. Obtain business licences and permits
Specific licences and permits are required for many types of businesses. As mentioned earlier, BizPal provides a detailed list of the licences and permits you may need for your business. Results can be filtered based on your location, industry, and business activities. It’s important that you know and acquire all licences that are required for your business.
One common licence needed for sole proprietorships and partnerships is the business name registration (formerally known as a Master Business Licence or MBL). This lists basic information about your business, like the business name, address, business number and a description of your business activities.
Keep in mind there may be occasions when additional permits are required beyond those already needed to begin business operations. For example, photographers often need location permits for photoshoots, and special permits are often required for events.
10. Protect your company with business insurance
Business insurance is an important consideration. The proper insurance for your business can protect you or your corporation from liability and losses that could be financially devastating. There are a variety of options for small business insurance, and the type of coverage that’s best suited for your business will depend on your business activities. Some business activities are relatively low-risk (for example, if you’re the sole employee and you work from home on your laptop), while some may require additional insurance coverage for protection (like if you provide a public-facing service that involves some degree of risk).
Here are some options to consider when choosing what kind of business insurance your small business needs.
- General liability insurance
- Commercial property insurance
- Business income insurance
- Workers’ compensation insurance
- Professional liability insurance
- Data breach insurance
- Commercial auto insurance
We recommend contanting an experienced commercial insurance broker to advise you on the appropriate coverage for your business operations.
11. Build your brand presence
Your business is essentially ready to launch at this point—so it’s time to get the word out and build your customer base. Your marketing strategy will depend on your type of business and marketing budget, but there are several effective ways to connect with customers:
- Build your social media following with engaging content
- Reach customers directly with email marketing to build brand loyalty and drive sales (consider email marketing services like HubSpot or MailChimp if you’d like to outsource this)
- Use paid social media to build your following and reach your market more efficiently
- Advertise with local publications or radio stations to reach specific markets or demographics
- Participate in events to increase brand awareness (and keep an eye out for in-kind sponsorship opportunities)
- Network within your industry among local business groups and marketing and events professionals
12. Hire employees and scale your business
As your marketing strategy pays off and your business flourishes, you may consider how to grow and scale your business by automating certain tasks to save you valuable time. Another important milestone is hiring employees for your small business.
One way to set your business up for growth and scaling is to automate tasks and processes wherever possible. You can automate emails to clients, batch upload and schedule social media content, or use apps to send out proposals and invoices, or accept payments. Part-time support can also free up your time for growth. A virtual assistant can manage your calendar and take care of invoices, payments or customer inquiries, while a freelance social media manager can handle strategy, content creation and engagement.
Even solopreneurs may reach a point where the demand for goods or services is more than one person can handle. Whether you have the budget to hire employees or choose to outsource some work, bringing the right people on board can help take your business to the next level.
You may want to consider additional professionals for specific services, such as a lawyer to write a vendor contract or an accountant to manage your books and prepare tax filings.
Frequently asked questions about starting a business in Ontario
What do I need to start a business in Ontario?
To start a business in Ontario, you first and foremost need an idea for a service or product that you would like to bring to market. Beyond that, following the 12-step process above will set you up for success with your business in Ontario. Registering your small business with Ownr will help make the process simple, and provide you the peace of mind that your business is fully compliant with all legal requirements.
How much does it cost to register a small business in Ontario?
The cost to register your small business in Ontario depends on the type of business structure you choose. The cheapest and most simple option is to register your business as a sole proprietorship or partnership which costs $60 online, by mail or email when registering yourself. Incorporation in Ontario can range from $300 to $360.
If you choose to register your business with Ownr, the cost for a sole proprietorship is $49 and ranges from $499 to $599 for Ontario corporation, depending on if you incorporate federally or provincially. Learn more about pricing and the advantages of registering as a sole proprietorship or incorporating your business with Ownr, like a year of free online Minute Book management.
Do you need a license to operate a business in Ontario?
It depends on your exact location, business structure, and the types of business activities you conduct, but in most cases, you will require a business licence to operate. The easiest way to find out what business licences (and any additional permits) that your business requires is by using BizPal, a free service that lets you search for required permits and licences in your area.
How can I start a business with no money?
Some small businesses require very little capital to startup, for example a freelance service that you provide from home where you already have most of the necessary tools (like if you provide freelance marketing and writing services or work as a virtual assistant). To make money online, you may not require much to get started beyond the fees to register your business (and if operating as a sole proprietorship with your exact name, you may not be required to register). Other businesses, like those selling a commercial product will require greater startup capital for stock, packaging and marketing materials.
What are the best businesses to start in Ontario?
The best businesses solve a problem or fill a gap in the market, and the same is true of any small business in Ontario. It’s also important that you as a business owner are interested and invested in your business idea. Get inspired with home business ideas for the best businesses to start on Instagram or check out the best small businesses to start in Toronto.If you already have an amazing business idea in mind, here’s how to validate it or put its potential to the test before you proceed with starting up your small business.
More resources to help you start a business in Ontario
Here are some additional resources to set you on the path to entrepreneurial success. Local small business centres are also a great resource as they will provide tools, workshops and free local resources to help get you started on your entrepreneurial journey.
- Ownr’s managed corporation plan
- Small business grants for Canadian businesses
- Resources and support for Indigenous entrepreneurs
- Resources for Black-owned businesses
- Everything you need to know about startup costs
Starting a business in Ontario is a lot of hard work and takes careful planning, but with this step-by-step guide, you now know some of the basics to make it happen. Go for it!
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.