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Registering a Sole Proprietorship in Ontario

Entrepreneurship has the potential to become a fulfilling and financially viable career choice, if you’re willing to make the commitment necessary to build a business from scratch. As an aspiring entrepreneur, legally registering your business is a key step in the process. If you’ve been putting it off because of fears about the cost, time, and effort required to register a business in Ontario, we’re here to help. 

Registering a business all on your own can be stressful, time-consuming, and downright confusing. Luckily, you don’t have to do it alone! When you register your business with Ownr, you’ll receive all the help you need to make the registration process (and beyond) a breeze, all at an affordable price. 

What is a sole proprietorship in Canada?

A sole proprietorship is the simplest business structure in Canada, in which an individual owner of a business takes on all the profits, debts, and legal responsibilities of a company. Sole proprietorships are taxed at your personal income tax rates, and are also the least expensive and most straightforward business types in Canada when it comes to both registration and ongoing requirements.

Do I need to register a sole proprietorship in Ontario?

In most cases, you are legally required to register a sole proprietorship in Ontario. The one exception is if you are conducting business operations under your own legal name, rather than a distinct business name, in which case registering your business is not mandatory. 

That said, registering your sole proprietorship may still be in your best interest, even if it’s not technically necessary. While establishing a sole proprietorship does not provide business name protection, having a registered business can lend a level of validity to your business that you don’t get with an unregistered company. 

Sole proprietorship registration also gives you the option of opening a business bank account, and can help with accessing government programs for business loans and other funding opportunities.

A sole proprietorship is also the easiest type of business to register, and considering how complicated starting a business can be, the comparatively stress-free sole proprietorship registration definitely has its share of advantages.

How to register a sole proprietorship in Ontario

Determine if a sole proprietorship is right for you

Becoming a sole proprietor can be the perfect business structure if you’re running a small business by yourself and don’t want to have to worry about complex corporate paperwork or expensive accounting fees. As a sole proprietorship, you can file your small business income and deduct business expenses as part of your personal taxes.

If you’re considering running your business with a partner, you’ll need to look into registering a partnership rather than a sole proprietorship. While a simple verbal agreement is enough to form a partnership, it’s always a good idea to lay out your business strategy in a partnership agreement. One of the advantages of a partnership is another person to bounce ideas off of, but it can lead to challenges when the roles of the partners are not clear.

On the other hand, if additional liability protection is a priority, incorporation may be the best choice for your business.

Register your business name

As we mentioned earlier, you aren’t required to register as a sole proprietorship if you’ll be doing business under your legal name. However, if you want to use a more creative name for your business, you’ll need to register your business name.

The Business Names Act of Ontario dictates that a registered sole proprietorship name is not protected from being used by another business, which means that multiple sole proprietorships could end up operating under the same name. While this is allowed, it makes sense to set your business apart (and make sure it shows up first in search engine results) by choosing a unique business name. You may also want to find out if the associated domain name is available at this stage.

When you register your sole proprietorship with Ownr, you’ll get up to ten free NUANS name searches to find out if the business name you have in mind is already taken. 

Fill out the paperwork

Now comes the part everyone loves – the forms. Luckily, a sole proprietorship is the easiest type of business to register, and you can complete the entire sole proprietorship business registration process online.

Once you’re ready to register your sole proprietorship, you’ll need to create a ONe-key account and a Service Ontario account. Then you’ll be able to log into your Service Ontario account and register your business for a fee of $60.

If you want to save money, time, and effort, you can register your sole proprietorship with Ownr for a one time full registration fee of only $49. You’ll also gain access to a ton of great perks and resources, including $100 back when you open an RBC business bank account within 60 days of registering with Ownr.

Ownr also keeps all your business information in one convenient location so you don’t have to tear your hair out wondering where the file is with your business registration information when you’re hiring a new team member, opening a business bank account, or applying for a business loan or credit card.

Register for a GST or HST number

Finished registering your business? Don’t pat yourself on the back for a job well done just yet — there are still a few more things to do! Most businesses in Ontario are required to register for the GST/HST, especially if you make more than $30,000 in annual revenue. If you meet the criteria to charge and remit sales taxes, you’ll need to apply for a GST/HST number online through the Canada Revenue Agency’s Business Registration Online (BRO). You can also register by mail, fax, or telephone.

Even if you don’t make over $30,000, you might still want to get a GST/HST number, since registering for GST and HST will allow you to claim input tax credits against your business income. Essentially, you’ll get to deduct the GST or HST from things you buy for your business.

Pro tip: you may also need to register for other business licences or certifications depending on your business, like health and safety permits required by the health department. BizPal is a government service that can help you figure out what licences and permits you may need.

Frequently asked questions

Do I need to register as a sole proprietor in Ontario?

If you’re going to be conducting business activity under your own legal name, you are not required to register as a sole proprietorship in Ontario. However, if you will be doing business under a business name, registering your sole proprietorship is mandatory. 

How does sole proprietorship work in Ontario?

In Ontario, a sole proprietorship is a business with one owner who has complete responsibility for the business, including all business decisions, profits, losses, and debts. A sole proprietorship does not have separate legal status and the owner is personally liable for the business. 

How much taxes do sole proprietors pay in Ontario?

From a taxation perspective, sole proprietors are required to pay their personal income tax rate on the net income generated by their business. 

How much does it cost to start a sole proprietorship in Ontario?

You can register a sole proprietorship in Ontario through Service Ontario for $60, or for only $49 using Ownr.

What can a sole proprietor write off in Ontario?

A sole proprietor can write off a variety of types of business expenses, including advertising, start-up costs, insurance, accounting services, maintenance, supplies, and many more.

Do I need a business bank account for a sole proprietorship?

If you operate your business under your own legal name, you do not need a separate business banking account. However, if you use a business name, you are required to open a separate business bank account in order to process payments to your business.

How to get started with your own business and become an entrepreneur

We’ve just gone over a lot of information, so let’s take a moment to summarize so you know what steps to take next to start your own sole proprietorship in Ontario. 

First, weigh the pros and cons of a sole proprietorship to determine if it’s the right business structure for you. Remember, you can always choose to incorporate your business later on if your goals and priorities change.

Once you’re ready to register, you’ll need to decide whether to do it on your own or get help (and tons of other benefits) by registering your sole proprietorship with Ownr. Then it’s time to determine if you need to charge sales tax, and if so, sign up for a GST/HST number with Canada Revenue Agency. 

After you’ve got all that set up and ready to go, you’ll be ready to focus on getting your new business off the ground. If you’re not sure where to start, using a business plan template can help to point you in the right direction.

Whether you choose to register a sole proprietorship or incorporate your business, Ownr is here to help with every step along the way.

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