Ontario Business Registration (6 Step Detailed Guide)

Embarking on the journey of registering a business in Ontario, demands careful planning and consideration. In this guide, we'll outline the six crucial steps required to establish and maintain a business in Ontario, whether you're opting for a sole proprietorship or navigating the complexities of incorporation. This concise roadmap will provide the knowledge and insights you need to make informed decisions and ensure your business thrives in this dynamic province.

Step 1 - Do You Need to Register Your Business?

Before going through the effort of registering your business, double check that you actually need to register. The Government of Ontario is clear about the requirement to register a business in Ontario. Essentially if a business has a physical presence in Ontario it must register.

A business must register with the Ontario Business Registry if it:

• Has employees in Ontario;
• Has facilities in Ontario; or
• Has Offices in Ontario.

Step 2 - Choose the Right Ontario Business Structure

The two most common business structures in Ontario are sole proprietorship and corporation. Other less common structures such as partnerships will not be the focus of this article.

Different Business Structures in Ontario

Corporation (Ontario)

Description. A legally separate business owned by shareholders. Governed by the Business Corporations Act (Ontario). Can be completely owned and operated by foreigners.
One-time government fee: $300
Annual government fee: $0

Corporation (Federal)

Description. Similar to an Ontario Corporation but governed by the Federal district. 25% resident Canadian requirement.
One-time government fee: $200
One-time name fee: $13.80
Annual government fee: $12

Sole Proprietorship

Description. A sole proprietorship is a business structure in which a single individual owns and operates the business, making them personally responsible for its profits, losses, and liabilities.
Government Fee: $60 every 5 years

Partnership

Description.A partnership is a business legal structure in which two or more individuals or entities collaborate to manage and operate a business, sharing its profits, losses, and responsibilities according to the terms of a partnership agreement.
Government Fee: $60 every 5 years

Pros and Cons of Different Business Structures

Business Type	Setup Fees	Pros	Cons
Corporation	$$$	Legal shield, easier to invest in, potential tax benefits	More complex, more expensive to set up and maintain
Sole Proprietorship	$	Simple structure & reporting	No legal separation between the individual and the business
Partnership	$	Can share costs between individuals	No legal shield, decisions require consensus between partners

Illustrative Costs Associated With Each Business Structure

	Corporation	Sole Proprietorship
One-time Government Name Search or Reservation Fee	Federal - $13.80 Ontario - ~$20 (varies by provider)	N/A
One-time Government Fee	Federal - $200 Ontario - $300	$60
Annual Government Fee	Federal - $12 Ontario - $0	$60 fee paid once every 5 years
One-time Extra-Provincial Name Registration Fee	Federal - $0 Ontario - N/A	N/A
One-time Extra-Provincial Registration Fee	Federal - $0 Ontario - N/A	N/A
Annual Extra-Provincial Registration Fee	Federal - $0 Ontario - N/A	N/A
Legal	$1000+ for lawyer to form company + $500+/year	$0+
Accounting	$1000+ for tax return preparation	$300+ for tax return preparation
Accounting Software	$0 to $700/year	$0 to $700/year
Payroll Software	$20/month + $3/employee	$20/month + $3/employee

Disclaimer. This are ballpark numbers to give a sense, situation and requirements will dictate

Step 3a - Register a Sole Proprietorship in Ontario

Registering as a Sole Proprietorship in Ontario is quick and can be completed in minutes.

Steps to register a Sole Proprietorship:

1. Search for name conflicts. Check for name conflicts for your proposed name using the Ontario Business Registry Search and the Canadian Trademarks Database. The reason you want to search is that you are permitted to register any name you wish, including those already taken, and it is up to you to ensure there are no conflicts.

Warning Given by the Ontario Business Registry

The Business Names Act (BNA) does not prohibit the registration of identical names, but if you decide to use a name that is the same as or confusingly similar to that of an existing business, it could result in a lawsuit. The person registering the name also assumes full responsibility for any risk of confusion with any existing corporation, business name or trademark.

2. Create a ONe-Key and Service Ontario Account. Create a ONe-key Account and a Service Ontario Account (within the ONe-Key Application) in order to access the portal used in the next step.

3. Register a Sole-Proprietorship. Register your sole-proprietorship with the Ontario Business Registry and pay the $60 fee.

4. Master Business Licence. After registration you will receive your Master Business Licence containing registration information, expiry date and Business Identification Number.

Step 3b - Incorporate in Ontario

Businesses can be incorporated in Ontario as either a Federal Corporation or an Ontario Corporation. There are some relatively minor differences but importantly both can sell across Canada and across the globe.

Free Extra-Provincial Registration in Ontario

Federal Corporations can register in Ontario for free making Federal Incorporation typically preferred to Provincial Incorporation in Ontario.

Federal Corporation with Ontario Extra-Provincial Registration

The most common choice for corporations in Ontario is a Federal Corporation with an Ontario Extra-Provincial Registration.

Extra-Provincial Registration

Extra-provincial registration in Canada refers to the process of a business entity obtaining permission to operate in a province or territory other than the one in which it was initially incorporated.

Steps to Incorporate a Federal Corporation with Ontario Extra-Provincial Registration:

1. NUANS Name Search. Conduct a NUANS name search through the Corporations Canada portal. Cost is $13.80 and is completed almost immediately.
2. Incorporate with Corporations Canada. Through the online portal, the same one you used for the NUANS Name Search, incorporate your business and pay a $200 fee. Corporations Canada provides recommended text you can use for items such as share classes, restrictions on share transfers, etc. Through the process you are required to sign the Articles of Incorporation and Initial Registered Office Address and First Board of Directors both of which are generated for you. You must keep a signed copy of both these documents.
3. Ontario Extra-Provincial Registration. Through the incorporation process with Corporations Canada you will be prompted to conduct extra-provincial registrations, it is $0 to conduct an Ontario Extra-Provincial Registration. You will be prompted for a few basic questions, address, contact info, etc., the process is straightforward.
4. Set Up Minute Book and Resolutions. Each corporation must maintain a minute book, which holds registers, ledgers, bylaws, resolutions, articles of incorporation, etc. Every corporation must also have the board of directors and shareholders issue certain resolutions relating to topics such as bylaws, appointing officers and directors, waiving of an auditor, etc. This step can get pretty confusing and it's recommended you hire legal/accounting advisors or use a service like Ribbon to do this for you.

Ontario vs Federal Incorporation

Federal Corporations, compared to Ontario Corporations, have higher legal name protection and can move their HQ between provinces. Ontario Corporations have the benefit that they don't require Resident Canadian directors.

Step 4 - Set Up Tax Accounts

Canada Revenue Agency Business Number. A business requires a Canada Revenue Agency Business Number if it is a corporation or if it needs a CRA Account (GST/HST, Payroll Deductions, Import/Export)

Ontario Integration with Canada Revenue Agency

Every Ontario Corporation is automatically signed up for the Canada Revenue Agency (CRA) Business Number (BN). When filing a T2 Tax Return with the Canada Revenue Agency, or paying HST, the Ontario taxes are automatically included so no separate provincial income tax or provincial sales tax return are required.

Goods and Service Tax/Harmonized Sales Tax (GST/HST) Account. If a business has sales of greater than $30,000 within the past 12 months it must register for a GST/HST account with the Canada Revenue Agency. Businesses that don't meet this mandatory threshold may still optionally register for the GST/HST account.

Payroll Account. If you have employees, and you hire them as employees not as contractors, you must register for a Payroll Account with the Canada Revenue Agency. Certain mandatory deductions such as Canada Pension Plan, Employment Insurance and Income Tax Deductions are remitted through the Payroll Account.

Step 5 - Obtain Licences and Permits

Signing up for business permits and licenses is of paramount importance as it ensures legal compliance and legitimacy for your business operations. These permits and licenses are not only a legal requirement but also serve as a crucial safeguard, helping you avoid fines, legal troubles, and potential disruptions to your business activities. Moreover, they can enhance your business's credibility and trustworthiness in the eyes of customers and partners, ultimately contributing to your long-term success and sustainability in the marketplace.

In general Ontario is very business friendly, if you are ever uncertain of requirements you can call up a local government entity (city, township, etc.) and speak with a representative to clarify requirements for you to obtain the correct permit or licence.

tip

BizPal is a great resource to find permits and licences

Step 6 - Stay Compliant - Annual and Ongoing Obligations of Ontario Businesses

Sole Proprietorship Obligations

A sole proprietor must file a T1 Tax Return (Individual Tax Return) if the business:

• has to pay tax for the year;
• disposed of a capital property or had a taxable capital gain in the year;
• has to make Canada Pension Plan/Quebec Pension Plan (CPP/QPP) payments on self-employed earnings or pensionable earnings for the year;
• wants to access employment insurance (EI) special benefits for self-employed persons; or
• received a demand from the Canada Revenue Agency to file a return.

Reference - Canada Revenue Agency

Business Registry. Sole proprietorships must renew their registration with the Ontario Business Registry once every 5 years.

The remainder of the sole proprietorship obligations depends on what tax accounts, permits and licences they have signed up for.

Corporation Obligations

Corporate obligations are more demanding than the sole proprietors

Key annual and ongoing obligations

• File an annual return with the relevant business registry
• File T2 return with the Canada Revenue Agency
• File relevant returns for Canada Revenue Agency Program Accounts (GST/HST, Payroll, Import/Export, etc.)
• Maintain a minute book
• Complete mandatory director and shareholder duties
• File relevant returns or file renewals for permits and licenses as applicable

Ribbon Makes Business Easy

To keep a corporation compliant is challenging. Ribbon gives entrepreneurs the tools to help them stay compliant. From setting up minute books, maintaining registers to annual filings, Ribbon let's Entrepreneurs focus on their business. Learn more about Ribbon or email support@getribbon.ai.

Conclusion

In conclusion, registering a business in Ontario involves a thoughtful and structured process, as outlined in this comprehensive guide. Whether you are considering a sole proprietorship or incorporation, these six essential steps provide the necessary insights and knowledge to navigate the complexities of starting and maintaining a business in this dynamic province. By carefully following these steps and staying informed about your obligations, you can establish a solid foundation for your business and ensure its success in Ontario.