How To Create A Company In Ontario
How to Register Your Business in Ontario
Being an entrepreneur is a feeling. It's something you have within you that says you want to take control of your career. While that aspirational emotion is the magic dust to being a successful entrepreneur, there are also logistical steps that must be taken to give your business the best chance to succeed. Registering your business is one of the first steps.
Types of business registrations in Ontario
There are a number of business structures for registering your business in Ontario. These include sole proprietorship, partnership, corporation, or Limited Liability Partnership (LLP). You have to be a lawyer, accountant, or another regulated profession to form an LLP. For a more comprehensive understanding of all business types, read our article on how to choose a business structure. Before proceeding any further with any type of business registration we strongly encourage you to seek independent legal advice and not rely solely on the link above or this article. With this said, the majority of the businesses fall into either sole proprietorship, partnership, or corporation, so we'll focus on these three types.
How to register a sole proprietorship or partnership in Ontario
Registering a sole proprietorship and partnership have many commonalities. The difference is that you are the only owner in a sole proprietorship. Registering as a sole proprietor is the simplest and least expensive form of business registration. It also offers the least amount of legal protection.
Registering a partnership is nearly as simple as a sole proprietorship, and the costs are also comparable. You will have to make a choice to either register as a general or limited partnership. The difference? General partnership usually involves a fair split between all partners. A limited partnership acknowledges that some partners are not equally as involved and therefore don't get compensated in the same way.
There are several similar steps to both registering a sole proprietorship and a partnership. Most of those steps involve registering a name for your business. You don't have any legal obligation past registering your business name when forming a partnership or sole proprietorship. However, it's important to note that in a partnership or sole proprietorship, there is no distinction between you and your business in terms of legal and financial liabilities. For example, you (and your partners) may be personally responsible for your business debt. This is not the case when you are incorporated. Here are 3 steps you need to register a sole proprietorship or partnership in Ontario:
1. Name your business
Unless you're using your own legal name, you have to choose a distinct business name. Even if your name is Kim Jones and you want to call your business "Kim Jones Flowers", your business still needs to be registered. Your business name also cannot be misleading. For example, you can't call yourself "Kim Jones Inc." because you're not a corporation. Your business name will stay registered for five years, at which point you'll need to renew your registration. You have 60 days from the time your name expires to complete the renewal.
- Why should you do a business name search: A unique name can offer many brand recognition advantages. It's the first thing customers identify your business with. Having a name similar to another business also makes it more difficult for yours to stand out. Or if that other company is incorporated, they have the right to take you to court. That's why it's important to perform a name search in the government's database to make sure your preferred name isn't already taken or too similar to existing businesses.
- How to do a business name search: There are different ways to go about searching for your business name. You can start with a casual internet search. This will eliminate the obvious businesses that are already operating. Once you've done an online search, graduate to official name search tools that checks your names against the government data. You can pay for each search via the government site directly, or use Ownr's platform which lets you search up to 30 names for free before registering your business. You'll know in real-time whether or not the name you've proposed is available.
2. Register your business
Now that you're happy with a unique name for your business, it's time to officially register your sole proprietorship or partnership. Here's what you'll need to prepare in advance:
- Your name and address — Legal documents will be mailed to you. There must be a name and valid physical address to where these documents can be sent.
- A valid email address — If you provide an email address, you'll receive a Master Business Licence within two business days after registering.
- A description of what your business will be doing — You need to summarize the function of your business. You don't have to go into great detail. Just a one-line, general description. So if your business is a bakery, something simple like "selling baked goods" works well.
- Names of partners — If you have partners, you must list all of their names.
- Partnership agreement — This is not a legal requirement for registering your partnership, but it is strongly recommended. Even though you and your business partners surely have good intentions when starting out, things happen. Circumstances occur, and partners may choose to go in a different direction. A partnership agreement is a legal document drawn up by a lawyer that outlines things like how decisions are made, the duties of each partner, how profits will be split and other parts of how your business will function.
Once your business is registered, you'll receive a nine-digit BIN number (Business Identification Number). This number is what identifies your business as registered in Ontario. With your BIN number, you can now open a business account, access wholesale pricing from suppliers, advertise your business and operate in Ontario for five years or until you decide not to renew your registration. What the BIN doesn't do is protect you as an individual from liability. For instance, if you take out a business loan under your business name but can't pay back that loan, you will personally be liable. A BIN also doesn't give you any corporate tax benefits or protect your name from being used by other businesses. These are all benefits of fully incorporating your business.
3. Register additional licences and certificates
You'll have to operate your business under provincial regulations. That may require you to collect HST for your business, in which case you'll need to create a GST/HST account. You may also need to register for Workers Compensation Insurance. Even though you're only operating as a sole proprietor, it's still important that you take this step of identifying any licences or certificates you need in order to operate legally. Do this research even if you're operating under your own name and haven't registered a unique business name.
How much does it cost to register a sole proprietorship or partnership in Ontario?
If you choose to register or renew directly with the government, there are costs for several items. To register or renew your business name, it costs $60 online or $80 by mail or in person for sole proprietorship or general partnership; and it costs $210 for limited partnership. There are additional costs for name search ($8-$26 depending on the types of search).
How to incorporate a business in Ontario
For these reasons, incorporating your business in Ontario is more detailed and more expensive than incorporating as a sole proprietorship or partnership: you'll have the option to register either a business name or a business number, and complete what's called Articles of Incorporation, which is essentially a summary that outlines the purpose of your business. There are a lot of steps to incorporate, so take your time to make sure nothing is missed.
1. Search for possible business names
If you decide to incorporate with a business name (vs. a business number), similar to a partnership or sole proprietorship, it's a good idea to start with a basic name search. Once you get through that step, it's time to run a formal business name search against the government database (a.k.a. NUANS name search), which is necessary before you take the next step of completing your Articles of Incorporation.
Did You Know: Ownr still provides up to 30 unique name searches and allows you to complete your incorporation for half the cost of traditional lawyers.
2. File your application
You can file your application once you've completed your Articles of Incorporation. Depending on the type of business you're starting, you may also need some supporting documents. If you are filing an application for the first time, it could be confusing in certain sections, for instance, what "other provisions" means. This is one of the benefits of using Ownr's platform – it assists with tips and explains legal jargon in plain language throughout the entire process.
3. Keep a minute book
As an incorporated business in Ontario, it's mandatory for you to keep corporate records, (a.k.a. Minute Book). A minute book describes all the activities of your business, including the following:
- All registered directors, including when they resign or change positions
- Minutes of mandatory shareholder meetings
- Copies of all notices
- Change in company address plus many more formal record-keeping requirements.
It doesn't matter how big or small your corporation is or how long you've been in business. Keeping a minute book is a legal requirement for all incorporated businesses, be that provincially or federally.
How much does it cost to incorporate a business in Ontario?
Incorporating by yourself directly with the Ontario government will cost you $300, plus separate cost for NUANS search. The process can be confusing and time consuming, and that's why many people opt out of this option and prefer assistance from a professional to ensure accuracy. But that could get pricey – incorporating with a lawyer can cost $1,500 or more.
Ownr offers a happy medium – much easier and simpler than the government process at a fraction of the cost of a lawyers. You can incorporate your business with Ownr for $619, plus applicable taxes, which provides you up to 30 free name searches, all mandatory documents (i.e. the NUANS report, Articles of Incorporation, and a digital Minute Book). In addition, if you open a new business account with RBC after incorporating with Ownr, you'll get $319 back*.
Deciding on the right business structure is an important step in growing your small business. Make sure you make educated decisions.
Ready to start your business? Ownr has helped over 40,000+ entrepreneurs hit the ground running quickly—and affordably. If you have questions about how to register or incorporate your business, email us at [email protected]
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.
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How To Create A Company In Ontario
Source: https://www.ownr.co/blog/how-to-register-your-business-in-ontario/
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