Not every type of business needs to register on a national basis. If you’re the local Ontario beauty parlour or tutoring school, you may prefer to register your business in Ontario. An Ontario registration is usually easier than one at the federal level.
However, provincial registration often affords less business name protection and greater complexities in continuing your operations to other provinces. Depending on the size and nature of your company, the simplicity of a provincial registration may trump the benefits of federal registration.
In this article, we describe how to register a small business in Ontario. This includes setting up your company and registering your business name, incorporation, and GST/HST number. Additionally, this post describes how you can start a business without registering.
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How do I set up a business in Ontario?
The first step to setting up a small business is selecting your business structure. There are numerous structures, but sole proprietorships, partnerships, and corporations are the most common. There are also other methods to run your organization, such as a co-operative or not-for-profit.
Sole Proprietorship: Sole proprietorships are run by only one person and are the simplest way to operate a business. You can even consider a child running a lemonade stand as a sole proprietorship! This corporate structure lets you run a business without a legal distinction between you and your organization. As a result, you file any income earned on your personal tax return. Additionally, if anyone sues your business, they’re suing you personally.
Partnership: A partnership is owned and managed by two or more people. There’s usually a partnership agreement to determine each person’s ownership and commitments (labour, capital, etc…). Partnerships are not a distinct legal entity, so any income received is filed on your personal tax returns.
Corporation: Incorporating your business means you form a corporation — a distinct legal entity from yourself. Your corporation must file its own tax returns — separate from your personal ones. Additionally, if someone sues your business, you’re not personally liable unless otherwise specified (in a contract, for example).
How do I register my business name in Ontario?
A business name is the identity of your venture. It’s an essential marketing asset, so think carefully about your name.
You should perform a Google search on potential names to see the results. Names without significant traffic may be beneficial as it means your target market will have an easier time finding you later on. You may also want to ensure that the associated domain names and social media handles are available.
The first step to registering your business name is to see if it’s taken. You can perform a name search through NUANS (Newly Upgraded Automated Name Search). This system searches a national database to see if another business takes a particular name.
There is also a NUANS that’s Ontario-biased, which only searches for Ontario businesses. Business name searches usually cost between $8 and $26.
It’s important to consider that registering your business name doesn’t necessarily protect it or make it exclusive to your company. You need a trademark for such protection.
After selecting an appropriate name, you can register it through ServiceOntario, online, in person, or through the mail. Online registration costs $60, while a mail-in or in-person registration costs $80.
How do I register my corporation in Ontario?
Choosing to incorporate has many benefits. It allows your venture to become a separate legal entity, which means you won’t be personally liable for the legal issues your business faces.
If you don’t incorporate, it’s essential to have the right business insurance plan, which can pay for the cost of defending against a lawsuit and for any damage awards.
But even after incorporation, you should still consider business insurance. The proper insurance plan means your company won’t have to pay legal fees out of pocket and ultimately face a sizeable financial fallout if someone sues the corporation.
Incorporating a business in Ontario is reasonably straightforward. You first need to select a business name and perform the required name searches.
The second step is to file the Articles of Incorporation, also known as a Form 1, with the Ontario government. You can file the Form 1 online, through an over-the-counter service at select Land Registry or ServiceOntario offices, or via mail.
Electronically filing Articles of Incorporation costs $300 plus any additional fees by a service provider such as Cyberbahn, OnCorp Direct Inc., or ESC Corporate Services Ltd. These providers have a digital portal system that takes you through the incorporation process.
If you incorporate in person or by mail, you need to submit:
- Your completed Articles of Incorporation
- An Ontario-based NUANS report of your proposed name unless you choose to use the numbered name assigned by default
- A fee of $360 — generally a cheque made to the Minister of Finance
- A covering letter that includes a contact name, return address, and phone number
- Any other supporting documents — a legal opinion, for example
An electronic filing may also require these documents or otherwise streamline the process depending on your chosen service provider.
How do I register for business taxes?
You can sign up for a Canada Revenue Agency (CRA) MyBusiness Account to register for a GST/HST account, payroll deduction account, corporate income tax account, and more. Registering for these accounts can be done online, by fax or mail, or over the phone.
You generally only need a GST/HST account if you haven’t incorporated your business. Any business that makes over $30,000 in revenue per year must register to collect sales tax and remit it to the government. If your revenues are under $30,000, you can still choose to register, but it’s not mandatory.
Can I run a business without registering?
It’s possible to run a business in Canada without registering it in any way. However, it requires that you operate a sole proprietorship under your own name and earn under $30,000 per year.
Only sole proprietors running their business under their own name can avoid a business name registration. Thus, sole proprietors carrying on business under a name other than the owner’s, as well as partnerships and corporations must register their business in some manner.
Additionally, sole proprietors who earn over $30,000 in annual revenue must register with the CRA as a GST/HST registrant to collect and remit sales tax.
There may be numerous fines and other consequences if you don’t register your business when you’re supposed to.
For example, under the Ontario Business Names Act, a sole proprietor or partnership may see fines of up to $2,000 for using an unregistered name. This fine shoots up to $25,000 for corporations.
Registering your business in Ontario could include registering a business name, incorporation, or opening a GST/HST account. Make sure to understand whether registration is mandatory for your business. Otherwise, you may face fines or other consequences.
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