If you've decided to incorporate your business in Ontario, that probably means you're looking for benefits like limited liability, tax advantages, and other aspects that you may not be able to get with a sole proprietorship. Or, maybe you've reached an income level where it's advantageous to incorporate.
Regardless of your reasoning, this article will help guide you through how to incorporate in Ontario, provide the steps and all the links you'll need, as well as a great offer from Ownr to help you with your incorporation.
Understanding the Basics of Ontario Incorporation
Before you start the process of incorporating your small business in Ontario, it's helpful to understand exactly what it means. When you incorporate a company, you're creating a legal identity for the company that's separate from you. This is distinct from being self-employed or a sole proprietorship, in which case the business is considered an extension of you personally.
In Ontario, incorporating your business can help ensure that you are not personally liable for any legal issues or debts, save you money on your tax returns, potentially help your business appear more professional, and even help you raise funds.
Pre-Incorporation Considerations
Before you start the process of making your business official in Ontario, it's essential to think about a few key things.
Federal or Provincial Incorporation
First, decide if you want to register your company in all of Canada (federally) or just within Ontario (provincially). Here's a quick rundown on what each option means for your business:
With federal incorporation:
Your business name gets protected all over Canada, and is generally better protected.
You can run your operations anywhere in the country.
With provincial incorporation:
Lets you establish your company specifically in Ontario or another province of choice.
Allows you to operate in the province where you're incorporated.
If you want to operate in other provinces or territories, you will need to register as an extra-provincial or extra-territorial corporation in those jurisdictions, too.
Choosing A Business Name
Choosing the right business name is another crucial consideration, and it's governed by the Business Names Act in Ontario. Your business name represents your brand and identity, and it can have a significant impact on your success. You can easily use the Ontario Business Registry to check if your desired name is already taken.
There are a few basic requirements for your business name, and you should aim to include the following:
Step-by-Step Guide: How to Incorporate in Ontario
Now that you're up to speed on what incorporation means and how to prepare for it, let's move forward with our guide on exactly how to incorporate your business in Ontario.
Step 1: Preparing the Necessary Documents
The main documents that you will need to prepare are called articles of incorporation.
Articles of incorporation lay out detailed information about your company like its name, what it aims to do, how it will issue shares, and who the business owners are. It's crucial these documents follow the rules set by Ontario's Business Corporations Act, and are clear and truthful.
Always proofread your articles of incorporation–any mistakes or confusion can just delay your incorporation.
Step 2: Filing Your Articles of Incorporation
After preparing your articles of incorporation, they must be submitted to the Ontario Business Registry. You can either submit them online by setting up an account, or mail the documents physically. There is a service fee of $300 for filing your articles of incorporation.
Once you've sent off your articles of incorporation through either method above, they will be reviewed by the Ontario Business Registry. If everything goes well, you will receive a Certificate of Incorporation in return, which will include your Ontario Corporation Number.
Be sure to store this document safely once you receive it!
Step 3: Registration For Gross Sales Tax and Harmonized Sales Tax (GST & HST)
When your business income exceeds $30,000 gross, you will be required to register for GST/HST with the federal government. Before registering for GST/HST, you will also need to register for a business number (BN) online.
Although this may not be an essential step at the beginning of your incorporation, you may want to plan ahead. Registering right away could be useful, especially if you expect to hit that income threshold soon after your incorporation.
Post-Incorporation Considerations
You're not quite done with your incorporation, even once you receive your Certificate of Incorporation! Incorporated businesses also have certain requirements, like record-keeping and tax obligations, that you'll need to know about.
Here are a few top things to consider:
Setting Up Your Corporate Bank Account
While setting up a corporate bank account is not technically required, it is highly recommended and can help you stay organized. It will ensure that your personal and business finances don't get mixed up, and help you keep business expenses crystal clear.
Typically, all you'll need is your business number, Articles of Incorporation, and your personal identification to open a business bank account at your bank of choice. We recommend getting this done as soon as possible in your business journey.
Understanding and Organizing Your Records
Once you've set up your company in Ontario, you'll need to start keeping detailed records according to the legal requirements. Using a cloud-based accounting software and receipt management tool is important, and will allow you to store and maintain your records safely.
Tax Requirements
Corporations in Ontario are required to file an annual return within 6 months after the end of the fiscal year, and they can be filed directly online through the Ontario Business Registry.
Conclusion
Incorporating in Ontario can be a great choice for your business, but it's important to do it correctly and address all the legal requirements. To streamline the process and ensure compliance, you can take advantage of ReinvestWealth's partnership with Ownr. Get your business accounting and professional incorporation both at a discount to maximize your business setup!
Frequently Asked Questions
How Long Does It Take to Incorporate in Ontario?
If using online services like Ownr or the Ontario Business Registry, you can incorporate in Ontario within 10 minutes. If you file via mail, you can expect a delay of 15 business days, or 7 business days via email. It could take longer to incorporate depending on your industry and business structure.
Can I Incorporate My Business Online in Ontario?
Yes, you can incorporate online directly through the Ontario Business Registry, or through online services like Ownr.
Do I Need To Trademark My Business Name in Ontario?
While you're not obligated to trademark your business name, it can offer name protection and ensure that other companies cannot use your brand to sell similar services. However, it's an optional step that you may want to consider depending on your business' priorities and goals.