If you’ve decided to register your business in Canada, that’s a great decision. While setting up a business in Canada seems rewarding, its registration is equally challenging. However, with professional assistance and strategic planning, you can make this step easier for yourself. While the rules and laws may differ across provinces, it is recommended that you conduct your research beforehand.
This is a general step-by-step process to help you complete your business registration in Ontario, Canada. Here’s another guide to help you with your small business registration in Ontario. Read it to grasp the concept.
Select Your Business Structure
First and foremost, it is important to choose the structure your business will operate under. There are three common business structures in Canada, each with unique tax laws. You can find details about them here.
1. Sole Proprietorship
This is the most common business setup that new business owners prefer. You are your boss in this structure. Simply put, you are responsible for all the debt and liabilities—in short, all the financial decisions and requirements. Your business’s financial details must be listed in a separate section of the personal income tax form.
2. Partnership
In this type of business structure, you form a partnership with someone. It can include one or more partners. Based on each partner’s share, their profits, losses, and taxes are filed.
All of this is carried out through a contract or agreement that each partner agrees to before entering the business together.
3. Corporation
This is a corporate business structure where you are the owner of a corporation with employees. It is the most complex of the three structures. Learn more about it here.
After carefully analyzing and reflecting on your goals and objectives, choose the business structure that best suits your needs.
Now, it’s time to move forward to the next step.
Think of Your Business Name and Proceed Towards Its Registration
Your business’s name defines its identity. Hence, it is important to choose a name that represents your goals and commitment.
You can also operate your business under your name as a sole proprietor. However, if you add another name to it, you’ll have to register it.
For instance, if your name is Jacob and you want to register your business as Jacob Enterprises, you’ll have to go through the registration process with this name.
Apply for Necessary Permits and Licenses
Obtaining the necessary licenses and permits from the Canada Revenue Agency (CRA) is essential for successful business registration in Ontario. This ensures that you operate your business legally within Canada.
There are five types of business licenses you may require:
- Municipal License: If your business deals with something that might disturb residents in a community, you need to obtain this license.
- Environmental and Zoning Permits: Similar to the municipal permit, if your business has the potential to harm the environment in any way, you’ll need to apply for this license. This permit is granted only if your business contributes positively to the community.
- Federal Registration: This is a national-level registration. To obtain this permit, you must register your business with the Canada Revenue Agency (CRA). If you have employees and operate on a large scale, your corporation will be assigned a business number.
- Provincial Registration: To obtain this permit/license, you must register your business with the provincial government. This registration ensures compliance with GST/HST tax regulations.
Create Articles of Incorporation
If you’re incorporating a small business, basic incorporation may be sufficient. It includes:
- Pre-determined articles of incorporation (which can be modified later if needed)
- One or two classes of shares
- A maximum of ten directors
- A corporate name
You can also choose to customize your articles of incorporation. Businesses that choose customization typically specify the following:
- Their corporate name
- Their share structure and any restrictions on share transfers
- Their corporation’s number of directors
- Any restrictions they might want to set for their business or operations
- Any other provisions
Register Your Business Address and Open a Business Bank Account
You are now close to completing your business registration in Ontario, Canada. For this step, you’ll need to choose a specific location for your office setup. This location will be used for all official business communications.
If required, it is important to establish a board of directors. If you appoint directors, you must mention their first and last names, along with their Canadian residency status, during the registration process.
Then, proceed with opening a separate business bank account capable of handling international currencies.
Pay the Registration Fee
Finally, you’ll need to pay your registration fee. Generally, business registration in Ontario costs around $360 in person and $300 online.
Key Takeaways
- While setting up a business in Canada might seem like an exciting opportunity, carefully managing the registration process is crucial.
- Whether you choose a sole proprietorship, partnership, or corporation, obtaining the necessary licenses and permits is essential for operating legally and smoothly. If you’re a resident or non-resident looking to start a business in Canada but aren’t sure where to begin, we are here to help. Book your first consultation with Numeracy Accounting Solutions, and we’ll guide you through the process.
For further reading, explore our blog on How to Choose the Right Business Consultant Firm in Mississauga for Your Needs or learn about the Benefits of Bookkeeping for Small Businesses.