Ontario is an excellent place to start a business. First of all, Ontario is the richest market in Canada, with a total population of over 14 million and the highest personal incomes in the country. Second, for Ontario’s business registration, the province has made it incredibly easy to find and access the information you need.
Being a small business owner in Ontario shows that you have something within you that shows you want to have control over your career. While that alone is the first step on your way to becoming a successful entrepreneur, there are also administrative steps that need to be taken to give your company the best chance to succeed.
Types Of Business Registrations in Ontario
When starting your business in Ontario there are several business structures to consider during the registration process. These are sole proprietorship, partnership, corporation, or Limited Liability Partnership (LLP). To form an LLP, you will have to be either an accountant, lawyer or another regulated profession.
Before you move forward with any type of registration for your new business venture, we strongly recommend that you consider seeking out some independent legal advice and not rely solely on the information within this article.
With the being said, the majority of new businesses will either be a sole proprietorship, partnership, or corporation, but for this article, we’re going to focus on a sole proprietorship and partnership. However, if you are still considering starting a business under an LLP and you want to speak to a business expert, sign up for a membership and speak with our business experts, they will be happy to speak with you and give you a hand.
How To Set Up a Sole Proprietorship or Partnership in Ontario
There are many similarities when registering a sole proprietorship and a partnership. The only difference being, when starting a sole proprietorship you are the only owner. It is the easiest and more affordable form of business when registering as a sole proprietor. However, there is also the least amount of legal protection.
Registering a partnership is almost as easy as a sole proprietorship, and the costs are pretty similar. Registering as a general or limited partnership is the choice that you will have to make when you register. The only difference being, a general partnership will usually involve a fair split between all of the partners. A limited partnership will acknowledge that some of the partners are not equally as involved and will therefore not be compensated the same way as the others that have a larger stake in the business.
When registering both a sole proprietorship and a partnership, there are multiple similar steps involved. Registering a name for your company will be the majority of these steps. When forming a sole proprietorship or a partnership, you won’t have any legal obligation other than registering your business name. But, there is no difference between you and your business in regards to the legal and financial liabilities in a sole proprietorship or a partnership.
Here are the three steps that you need to make to register a sole proprietorship or partnership in Ontario:
1. Name The Business
You will have to choose a unique business name unless you are using your legal name. Your business will still need to be registered even if your name is Jane Smith and you would like to name your business “Jane Smith’s Flowers”. Your business name must also not be misleading in any way. For example, you will not be able to call yourself “Jane Smith, Inc.” because you are not incorporated. You will have to renew your registration every five years. You will have 60 days from the date that your name expires to complete the renewal.
- Why should you search your business name?: There are many brand recognition advantages to having a unique name. It will be the first thing that your customers use to identify your business. It will be difficult for your business to stand out if your business has a name that is similar to another business. Also, if the other business is incorporated they will have the right to take you to court. This is why it is so important to do a name search in the Ontario government’s database to ensure that the name you prefer isn’t too similar or already taken by another existing business.
- How can you perform a business name search?: There are multiple ways to perform a search for your business name. A casual search of the internet is a good place to start. Doing this will eliminate the more obvious businesses that are currently operating. Once you have searched, you can then use an official name search tool that will check your chosen names against government data. This way you will know in real-time whether or not the name you want is available.
2. Register The Business
It is now time to officially register your business now that you’re happy with your unique business name. Here are the things that you will need to prepare in advance:
- Your name and address – The legal documents will be sent to you by mail. These documents need a name and valid physical address to receive them.
- A valid email address – You will receive a Master Business Licence within two business days after you register when you provide an email address.
- A description of what your business will be doing – The function of your business will need to be summarized. There isn’t any need to go into great detail. Just a quick one-line, general description. So, for example, you can say something as simple as “selling baked goods” will work well enough if your business is a bakery.
- Partner’s names – If you are registering the business with partners, their name’s must be listed.
- Partnership agreement – This is strongly recommended, even though it is not required legally. You and your business partners will surely have the best of intentions when starting the business, but things happen. Situations can occur, and partners may end up choosing to go in a different direction. A lawyer can outline called a partnership agreement that will summarize how the decisions are made, your and your partner’s duties, how the profits are going to be split and other parts of your business will operate.
You will receive a nine-digit Business Identification number (BIN) once your business is registered. The number is what will be used to identify your business as registered in Ontario. Also, with this number, you can access wholesale pricing from suppliers, advertise your business, open a business account, and operate in Ontario for five years until you decide to not renew your business registration. What your BIN won’t do is protect you as an individual from any liability. For example, if you were to receive a business loan under your business name but you aren’t able to pay the loan back, you will be liable personally. A BIN will also not give you any corporate tax benefits or protect your business name from being used by another business. Incorporating your business will allow you to receive these benefits.
3. Register any additional licences and certificates
You will have to run your business under provincial regulations. This may require you to collect HST for your business, in this case, you will need to open a GST/HST account. You may also need to register for Workers Compensation Insurance. It is still important to take this step to identify any licences or certificates that you will need to operate legally, even though you are only operating as a sole proprietor. Even if you are operating under your name and haven’t registered a unique business name you should still do this research.
How Much Does Registering a Sole Proprietorship or Partnership Cost?
There are costs for a few items if you decide to register or renew with the government directly. It will cost $60 online or $80 by mail or in-person for a sole proprietorship or a general partnership, and $210 for a limited partnership. A name search will be an additional cost, $8 – $26 depending on the search type.
If you need more advice on what is needed to register your business, sign up for a membership and speak with our business experts and let us get you started!
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