How to Incorporate a Company in Ontario?

Starting a business is an exciting endeavor, but one of the most crucial decisions you'll need to make is the legal structure of your company. Incorporating your business in Ontario can provide numerous benefits, such as separating your personal and business finances and protecting your personal assets from liability. However, the process of incorporation can be complex and time-consuming. In this comprehensive guide, we will break down the steps you need to follow to incorporate a company in Ontario successfully.

Understanding Incorporation

Incorporation is a legal process that establishes a separate legal entity for your business. Unlike sole proprietorship or partnership, a corporation exists as a distinct entity from its owners, known as shareholders. When incorporating, the ownership of the business is represented by shares, and each owner receives ownership shares proportionate to their percentage of ownership. This allows for flexibility in transferring ownership in the future.

Corporations can be classified as either public or private. Public corporations trade their shares on stock exchanges, while private corporations do not have this obligation. Incorporation provides various benefits, including limited liability, tax advantages, access to capital, and the ability to have continuous existence. The question of "Should I incorporate my business", needs to be carefully considered after weighing the benefits and disadvantages of incorporation. In addition, the tax advantages of incorporating a private corporation that is a Canadian Controlled Private Corporation should also be considered.

Should I Incorporate Federally or Provincially?

When deciding to incorporate your business, you have the choice of incorporating at the federal level or provincial level. Let's look at some of the differences between the two:

Provincial Incorporation

If you plan to operate your business solely within Ontario, incorporating provincially is the most common choice. By incorporating provincially, your business is bound by the legal regulations specific to that provincial jurisdiction, and your corporation's name is protected only within the province of incorporation. If you later decide to do business out of another province, you will need to incorporate in that province separately.

When incorporating your business provincially, you can find all the forms required from the associated provincial business registry, such as the Ontario Business Registry. Alternatively, you can also seek our professional business incorporation services in Hamilton, to ensure that you meet all the legal requirements.

Federal Incorporation

If you intend to operate your business in multiple provinces or have plans for international expansion, incorporating federally may be more suitable. Federal incorporation grants national protection for your business name and allows you to operate in any province. However, the process of federal incorporation is generally more time-consuming than provincial incorporation. For federal incorporation, you can submit the required information to incorporate through the Online Filing Centre with Corporations Canada.

How Much Does it Cost to Incorporate a Company in Ontario?

The cost to incorporate a company in Ontario depends on the method you choose. Incorporating by mail or online incorporation through the Ontario Business Registry incurs a fee of $300. However online applications can also be facilitated through a service provider that operates under contract with the Ontario Ministry of Government and Consumer Services. Additional costs will be imposed by service providers for their online services. The two service providers used by the Ministry to incorporate a company in Ontario are:

• ecore by Dye & Durham Corporation
• ESC Corporate Services Ltd

How Long Does it Take to Incorporate a Company in Ontario?

The timeframe to incorporate a company in Ontario varies depending on the method chosen. Incorporating online through the Ontario Business Registry can be completed in as little as a few hours. By mail, the process may take up to 15 business days. Federal incorporations generally take longer, with a processing time of 1-2 days. The reason for this is that when going through the Federal corporation process, an examiner carefully assesses the application, with a specific focus on the NUANS report. The aim is to verify that there are no conflicting business names.

Steps to Incorporate a Company in Ontario

There are several steps and requirements to incorporate a company in Ontario. Here is a general outline of the process:

Step 1: Choose a Business Name

• You must first determine if you prefer to use a company name, like Angel's Cakes., or a numbered company, such as 1234567 Ontario Inc. Often, a numbered company is preferred when the name of the business will not be advertised, such as a real estate holding company.
• If you prefer having a named company for advertising purposes or name protection purposes, you will need to conduct a name search or order a NUANS report. The purpose of the NUANS report is to ensure your desired name is available and distinguishable from other businesses in Ontario. The NUANS report is provided to the provincial examiner within the Ministry of Government and Consumer Services for review along with the incorporation documents. Please note that as mentioned above, the name is only protected within the same jurisdiction. Unlike federal incorporation, when you incorporate a company in Ontario, name protection is not available Canada-wide. The name search has to be done using the services of a NUANS name search provider.

Step 2: Create the Articles of Incorporation

• Generally, individuals seek the assistance of a lawyer to navigate through this process. This document outlines the regulations and purpose of the corporation. It includes information such as the corporation's name, registered office address, share structure, and the rights and responsibilities of shareholders and directors. The share structure also specifies the number of shares within the organization, including whether there is only one category of shares or if there are separate classes for voting and non-voting shares. By utilizing the services of a lawyer, you can ensure that the incorporation of your small business complies with the Business Corporations Act and any additional regulations specific to your industry.

Step 3: Submit the Application

• Once you have the completed Articles of Incorporation, file them with the Ontario Ministry along with the required fees. If choosing to incorporate online, submit the application electronically through the Ontario Business Registry or service provider. When the incorporation is approved, you will receive the Certificate of Incorporation as part of the finalized incorporation documents.

Step 4: Create an Online Account with Service Ontario

• Set up a One-key account and a ServiceOntario account to facilitate the registration process of your business. This will allow you to link your business to your Service Ontario account and thereby allow you to access the Ontario Business Registry, which is used to update your company information with the Ministry, file your annual returns etc,

Step 5: File Initial Notice

• Once your account is set up with the Ontario Business Registry, use the online services to file your Initial Notice, which is required within 60 days after the completion of the incorporation. If the filing is not completed within the required 60-day time frame, the Province of Ontario can cancel the incorporation for non-compliance. Please note that the initial notice is a one-time filing requirement for an Ontario corporation but going forward, there will be a requirement to file an Annual Return for your corporation. This can also be done online through your Ontario Business Registry and must be filed within six months of your fiscal year-end. Alternatively, you can also use the private sector service providers listed above to file your Initial Notice and Annual Return. Typically the service providers will charge a fee for filing these returns.

After the incorporation of the Ontario company, there are a few other things required. These include preparing a minute book and tax account set ups with Canada Revenue Agency.

Conclusion

In conclusion, to incorporate a company in Ontario or Canada, understanding the process and following the necessary steps is crucial for a successful incorporation. Whether you choose provincial or federal incorporation, ensure compliance with the relevant laws and regulations. Consulting with professionals, such as tax accountants or lawyers, can provide valuable guidance throughout the process.

If you are looking for an accountant in Hamilton for professional guidance on incorporating your business in Ontario, contact us today. We are a full-service accounting firm in Hamilton that provides professional incorporation services to ensure your company is set up properly.

If you want to learn more about other tax and accounting topics, explore the rest of our blog!

Disclaimer

The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting/tax professionals. NBG Chartered Professional Accountant Professional Corporation will not be held liable for any problems that arise from the usage of the information provided on this page.