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.
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.
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:
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.
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.
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:
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.
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
Step 2: Create the Articles of Incorporation
Step 3: Submit the Application
Step 4: Create an Online Account with Service Ontario
Step 5: File Initial Notice
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.
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!
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.