If you’re a business owner considering to incorporate your business in Ontario, Canada, you may be wondering how to successfully register it with the government.
This article will go over the basics of incorporation in this Canadian territory and the benefits your business can derive from it.
What Is A Corporation?
A corporation is a legal entity separate and distinct from its owners. As a legal person, it can enter into contracts, own property, and sue or be sued in its own name.
A corporation can also issue shares to raise capital. The shareholders of a corporation aren’t liable for the debts of the corporation, except in certain limited circumstances.
It’s important to consult a lawyer before choosing your business structure as there may be more than one choice that would work well for you, depending on your situation.
Benefits Of A Corporation
There are three major reasons you would want Ontario incorporation for your business.
Incorporation can provide you protection from personal liability, protection of your business name, and possible advantages when it comes to taxes.
Firstly, it’s possible for corporations to shield their shareholders from personal liability for the company’s actions.
This means that if there was an accident at your manufacturing plant or something went wrong with your product, then only the corporation would have to pay damages and not the shareholders themselves.
Secondly, corporations allow name protection. The registered business name can be protected from infringements and counterfeit within the jurisdiction of Ontario.
Thirdly, incorporation can help reduce taxes because corporations are entitled to more deductions than other forms of businesses.
Essentials For Business Incorporation in Ontario
Before you incorporate your business in Ontario, there are a few things you need to know.
1. An Ontario Registration Is Different From A Federal Registration
Though they may sound similar, an Ontario business registration is different from a federal business registration.
An Ontario registration would only allow you to provide goods and services within its jurisdiction.
Meanwhile, a federal registration would allow you to operate in more than one province or territory in Canada.
2. No Need For An Extra-Provincial Registration
An extra-provincial registration is only needed if your business is selling goods and services outside of Ontario.
As long as you don’t have any plan on expanding outside of Ontario, you won’t need to worry about this.
If you intend to do business with foreign companies, however, you may apply for a federal registration.
This will allow you to apply for a license to export and import goods with other businesses.
3. An Initial Notice Is Included In Your Mandatory Corporate Filings
Within 60 days after incorporation, an initial notice must be filed with the government for the corporation to continue operating legally.
This is also required to announce the name of directors or shareholders of the corporation.
When including the business directors or shareholders, it’s important to provide their legal names.
These include their first, middle, and last name as listed on their passports and licenses.
The number of shareholders required can range from one to ten individuals.
4. Government Fees Are More Expensive
In comparison to a federal incorporation which costs CAD $200, a business costs CAD $360 to get incorporated under Ontario’s jurisdiction.
5. Faster Name Approval, But Lower Protection Level
Incorporation is easier as the name approval process takes less time. As long as there’s no similar name registered within its jurisdiction, then your business name can be used without any problems.
Some companies even offer a one-day incorporation process if the business’ Articles of Incorporation have been prepared.
With the availability of the Ontario Business Registry, online transactions are also permitted.
However, when incorporating in Ontario, know that your name protection is weaker compared with a federal one.
Your name protection is only limited within its jurisdiction but may not be protected when used in another Canadian territory.
With a federal incorporation, your business name remains protected while you’re applying for a trademark registration.
6. Canadian Citizenship Is Not Required
In comparison when registering as a corporation in Canada that requires 25% of its owners to be Canadian citizens, an Ontario registration doesn’t have a citizenship requirement.
A foreigner can own 100% of an Ontario business and still operate in this province.
That’s the reason there are less restrictions on the corporate address and the incorporators’ addresses when registering a business.
In Conclusion
As an Ontario business owner, you might know that incorporating your business provides added protection to your personal assets and gives your company a boost in credibility.
But to do this, there’s important information you need to know. This article covers essential information to get your company incorporated today.
Ella Marcotte
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