Everything Your Need To Know About Registering A Business in Ontario

What Is Meant By Registering A Business?

Registering a business means getting your business officially recognized by the Ontario government. While it might seem like some arbitrary paperwork, plenty of legalities are attached to the idea of a registered business. Although it might seem like you can jump right in and mow clients' lawns, teach them fitness, pave their driveways or perform whatever services you do for your clients, making your business recognized by the government makes certain aspects of your business, such as location, identity and tax rules clear from a legal viewpoint. 

You must register your business with the Ontario Business Registry, and can be done through Service Ontario. 

Who Can Register A Business In Ontario?

Anyone can register a business in Ontario. However, some people will need to take additional steps to properly register their business legally.

Anyone who is not a Canadian citizen or a permanent resident of Ontario must do additional paperwork and find a location within the province to operate out of. Additionally, anyone under 18 will not be able to sign their own documents and will need to have a parent or other guardian do so on their behalf to register a business in Ontario.

Do I Need To Register My Business?

Registering your business is almost certainly a legal requirement. If your business makes $30,000 per year or more, you will be required to register your business. This is because you need to register for a GST/HST account for tax purposes, and only registered businesses can have a GST/HST account. If you pass the $30,000 mark partway through the year, you must register.

You will also need to register your business if you want to name your business any name but your own. There are stringent laws about this. For example, if you are an accountant named John Smith, you might think you can operate your unregistered business under a name like "John Smith Accounting," but this would be incorrect, as having that name would require registration. This is also true when using only part of your name. To use some pop-culture examples, companies such as "Stark Industries" or "Moe's Tavern" would have needed registration despite containing part of the owner's name.

Unless your legal name is something like "Daytime Dog Walking", your name is unlikely to describe your business, meaning that you would be required to register your business.

If your business meets both requirements of making less than $30,000 annually and having your exact name, you are not required to register.

Registering your business within 60 days of beginning operations is recommended.

The Benefits Of Registering A Business In Ontario

In addition to the benefit of not facing drastic legal consequences, registering your business has significant advantages. 

First, you can ensure your business has a unique name. Doing so provides legal protection if someone else wants to use the same name. Having an official business name will give you, as a business owner, name recognition and allow you to use that name to identify your business legally. This will help you build a brand that will give you name recognition to customers, increasing your credibility. A registered business can also legally hire full- and part-time employees, allowing for further business growth.

How Long Does It Take To Register A Business In Ontario?

The time it takes to register a business can vary. One of the most significant factors involved is the type of business that you are registering. A smaller, less complicated business structure, such as a sole proprietorship, can be registered successfully within one business day. Corporations can take as long as five business days since the process is much more complicated. 

Within a few days, you should get your business number (BN), a nine-digit number assigned to you by the Canada Revenue Agency that is needed for taxation purposes. You will also receive a separate 9-digit number on your business identification number (BIN), which is used provincially and can be found on your business license. 

What Information Is Required To Register My Business?

A wide variety of information is required for you to register your business. 

• Business Name: Your business needs a name to operate. This name must be unique to your business. 
• Name Of The Owner(s): Anyone involved in ownership should be disclosed.
• Location: The business needs a physical address to operate out of.
• Valid Email Address: You will be emailed information such as your Business Number..
• A Description Of Your Business: This pertains to the type of business being run. A simple description will do if the type of business you run is common enough. For example, "Selling new and used sporting goods" would be acceptable for a sporting goods store. A more niche or unusual business may require a more detailed description.
• Partnership: Disclosing a list of partners and their roles within the company is mandatory.
• Business Bank Account: When operating a business under your legal name, you may use your personal bank account. However, you must have a separate business bank account to conduct transactions if you have a registered business.

Steps To Register A Business

Registering a business might sound intimidating, but it has fewer steps than one may think, although the amount of time it takes to do so will vary. A small business generally has less information and paperwork than larger ones, although this is not always true. 

1. Have A Unique Business Name

While registering allows you to choose a business name different from your legal name, there are still some restrictions. You must not give it the same name as an existing business in Ontario. You can conduct business name searches for free before business name registration to help avoid this. Some additional rules must also be followed, including:

• You can not imply that your private business is connected with or serves any level of government, the crown, other other public interest entity.
• You can't imply that your business structure is anything other than what it is. For example, for your business name to imply that it's a partnership, your business must be a partnership.
• The first character in the name must be either a letter of the Roman alphabet or an Arabic numeral. Furthermore, although punctuation marks and other marks may be included in a business name, a name made up of primarily punctuations is disallowed.
• You may not use more than one space between words.
• The name must not be considered obscene, scandalous, or immoral to a reasonable person.
• You can not imply that the business has credentials or status that it does not. For example, you can't use the words "college," "university," or "institute" in your business name without the approval and written consent of the Minister of College And Universities.
• You can not use the name of any real person not affiliated with the business without that person's written consent.
• The name may also not infringe on any trademarked or copyrighted material you do not have the legal right to use.

You should search the Ontario Business Registry to find out if the business name you are considering has yet to be taken.

2. Decide On A Business Structure

There are a large number of the types of business structures that you can register your business as. Each of these has a legal structure and its pros and cons. Please note that if the number of owners changes or your business changes its incorporation status, this will change its legal structure, and you must let the proper provincial or federal authorities know. You will also likely get a new business number.

What Are The Most Common Business Structures In Ontario?

The most common business structures in Ontario are ….

Sole Proprietorship

A sole proprietorship is the simplest business type available and the default type of business with only one owner, known as a ‘sole proprietor’. A sole proprietorship lets the owner have control of every decision made and keep all the profit. However, the owner also assumes all risks, including legal liabilities. This business structure requires the least paperwork, making it easier to start, end or renew. The owner and the business are seen as a single legal entity, and the owner reports income and loss on a T1 form. All profit is reported as personal income for the business owner. 

Partnership

Partnerships take the convenience and ease of sole proprietorships, but have multiple owners. There are multiple different types of partnership business structures. Each type of business has different pros and cons. How the owners share in profits and responsibilities is decided upon by all owners. A brief description of some common types of partnerships are below.

• General Partnership: All partners share in the profits, responsibilities and risk. If the company faces a liability, all partners involved are responsible. This is the default and most common type of partnership created in Ontario.
• Ontario Limited Liability Partnership: All partners share in the profits and responsibilities, but in cases of negligence, only the partner found to be negligent will face legal consequences. Requires more paperwork, but protects partners who are not at fault.
• Extra Provincial Limited Liability Partnership: Follows the rules for a limited liability partnership. Common for businesses from other provinces who are expanding into Ontario.
• Ontario Limited Partnership: One or more partners are not involved in the operations of the business, but provide financial support while sharing in the profits. Partners not involved in the operations may provide advice or guidance, but can not have final say.

Cooperative

A cooperative is the result of a group of people who create an organization to meet the needs of themselves or the community, with the owners often working on the front lines. Decisions are made by having members vote on them, and profits are shared equally among owners.

Business Corporation

A corporation is a business that is considered a separate entity from its owner(s). Unlike a sole proprietorship or partnership, a corporation can face legal consequences separately from any of its owners. This can provide a level of protection from lawsuits. For example, if you as a business owner are found legally responsible for actions taken by the company, although lawsuits can still target the company, your personal finances are safe.

Corporations also have lower tax rates than other businesses and allow ownership transfers if the owner wants to sell the business. The owner can also raise capital in other ways, such as selling shares. The business can continue to operate after the owner passes on, as they may designate beneficiaries to take over the business. Corporations also, however, have more paperwork to do, and other legal formalities such as additional regulations to follow. 

Do I Need To Register My Business In Order To Get Insurance?

As long as you follow all other laws and regulations, you are not required to register your business in order to get business insurance. If your business makes less than $30,000 annually and operates only under your legal name, you do not need to register your business to get business insurance. However, registration may make the terms of your insurance easier, and certain subcategories of business insurance are only available to you if you register your business. Please speak with your Morison Insurance broker to find out more. 

How Often Do I Need To Renew My Business?

You must renew your business every five years for it to remain a registered business. There is also a 60-day grace period in which you can operate before renewal. 

How Do I Lower My Business Risks?

Businesses are exposed to a large number of risks. This is especially true for an unincorporated business, as they expose the owner to personal risk. One way to mitigate this risk to you and your business is to purchase business insurance. Business insurance will help minimize the risk of you facing a potentially business-ending or life-altering consequence. It will give you the peace of mind needed to focus on the aspect of your business that you love.