Running a business enterprise in Ontario can be exciting and rewarding. Being the most popular province in Canada and its strategic location with access to global markets, Ontario allows business owners to reach many customers. The availability of modern infrastructure and a skilled workforce further makes Ontario a business hub for domestic and international entrepreneurs. If you’re looking to buy a business in London Ontario, you’ll find a thriving market and numerous opportunities to establish or expand your entrepreneurial ventures in this vibrant city.
There are numerous steps to take when starting a business in Ontario, Canada. One is to choose a company entity or structure for your business. Your pick will significantly impact your personal liability for the business debts, tax obligations, business management structure, and your share of the company’s profits. One common business entity for entrepreneurs in Ontario is a corporation.
In this guide, you’ll find all the information you need about a corporation, including what it’s, its benefits over other structures, and how to incorporate a business Ontario. Read on to learn more.
An Overview Of A Corporation
A corporation is a business entity that’s separate and distinct from its members. Under the law, a corporation is treated as a legal person. It can enter contracts, borrow money, hire and fire employees, possess properties, pay taxes, and do many other things in its name.
Members of a corporation are known as shareholders and can be individuals, partnerships, trusts, and other corporations or entities. They contribute capital to starting and running the business, hoping to get returns in the form of dividends.
Benefits Of Incorporating In Ontario
There are several business entities for entrepreneurs who want to run businesses in Ontario province and the larger Canadian state. So why choose a corporation over other options? Here are the key benefits to incorporate a business Ontario.
- Offers Limited Liability
One benefit of incorporate a business Ontario is that it offers limited liability to its members. Company shareholders are only liable to the extent of their shareholdings. This means the owner’s assets are protected from the company’s debts and other legal liabilities. If the business can’t settle its debts, you won’t be liable beyond your investment.
- Has A Perpetual Existence
Once incorporated, a business becomes a separate entity from its owners. And the company is managed by directors who become the agents of the shareholders. Therefore, the death or withdrawal of a member from the company doesn’t affect the company’s operation, meaning it has an unlimited life.
Incorporating in Ontario can be one of the effective ways to create generational wealth since you can pass the business to your children and your children’s children.
- Has Many Options For Raising Capital
A corporation can raise funds from numerous options. Apart from selling shared and insuring bonds, a corporation can quickly qualify for loans. Many lenders view a corporation as more credible, especially when compared to other business entities such as a proprietorship. Thus, the chances of a corporation getting a loan are higher than most other entities.
The abovementioned are just a few examples of how corporations are advantageous when doing business in Ontario, Canada. A certified business guru can further educate you on the perks of corporations during a consultation meeting.
How To Incorporate In Ontario
There are several steps to take when incorporating a business in Ontario. They include the following.
- Choose A Business Name
The first and most important step when incorporating in Ontario is to choose a company name.
Generally, Ontario law prohibits the use of the same name as other corporations or entities. For this reason, try to create a unique name for your corporation. And even if it was allowed to register more than one business with the same name, giving your corporation a distinct title is vital as it can enhance your marketing efforts.
To ensure you choose a unique name for your corporation, you’ll have to do thorough research to ensure that the name is available. And there are various options to achieve this. One is to visit the Ontario government’s official website to see whether there’s any other company registered with your preferred business name.
Another option is to use search engine tools and leverage social media to see whether there’s a business bearing your chosen business name. If the name is still available, preserve it to prevent others from using it while you undergo the process of incorporation.
- File Articles Of Incorporation
Once you’ve chosen a business name, the next step is to file articles of incorporation.
Also known as a certificate of incorporation, an article of incorporation is a legal document that establishes the existence of your company as a corporation. You’ll file articles of incorporation with the Ontario Ministry of Government and other regulatory bodies such as consumer services.
Below are the contents of the certificate of incorporation:
- Name of the business;
- Purpose of the corporation;
- Share structure;
- Name of promoters and directors;
- The physical registered office and address; and so on.
Make sure that you reach out to the authorities for more details about how to form and submit your company’s articles of incorporation.
- Obtain A Business Number
After you successfully file articles of incorporation, you’ll receive a business number from the Canada revenue authority. This number serves as a unique identifier of your corporation. You’ll also use the number for various tax-related purposes, including paying and filing taxes and claiming tax credits.
Furthermore, the business number will be useful when opening a business bank account. As noted earlier, one advantage of incorporating in Ontario is to protect your personal assets from the company’s debts. But to achieve this, you must open a business bank account to help separate personal and business finances. A Business number will help you to open a separate bank account for your corporation.
- Apply For Necessary Licenses And Permits
It’s a legal requirement to have the necessary licenses and permits to run a corporation in Ontario. So, apply for any specific licenses and permits required for your industry and business. Here are some common licenses and permits that your corporation may need to operate in Ontario:
- General business license to operate within the jurisdiction;
- Provincial sales tax if your corporation will be involved in retail sales;
- Employer registration if you plan to hire workers;
- Environmental permit if your business will be involved in manufacturing or waste management; and others.
Once you obtain the necessary licenses and permits, begin your business operations and connect with potential customers.
Following the steps above down to the tea is helpful in you being able to set up a corporation in Ontario stress-free.
Takeaway
A corporation is a business entity to consider when starting a business in Canada’s Ontario. And for good reasons, it protects your personal assets from the company’s debts, has a perpetual existence, and presents many options for raising capital.
Yet you must follow the right steps when forming your corporation. Picking a business name, filing articles of association, obtaining a business number, and applying for licenses and permits are key steps when incorporate a business Ontario.