Incorporating a business has several advantages. Legally, ownership transfers and changes are easier, making them more attractive to potential investors. Financially, corporate tax rates are lower than personal taxes. Moreover, shareholders are protected from personal liability in bankruptcy, and creditors can’t go after the shareholders in such situations.
As with any new business, the only way for corporations to exist legally is to follow the applicable incorporation rules. These regulations may vary from jurisdiction to jurisdiction, so it’s best to seek information from legitimate sources before proceeding.
Below, you’ll find useful information to help you incorporate a business in Ontario seamlessly.
What Are the Steps Required For Business Incorporation In Ontario?
To become officially recognized as a corporate entity, your corporation must have a name, address, board of directors, and articles of incorporation.
Thus, before registering, here are the steps every corporation has to go through:
- Choose A Name
In order to incorporate a business in Ontario, the business must assume an identity for legal, official, fiscal, and other purposes. A corporate name will serve as the entity’s legal name and be used in all internal and external documents, including contracts, invoices, etc. Ontario allows words and numbers to be used in naming a corporation.
- Create Your Articles Of Incorporation
The articles of incorporation chronicle the organization’s creation. It’s often called the certification of formation or charter. As such, it contains useful information about the corporation, including its name and location. Alongside bylaws, the articles of incorporation form the venture’s legal foundation.
Ontario’s official website allows applicants to choose between basic incorporation, ideal for corporations with simple structures. Similarly, there’s an option for custom incorporation for businesses with more complex systems and provisions.
The government requires the document to be written in either English or French languages, or both.
- Identify Your Address
A corporation must have a business address where official communications and documents will be sent. This address must enable the entity to keep its records and perform organizational activities.
- PickYour Board Of Directors
The number of directors will be identified in the articles of incorporation and elected through a shareholder’s meeting. A corporation must have at least one director, who may also be a sole shareholder, officer, and director.
Here are Ontario’s qualifications for directors:
- 18 years or older
- Not declared incapable by any Canadian or non-Canadian courts
- Not bankrupt
At least 25% of the directors must be residents in the case of organizations with at least four directors. At the same time, the majority of the board must be Canadian residents in certain businesses.
Once these steps are completed, the corporation can proceed with the registration.
Checklist Of Required Information For Registration
Globally, the number of corporations is on the rise. In Ontario, Canada, for instance, 458,780 active business corporations were registered in 2020. This figure reflects an increase of 15% from its pre-pandemic level in 2019.
It’s easy to register a corporation in Ontario, especially online. Prepare the following list of information to have a seamless experience:
- The corporation’s legal name
- Corporation address
- The legal name of each director, including their first, middle, and last name, and whether they’re a Canadian resident or not
- The individual incorporator’s address (can be in or outside Ontario)
- The number of directors (minimum of one and maximum of 10)
- Share structure (the type, series, and classes of shares the company is authorized to issue)
- North American Industry Classification System (NAICS) Code
- Domain name
- Tax setup information
- Corporate supply delivery address
Any authorized person with the above information can register online, as the directors’ signatures aren’t required.
Other Important Things To Prepare
You can either file your incorporation at the provincial or federal levels. A federally-recognized corporation will enjoy better and more rights in conducting business in Canadian jurisdictions and the international business front.
Besides the requirements and information discussed, you also need to prepare the following:
- Appropriate Business Permits And Licenses
Newly-formed businesses must secure appropriate permits and licenses depending on their location and nature of business. A permit is proof of a business’s compliance with applicable laws, while a license lets you operate in the area.
- Minute Book
A minute book can be a binder or case holding the company’s essential documents.These could include:
- Articles of Incorporation
- Bylaws
- Minutes of Meetings
- Shareholder Agreements
- Board Resolutions
- Ledgers
- Notices
- Other pertinent papers
Keeping a minute book complete and updated promotes transparency. It’s likewise vital in understanding specific legal elements of your business. Failure to maintain one can have serious legal consequences that could lead to the cancellation of the corporation’s charter and scrutiny from the Canada Revenue Agency (CRA), among others.
What Happens After Registration?
After a corporation application has been filed, the Ontario government will create a business number for your corporation. This information will be mailed to you. A business number will be used in registering multiple corporate accounts before the CRA, such as:
- Goods and Services Tax (GST)
- Payroll Deductions
- Corporate Income Tax
- Export/Import account
If hiring employees, a corporation may need to register before the Workplace Safety and Insurance Board.
Conclusion
Incorporating a business in Ontario is easy, especially if you know the documents, permits, licenses, and information needed for registration. The curated information above should provide newly-formed entities with valuable insights into registering a new corporation in Canada’s most populous province.
