Business ownership determines who takes care of a business’s assets and liabilities. Canada’s Ontario has three main types of business ownership: sole ownership, partnership, and incorporation.

Sole proprietorship and partnership are where the business owner is responsible for various things. For example, business owners hold the assets bought for the business.

Further, the business’s liabilities are considered the owners’ responsibility. The two are usually preferred because they use simple business structures.

Simple business structures are beneficial as they need minimal paperwork, don’t incur many expenses, and work very well in most business situations.

On the other hand, incorporation involves registering your business with a province or state. By registering, your company becomes a separate legal entity. This means business owners can’t be held responsible for what their business does.

However, you should note that business owners can be held accountable in incorporation if they’re proven to be negligent or have provided a personal guarantee.

The process of incorporating a business may differ from one state to another. Today’s post is focused on Ontario. When you incorporate a business in Ontario, you get to enjoy a number of benefits—interested in setting up shop soon? Keep on reading to learn valuable insight.

Advantages Of Business Incorporation

Ontario is said to be a paradise for business owners looking to launch their ventures via incorporation. Business incorporation offers the following advantages:

• It lowers tax rates;
• Business owners benefit from limited liabilities;
• It’s easy to transfer ownership interests;
• It’s easy to access grants;
• It offers a straightforward means that businesses can use to keep them going; and
• It offers a wide range of investment and financing options.

Now that you know the benefits of business incorporation, here’re the steps you can use to incorporate your business if you’re based in Ontario.

Top 5 Steps To incorporate your business

Step One: Start By Finding A Name For Your Business

Names are used to identify various things such as places, people, cars, and many more. The same applies to business. You have to find a name that suits your company. In other words, the name you settle with should relate to what your venture deals in.

When assigning a name to your business, you can give it a word or a numbered name. Numbered names usually have numbers at the beginning and letters at the end. For instance, you can name your company 87654321 Ontario Inc. Meanwhile, word names contain letters and symbols. 

Before settling on a name, it’s best to conduct a name search. This is because sometimes you might find another business already owns the name you’ve chosen. There are websites that you can use to run a name search.

Nonetheless, a number of these sites require you to make payments for the services they offer – usually a small price to pay for coming up with a name that’s uniquely yours.

Step 2: Proceed To Come Up With Articles Of Incorporation

To incorporate a business in Ontario or anywhere else, for that matter, requires a lot of documentation.

Documentation is a very critical stage of business incorporation. It details how you plan to run your business. As such, it’s best when done by professionals who are well-versed in legal matters. That is, lawyers

Lawyers offer legal guidance on how to come up with these articles. They also ensure that you adhere to all required laws of the state of Ontario when documenting your business incorporation.

Other than lawyers, you can consult experts in Ontario’s business corporation field. These experts also offer advice to help make the process of your business corporation easier.

You can use two main types of incorporation in this step, namely basic incorporation and custom incorporation. Basic incorporation is mainly used for small and private businesses and offers the following services:

• Classes that teach about shares;
• Pre-determined articles regarding incorporation;
• Not more than ten directors; and
• A numbered name for your business.

On the flip side, you can use custom incorporation if you want to customize articles of incorporation to match your business’s needs. The following is a list of what is offered by custom incorporation:

• A name for your corporate entity;
• Restrictions you might want to have in your corporate organization;
• The number of directors you’d like to work with; and
• A shared structure that you’ll be using.

Step 3: Register Your Company

When registering your company in Ontario, you should provide the following details:

• The name of the company you settled for during the first step;
• An address that you’ll use to receive any documents sent to your business;
• Details of every shareholder; their names, and address;
• The details of your board of directors – apart from their names and address, you should indicate whether they’re Canadian citizens or not; 
• A Newly Upgraded Automated Name Search (NUANS) report not older than ninety days; and
• A description of the activities that’ll be done in your business organization.

Step Four: Submit Your Documentation

Once you reconcile all the documents required to incorporate a business in Ontario, submit them. Since you’re incorporating your business in Ontario, you’ll submit your documentation to the province.

Before submitting, ensure that you make copies of every document. Making extra copies helps when the documents sent don’t get to the intended recipient.

Therefore, instead of starting the whole process again, you use the spare copies made earlier. 

Also, you can choose to submit your documents through mail, online, or in person. Online means are preferred by many because it’s the fastest and simplest way. Last but not least, there’s an incorporation fee you have to pay when submitting the documents. 

When Is The Right Time To Incorporate A Business In Ontario

There’s no specific time that is perfect for incorporating a business. But two periods can work to your advantage.

The first period is when you’re starting your business. Instead of setting up your business as a sole proprietorship, you can decide to incorporate it instead. Incorporating your business from the beginning is essential, especially if your company has risks of lawsuits.

Another period that you can incorporate your business is during its growth. It might be challenging to incorporate your business when starting it due to financial issues. Yet this doesn’t necessarily mean you can’t incorporate it later.

Instead, you can save up under a sole proprietorship. Once your business grows, you can mix it to enjoy income tax options and limited liability.

Cons Of Business Incorporation

There are benefits you enjoy from incorporating your business, but there are also cons to keep in mind. Here are some drawbacks you should be prepared to deal with:

• To incorporate a business in Ontario requires a lot of formalities which consume a lot of time;
• Some shareholders don’t have the opportunity to foresee their business’s functions and participate in decision-making; and
• It results in greater social responsibility because some incorporated companies offer more job opportunities.

Summing It Up

Business ownership is critical in determining the scope of liability in a particular enterprise.

It’s said that for the least liability, an entrepreneur should move to incorporate a business in Ontario and nearby areas.

Hopefully, the insights mentioned above will guide you throughout the process from preparing and filling up the paperwork to paying up the incorporation fee set by the authorities.

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