Register Ontario Corporation: Ontario Incorporation

Registering an Ontario business is a big first step into getting a legal, proper business on the ground. Once registered as an incorporated company, one enjoys benefits such as limited liability protection and tax efficiency, among others, for incorporated status; this also gives one good credibility with customers and suppliers. Ontario-Business makes it easy and accessible to incorporate your business in Ontario for entrepreneurs. Follow the below given stepwise tutorial that will guide you on how you can register a standard corporation order to the Ontario Incorporation.

Understanding the Ontario Incorporation Basics

Before proceeding with registration, you should be aware of what incorporation is and how it can make a difference in your business.

1.1 What is Incorporation
Incorporation is the legal process of forming a corporation, a separate legal entity from its owners (shareholders), which can own property, incur debt, and be sued in its name, but offers limited liability protection to its shareholders.

1.2 Advantages of Ontario Incorporation

Limited liability: What it does: The personal assets of the shareholder are protected from the liabilities of the corporation.
Tax Advantages: A corporation can benefit from reduced tax rates on earnings retained.
Perpetual Existence: The corporation continues its existence notwithstanding a change in ownership or shareholders.
Increased Credibility: Incorporation will make your business seem more stable and credible.

1.3 Corporation Types in Ontario
In Ontario, you can incorporate either an ordinary corporation or a professional corporation. This resource will outline the process for incorporating an ordinary business corporation.

Ontario Standard Corporation

An Ontario Corporation is a company registered with Service Ontario under Ontario Business Corporations Act (OBCA). It can legally carry out business activities in Ontario. One of the key benefits of incorporating as an Ontario Standard Corporation is limited liability protection for shareholders and corporation’s name protection in Ontario.

What are the benefits of Ontario Corporation?

One of the primary benefits of incorporating is limited liability protection. Shareholders of an Ontario corporation are typically not personally liable for the debts, liabilities, or obligations of the corporation. This means that personal assets of shareholders are generally protected from business-related risks and creditors.
You can easily make changes in your corporation: change the name, change corporation structure, etc.
Ontario corporations may benefit from certain tax advantages, including the ability to access the small business deduction rate on active business income, which is lower than the general corporate tax rate.
The corporation can continue to exist even if shareholders change or pass away.
Corporations may find it easier to raise capital and attract investment compared to sole proprietorships or partnerships. Investors and lenders may be more willing to invest in a corporation due to its limited liability structure and potential for growth.

Who can Incorporate?

One or more individuals above the age of 18.
Must have a physical address in Ontario. If you don’t have a local provincial address, we provide registered address and mail scanning service:
No residency requirement.

Federal Incorporation

A Federal Corporation is the name used for a company that is registered or incorporated under the Canada Corporations Act. Federal incorporation, therefore, means that a corporation can do business in all provinces and territories of Canada and its purpose is clearly national in scope. While a provincial corporation can do business only in the boundaries of the province in which it is incorporated, a federal corporation has more flexibility to carry on business activities across the whole country without any further registration in various provinces.

What are the benefits of Federal Corporation?

Name Protection: A federally incorporated company benefits from name protection across all provinces and territories, which helps in building a national brand identity.
Expansion Flexibility: Federal incorporation allows businesses to expand operations more easily across provincial and territorial boundaries without needing additional registrations, making it ideal for companies with national aspirations.
Global Recognition: Federal corporations are recognized around the world, an important consideration if you plan to expand outside Canada.
Flexibility: Your official business address can be anywhere in Canada, and you can hold annual meetings digitally and anywhere in the world.

Who can start a Federal Corporation?

One or more individuals above the age of 18.
25% of directors must be a Canadian Citizen or a Permanent Resident (PR).

Requirements:

Minimum one incorporator, director, shareholder and officer.
The registered office address must be a physical address in Canada, P.O. Box address is not allowed. If you don’t have a local provincial address, we provide registered address and mail scanning service.
A Federal corporation, although registered federally, must also register in the province or territory where the corporation is conducting business.

Professional Incorporation

An Ontario Professional Corporation (OPC) is a type of business entity that permits certain regulated professionals in the province of Ontario, Canada to incorporate their practice while at the same time maintaining limited liability protection. Specific rules and regulations under the Ontario Business Corporations Act (OBCA) govern these corporations with relevant professional regulatory bodies.

Who can Incorporate?

An Ontario Professional Corporation is a relevant vehicle for individuals possessing a professional license or certification in some controlled professions: physicians, lawyers, chartered accountants, dentists, professional engineers, and other regulated professionals.

What are the benefits for having an Ontario Corporation?

One of the most important benefits that can be derived from the formation of an Ontario Professional Corporation is personal liability protection. Personal assets of the professional are usually protected against business-related liabilities, debts, and legal claims arising from professional services rendered by the corporation. You can easily make changes in your corporation, for example, changing the name, changing the corporation structure, etc. Some of the ways in which Ontario corporations could realize some tax advantages, however, would be through qualifying for the small business deduction rate on active business income, which is lower than the general corporate tax rate. A corporation may endure despite changes of its shareholders or their death. Corporations have a much easier access to capital and investment than sole proprietorships and partnerships. The reason behind it is that people are always interested in investing more in a corporation due to the limited liability structure and the growth option they offer.

Ontario Non-Profit Organization

An Ontario NPO, commonly known as a non-profit organization, is a legal body functioning for reasons not involving profit distribution to the members or owners of the organization. Nonprofits in Ontario are usually incorporated under the laws of Ontario, either under the Ontario Corporations Act or the newer Not-for-Profit Corporations Act (ONCA). Not-for-Profit Corporations are regulated differently than ordinary For-Profit corporations. For a Non-Profit, all profits are not distributed to its members, instead put back into the operations of the business. Therefore, a Non-Profit does not have a share capital.

Benefits of the Non-Profit Organization in Ontario.

Non-profit organizations in Ontario can get tax exemption or pay no income tax on the surplus income they accumulate. This makes it more resources to achieve the charitable or organization community goals. Government, foundation and other sources can fund nonprofit organizations that are purposefully marked for charity and community organizations. It may be used in giving aid to program delivery, operation cost, and community capacity-building endeavors. Nonprofit corporations give limited liability protection to directors, officers, and members. This means that the individual members forming the organization are largely not personally responsible for the obligations and debts of the organization, except as provided for under law.

Requirements for Incorporation:

Minimum of 3 directors and applicants. The directors are not required to be residents of B.C. Must be of a non-profitable nature and may be anything such as social services, education, arts, and culture promotion, health matters, a cause, community issues, among others.

Required to Incorporate

These are the few main requirements that must be accomplished prior to incorporation in Ontario:

Company Name: You must register a name that is exclusively distinctive to your corporation and complies with the naming standards of Ontario.
Directors and Officers: At least 18 years of age, not bankrupt, sound mind.
Registered Office: Your corporation is required to have a registered office in Ontario for receiving official documents and notices.
Articles of Incorporation: You must prepare and submit the Articles of Incorporation to the Government of Ontario.
Initial Corporate Bylaws: It is very important to prepare corporate bylaws, as it will provide the ways for handling internal management of your corporation.

Choosing a Name for Your Business

One of the most important steps, after making the decision to incorporate in Ontario, is name selection. It has to be unique and must not clash with already existing names, either registered or trademarked. The name should also be reflective of your brand and easy for people to remember. You can do a search on the Ontario Business Registry to make sure that name is available. In addition, you may also reserve that name for a period while you complete the incorporation process.

Choosing a Jurisdiction

Once you have decided to incorporate in Ontario, you have to determine whether to incorporate provincially or federally. If you go for the provincial route, your business will be allowed to operate in Ontario only. But if you opt for the federal form, then the boundaries of operation open up for you to work anywhere across Canada. This decision too has to be made based on the business objectives, levels of operations, and expansion plans in the future.

Drafting the Articles of Incorporation

The Articles of Incorporation are your legal document that brings your corporation into existence. The following information must be included:

Business Name: Name of your business as chosen by you.
Address of Registered Office: The address of the registered office of the corporation in Ontario.
Share Structure: Information related to classes, and the number of shares the corporation is authorized to issue.
Directors: Names and addresses of the first directors.

Filing the Articles of Incorporation with the Ontario Ministry of Government and Consumer Services is a crucial step to incorporate in Ontario.

Appointing Directors and Officers

Appointing directors and officers is an important step of the incorporation process in Ontario. Your directors are responsible for overseeing your corporation’s activities and taking large-scale decisions. On the other hand, officers look into managing day-to-day operations. Be careful to appoint only directors and officers who meet all legal requirements and who will be capable of acting in the best interests of your corporation. Note down their appointment and any changes in the corporate records.

Writing a Share Structure

This indicates the various kinds and number of shares that may be issued by your corporation. The share structure outlined below largely dictates issues that might arise in regard to ownership, control, and how capital can be raised. The common share structures include:

Common Shares: Common shares are with voting rights and allow the shareholders to have a share of profits.
Preferred Shares: Preferred dividends and, in the case of liquidation, preferred claims on available funds, but they may have limited or no voting rights.

Define the best share structure for your business requirements and put it in writing in your Articles of Incorporation.

How to Register Taxes and Permits

After you have incorporated in Ontario, there are a number of taxes and permits to which you must register in order to operate your business legally. These may include:

Harmonized Sales Tax (HST): Register for an HST account if your business revenue exceeds a certain threshold.
Corporate Income Tax: Apply to have a corporate tax account with the Canada Revenue Agency.
Payroll Deductions: If you have employees, sign up for payroll accounts to remit deductions such as CPP, EI, and income tax.
Industry-Specific Permits: Depending on the type of your business, you may need additional permits or licenses from municipal, provincial, or federal jurisdictions.

Creating Corporate Bylaws

Corporate bylaws: Essential for governance within the corporation. Corporate bylaws outline the rules and procedures for:

Hold Meetings: Procedures for general annual, special, and board meetings.
Voting Rights: Instructions for the voting of shareholders and directors.
Director and Officers: Roles and Responsibilities, Term of Office.
Shareholder Rights: Rights and liabilities of shareholders, including those relating to the transfer and transmission of shares.
Conflict Resolution: Processes for settling disagreements within the organization.

Composing all-inclusive and clearly defined bylaws is important in ensuring smooth corporate governance and also reducing any possible conflict.

Maintaining Corporate Records

If you’ve incorporated in Ontario, as a business owner you must keep accurate and current corporate records. The following is a list of records:

Minutes of Meetings: Elaborate records of meetings with shareholders and directors.
Shareholder Register: A list of all shareholders and the quantity of shares they hold.
Register of Directors and Officers: Information about current and past directors and officers.
Financial Statements: Annual financial statements and reports.

Maintaining detailed records ensures conformity with legal and regulatory requirements and supports the smooth operation of a business.

What are the incorporation steps?

Step 2. Select your articles of incorporation:
This step establishes the structure of your corporation. Choose the right share structure:

Basic one with unlimited common shares with no specific share class.
Standard: common shares with class A voting and class B non-voting.
Custom: this share structure allows to categorize shares into many types such as common, preferred, voting, non-voting etc.

Step 1. Name your corporation.
Choose if you want a numbered or a named corporation:

A numbered name is the simplest way to name your corporation because the government assigns the number (for example, 12345678 Ontario Inc.).
Your company can be named and have a unique name that sets you apart from your competition.
Please include the legal suffix like Inc./Ltd./Corp. at the end of your name.
An Ontario NUANS Reservation Report is required to register a Named Corporation. You can obtain a NUANS Report.

Other recommended service providers that are registered NUANS members:

Incorporationpro NUANS Report
Incorpmastercanada NUANS Report
MDLegals
NUANS Report

For further details on the regulations for naming a corporation, please refer to this link: Click Here

Step 3. Establish the office address.

Registered office address must be a physical address in Ontario.
Mailing address can be a P.O. BOX.
You are allowed to have a legal land description address too but must have a P.O. Box connected to it.
If you don’t have a local provincial address, we provide registered address and mail scanning service: https://ontario-incorporation.ca/product/registered-office-address/

Step 4. Decide who will be a director, shareholder, officer and Incorporator.

Director – is the head of the corporation. You can add up to 10 directors.
Shareholder – owns the corporation and receives profit from the business as dividends and shares.
Officer – is anybody including an employee, no decision making power.
Incorporator – is the person under whose authority the corporation is created. Is not changeable.

Ongoing Compliance Requirements

As you incorporate in Ontario, you are further agreeing to a continuing stream of compliance responsibilities for keeping your corporation in good standing. These include:

File an annual return with the Ontario Ministry of Government and Consumer Services to bring your corporate information up-to-date.
Annual General Meeting (AGM): Through an AGM, the business is able to present its financial statements, elect its directors, and air out any questions or issues that shareholders have.
Corporate Filings: File changes to directors, officers, registered office, or share structure in a corporate registry.
Annual financial statements and corporate tax returns.

Keeping up with such compliance requirements ensures that your corporation is always in good standing and does not face any penalties.

Mandatory items to run a business.

Minute book: consists of bylaws, share structure, minutes & other legal sections. Without it, a corporation is not complete.
Initial Return: It’s a mandatory filing with Service Ontario for each new corporation. It has to be filed within 60 days of Incorporation. It confirms the details of the corporation. It is not a tax filing with CRA.
Business Number: It is a unique identification of your business with the Canada Revenue Agency. It is required to register accounts like GST/HST, Payroll, Import/Export accounts.
Corporate Tax ID: It is like a SIN number for a corporation.
HST Registration-Harmonized Sales Tax: If you are selling goods and collecting HST you can have an HST account. every time a business incurs an expense – be it rent or paying for goods – it pays HST, if you set up the account, you can claim it back.
Payroll Account: If you have employees, including yourself, you must set up a payroll account.
Import/Export: If your goods or raw materials cross the Canadian border, you are required to clear customs using the Import/Export account.
WSIB Account: It’s the Workplace Safety and Insurance Board registration. If your corporation has employees (except directors and shareholders) you must register for WSIB.
Annual Return: A corporation must file its Annual Return with the Government every year to keep it active. You may add Annual Return to your package to avoid the risk of forgetting it. We will take care of it!

Incorporate in Ontario Faq's:

To assist you further on your incorporation journey, here are the answers to the most common questions.

How long will it take me to incorporate in Ontario?
It generally takes a couple of business days to incorporate. Ontario-Business.ca fast-tracks the process since it files electronically, we can incorporate Ontario corporation within 30 minutes only!
Can I still incorporate my business even if I am not a Canadian citizen?
You can do it, if it is a standard Corporation in Ontario. If it is a Federal Corporation, at least 25% of your directors must be Canadian residents. If you have fewer than four directors, one must be a Canadian resident.
What is the difference between a named and numbered corporation?
A named corporation uses a unique business name (e.g., ABC Enterprises Inc.), while a numbered corporation is identified by a number assigned by the government (e.g., 1234567 Ontario Inc.).
Do I need to retain a lawyer to incorporate my business?
It is not required, but certainly in many instances it is wise, especially if the share structure will be anything less than simple. Ontario-Business.ca provides an easy and affordable service for basic incorporations.
Once my business is incorporated, what do I need to do?
After incorporating, you will have to manage corporate records, ensure annual returns and meet your tax obligations. Ontario-Business.ca offers management support services for these roles.

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