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What do I need to know about licensing and regulations to start a business in Ontario?
All businesses, large and small, are subject to laws and regulations in Ontario.
Register a Business
In Ontario, you are required to register your business name within 60 days of opening your business. You are exempt from this requirement if you use your own name for the business. If you add another word, for example, Your Name Consultants, you must then register the name.
Legal Forms of Business
Before you register your business, you must decide between on the legal form for your company. These are:
- Sole proprietorship
This is the simplest legal form. Simply by beginning operations, and selling your product or service, you are deemed to be a sole proprietor. As a sole proprietor, you are the business - that is, you are not an employee of the firm. The net income of the business becomes your net income and is added to your personal income. A sole proprietorship is responsible for all debts, and the business automatically ceases to exist when the owner abandons it.
This is a sole proprietorship that is divided among 2 or more principal business owners. It is important to remember that any debt incurred by 1 partner on behalf of the business is incurred by the other partner.
This is a legal form of ownership that requires more detailed legal filings. An incorporation creates an independent entity that is separate from the "shareholders" or owners. An owner is paid with dividends or shared profits, and/or as an employee.
The major advantages of incorporation are:
- A corporation can issue shares thereby raising capital.
- An owner is indemnified or protected against corporate debt or liabilities (in most cases).
- Incorporation may enhance the image of the firm or may be customary in the relevant industry. For example, it is mandatory in securing government contracts.
- There may also be income tax advantages at specific levels of net income.
- Cost of set up: About $150 - $400.
- Higher administrative costs
Ontario has a regulated workplace insurance system where employees who get injured on the job are protected, administered by the Workplace Safety and Insurance Board (WSIB). Likewise, employers are protected against lawsuits by injured workers. As the employer, you are required to pay an insurance premium on behalf of these employees.
Find more information on the Workplace Safety and Insurance Board for Employers website.
Municipal Zoning and Licensing
Many - but not all - types of businesses require a municipal licence. If you plan to open a business you may require a municipal business licence. Municipalities are responsible for issuing licences to the following types of business and trades:
- Vehicular businesses, such as driving school instructors, catering truck owners, taxi owners
- Stationary businesses, such as bowling allies, parking lots, pet shops, drug stores
- Trades and other professions, primarily plumbing, heating, and electrical contractors
For details of fees and application requirements contact the building department or bylaw officer in the municipality where the business is located.
For More Information
- Start a Business - A list of links to information about starting a business in Ontario. From the Ontario Immigration website.
- Canada Business Network: Services for Entrepreneurs - Information about taxes, licensing, importing, exporting and much more. From the Government of Canada.
- Business Guide for Newcomers to Canada - If you want to start a business in Ontario, this guide will help you understand the government resources that are available to you. It has information about choosing your business structure, regulations, taxation and more.
- Canada Business Ontario - An information gateway for Ontario business to access federal and provincial programs and services for business. They can help you find answers to your business start-up, business growth, and exporting questions in several ways.
- Pro Bono Ontario - is a registered charity that provides legal education and assistance to low-resource immigrants who want to launch and grow their independent businesses.
November 9, 2015