A business that has been incorporated enables its proprietors to run it independently of themselves. The advantages of incorporation include tax incentives, where a company is taxed at a lesser rate than the individual tax rate for citizens, and restricted liability protection for the individual and the possessions of the people who own the firm from the liability of running the company. To enjoy the tax benefits, it’s crucial to keep business profits in the business’s bank account rather than transferring them to an individual’s account. The tax obligations shift to the person at an increased tax rate when funds are transferred from the business’s account to the owner’s.
Once incorporated, your company receives limited liability protection. This implies that while your property or personal funds cannot be confiscated to settle debts or cover legal bills, the business’s assets can. An incorporated business keeps functioning even after you pass away. It can be dissolved only when the directors decide to disband the business and submit the necessary paperwork to the appropriate authorities. If you would like to incorporate a business in Ontario, here is an outline of what you need and what you need to do.
1. The Name Of Your Corporation
The first thing you’d need to incorporate a business in Ontario is a name for your corporation. Though it can be a bit frustrating, coming up with a name for your company can also be a lot of fun. You can incorporate a business in Ontario under a numbered name, such as 101010 Canada Inc. If your company doesn’t deal with the general public, you can function needing a business name or decide on a name later. Below are some criteria for choosing an incorporated business’s name in Ontario.
- A business that wants to be incorporated in Ontario must have a name that ends in Limitée, Incorporée, Limited, Incorporated, Ltd., Inc., Corp., Corporation, or Ltée.
- A business that wants to be incorporated in Ontario must have a name written in either French, English, or both languages.
- The likelihood of your prospective business name getting approved drops if it contains familiar or popular names. You might not be permitted to register a name that is the same or confusingly similar to one that another company or competitor in your region is currently using.
- The NUANS (Newly Upgraded Automated Name Search) report will also be required when picking a business name to incorporate a business in Ontario.
2. The Articles Of Incorporation
This document outlines the exact procedures for running your business. Even if you have legal training, it is strongly advised that you seek unbiased guidance from professionals in this field. Simply put, spend the effort necessary to ensure that your articles of incorporation are flawless from the start. It will ultimately save you time, headaches, and future expenses.
Your business’s purpose and organizational structure, including the total amount of shares (authorized and issued shares) and the maximum and minimum number of directors, are outlined in the articles of incorporation. Below are some of the other required details included in the articles of incorporation.
- Information about each director is required: their full home address, their status as Canadian citizens, their field of employment, and their signatures.
- Each business officer’s full home address, occupation, and signature must also be provided. A business to be incorporated in Ontario is mandated to have a president and secretary.
To incorporate a business in Ontario, the articles of incorporation can be written in French, English, or both languages.
3. A Registered Office
A business’s registered office is the place it formally designates as such to the appropriate governmental agency or authority. A registered business address and a list of trustees are required to incorporate a business in Ontario. If you don’t have a formal office, you may put your home address, but a mailbox at the post office is unacceptable.
The registered office is often the location of the corporation’s main operations, such as a retail store or a manufacturing factory. You may choose any of the company’s locations if it has more than one business location.
4. Incorporation Fees
To incorporate a business in Ontario costs about CA$365+. You will require the services of a third-party processing firm if you opt to submit the articles of incorporation online. This will impose an extra payment for such services. You should also consider the expense of any professional guidance you may require while incorporating your business.
There are specific situations when incorporating your business is advantageous and perhaps even necessary, though many entrepreneurs opt to operate as sole traders or in partnerships. Use the guidelines in this article to gather the necessary documents and take the necessary actions to incorporate a business in Ontario.