Have you ever considered starting your own business or one with some friends? If you have, you must have heard how long and tedious the process might be. You are confused and don’t know which step to take to start a business.
No worries, in this blog you will learn step-by-step how to open your own business as a sole proprietor or with your friends as a corporation in Ontario.
Sole Proprietorship
In business terms, a sole proprietorship business is defined as a business owned by a single person, an individual, or one owner. A sole proprietor’s ship owner is responsible for making decisions, bearing all losses, and enjoying all profits.
Step 1: Selecting a business structure
When you have decided to start a business, the first step is to choose a business structure. A business structure is a method or structure used to run the day-to-day activities of a business. Firstly, we will look at how to set up a sole proprietorship business in Ontario.
Step 2: Look up the company's name.
Choosing the perfect business is very important as it will be the identity of your business. You can search for the business name availability on Google, online websites, or NUANS (Newly Upgraded Automated Name Search).
Step 3: Register your company.
The next step is to register your business name. In Ontario, you can register your business name through available services. Register your business online or as a ServiceOnatrio.
Step 4: Register your company for tax purposes.
When you first start your business, you need to register for a vendor permit. You can also register with the Canadian revenue agency, which will provide you with the GST/HST number upon payment.
Step 5: Obtaining commercial insurance
Insurance is very important for a sole proprietor business as the owner has unlimited liabilities. In the case of bankruptcy, accident, or risk, the owner will be responsible for paying off all the debt. So, banking is the sixth step. Obtaining insurance is necessary.
Step 6: Banking
Opening a bank account is another important step when starting a sole trader business. When going to the bank, bring a copy of your registration, photo ID, and other important documents to easily open your bank account.
Step 7: Begin your business.
You have now successfully launched your own sole proprietorship. It's not as tough as you initially believed, is it? Keep in mind that you can seek professional assistance if you experience trouble with any of the steps.business,
Now that I have explained how to register a sole proprietor business, let’s move toward how to register a corporation.
Corporation
The literal meaning of a corporation is a business entity owned by shareholders. However, according to the article published on July 18, 2022, on the government of Canada's website, a corporation is a company or collection of corporations permitted to function as a single entity and legally recognized as such.
Step 1: Method of incorporation:
An article published on the Ontario website on December 3, 2021, says that there are 3 methods available to the client who wants to proceed with the corporation.
- Registering the business electronically
- Registering the business over the counter
- Registering over mail.
You can select any approach that is convenient and appropriate for you to register your entity.
Step 2: Fill out the legal documents
The next important step is to fill out all the necessary documents for your corporation. You can fill in the details regarding your company by downloading Article of incorporation form 1 and Consent to act as director form 2.
Step3: Name your business
Finding the perfect business name means having a name that is easily understandable to the consumer. The name highlights what product or service you offer to the customer. Selecting the ideal company is crucial since it will determine your company's identity. You may check the availability of a company name on NUANS (Newly Upgraded Automated Name Search).
Step 4: Establish the structure of your corporation
Another important step is creating the articles of incorporation to determine whether your business is large, small, private, or a public firm. You will fill in the details regarding directors, shareholders, and the percentage of shares given to the directors.
Step 5: Shareholder agreement:
The company minute book contains written records that serve as the corporation's organizational framework. This initial organization contains
- Approval of legal company
- Regarding Issuance of share
- Elected directors
- Resolutions
- The agreement of all shareholders of the company.
Step 6: submit and register the article of incorporation
After you are done filling out the documents, you will submit the articles of incorporation and other supporting documents to start the process.
Step 7: Obtain permit and licence
Obtaining a permit and licence is another very crucial step to take after submitting an article of incorporation.
- Register for taxes
- Open account for Import/export
- GST/HST
- Sales tax
- Employer health tax
- Workers compensations
- Federal business number
Step 8: Bank
Last but not least, to open a company bank account, you need to show the articles of incorporation and any articles of amendment. These articles must be signed by all the directors of the company for the smooth running of the business.
Step 9: start your business
Hooray! You have opened your corporation. Now work hard, cooperate with everyone, and make all your dreams come true.
Summary:
In this blog, I have talked about 2 important business structures: sole proprietorship/sole trader and the corporation. I have given step-by-step guidance on how to register your business in Ontario. What legal documents or forms might you need to fill out and submit?
There is no right time to start your business. People might say, first save money and then start your business operation. Nevertheless, money is vital, but the more important thing is the passion and diversity you are ready to incorporate into your firm. Registering for the business is the first ladder to climb toward your success.