Wondering how to start a business in Ontario? You're far from alone. Each business has a unique backstory, but many follow this general pattern: The business started by taking on small jobs or selling small quantities of goods or services and gradually ramped up to execute large projects. This is a great way to get going, as it allows you to test an idea before you invest a lot of money and effort. Another method of testing before investing is to buy an existing business, if you can get a good deal.
Of course, even the smallest businesses require planning to boost their chances of success. Here’s a guide on how to start a business in Ontario, whether you plan to go big or small. Many of these steps overlap.
Do Research to Come Up with a Plan
You’ve probably heard of business plans - these documents can be relatively simple or hugely complex. You likely don’t need anything complicated at this stage, but consider the issues touched on in this article for your business plan; things such as how your business would solve a problem, market itself, make money and differentiate itself from competitors. Costs to think about may include those for banking, inventory, rent, professional fees and marketing.
Decide What Business Structure Makes Sense for You
In Ontario, there are a number of ways to structure your business. The most common business structures are sole proprietorships, partnerships or corporations. Each has pros and cons. For instance, operating through a corporation generally gives you limited liability protection and asset protection. It may also allow you to take advantage of government grants that may not be available to sole proprietors. On the other hand, corporations can be more costly to start. There are initial incorporation costs (see our incorporation packages) and ongoing costs related to filing your corporate taxes, etc.
If you simply want to see if an idea such as selling homemade jewelry pans out, then doing a sole proprietorship for a few months may make sense. If you decide on a sole proprietorship to start, revisit your options after a while to see if the advantages of incorporation will better fit your needs as your business grows.
Choose the Business Name
What’s in a name? Could be everything! Remember these basics: simplicity, creativity, positive emotions and legality. Before purchasing domains and preparing all your marketing material, make sure the name is available for use. We can help you conduct the necessary NUANS search to verify whether your name is available.
Register the Business
In many situations, the next step after choosing your business name is to register the name or incorporate. Either way Ordower Law can help. If you’re a sole proprietor and only doing business under your personal name, you can skip this step.
Speak to an Accountant
An accountant can help you with the financial and tax aspects of starting a business in Ontario. Accountants can help by explaining your potential tax breaks and benefits and obligations, whether you need to collect and remit HST or payroll taxes and how to handle business finances.
Open a Bank Account
Even if your business is a sole proprietorship, open a separate bank account for it. This makes life a heck of a lot easier when it comes to tracking business income, debts, expenses and so on because your personal finances if mixed in can confuse the picture.
Depending on your business structure, you’ll need to show different types of documentation to open your account. For example, corporations need to show their Certificate and Articles of Incorporation in order to open a corporate bank account. You will also be asked to show personal identification, among other things. If you register a sole proprietorship, the bank will need to see your Master Business License, which is only good for 5 years and will then need to be renewed.
Get Your Tax Accounts
If you’re acting as a sole proprietor, call the Canada Revenue Agency to get your business number. You receive the business number automatically when you incorporate. You will usually receive it to your registered address 7-10 days after incorporating. From there, you can determine whether you need an HST number or payroll number. Again, an accountant can help with these questions.
Check about Permits and Licenses
Your business may need some permits or licenses. For example, full-service restaurants must pass public health inspections and must have permits to sell alcohol.
Find a Location If Applicable
Here are some things to think about location-wise if you’re opening a customer-facing business. Renting office space, retail space or industrial space could be one of your largest expenses when starting a business.
If you are planning on renting commercial space to operate your business, understanding what your lease says, managing your risks and limiting your liability should be a priority. Ordower Law can guide you through the process of entering into a commercial lease.
Thinking about how to start a business in Ontario isn’t an exercise for the faint of heart, but it could turn out to be the best thing you ever did.