Starting a business in Ontario: the legal checklist

Most Ontario businesses do not fail on their legal setup, but the ones that skip it pay for the shortcut later, usually at the worst possible moment: a CRA audit, an injured worker, a licence inspection, a bank that will not open an account. The setup itself is a fixed sequence of steps, most of them cheap, all of them documented on government websites. Here is the order, what each step costs, and where founders trip.

Sole proprietorship, partnership, or corporation. The choice drives liability, tax, and everything else on this list, and we covered it in detail in our guide to choosing an Ontario business structure. The short version: incorporate if the business carries real risk or earns more than you spend; start simple if it does not, and revisit as revenue grows.

Before you fall in love with a name, search it. The Ontario Business Registry↗ checks registered business names in the province, and a named corporation needs a NUANS report, a broader search of corporate names and trademarks across Canada. Two cautions. First, registering a business name gives you almost no exclusive right to it; it is a public record, not brand protection. Second, a name that clears the registry can still infringe someone's trademark. Search the Canadian trademarks database↗ too, before the signage and the domain are paid for.

• Sole proprietorship or partnership: Register the business name through the Ontario Business Registry. It costs $60 online and lasts five years, and the five-year expiry is the part founders forget.
• Ontario corporation: File articles of incorporation online for $300, plus the NUANS report for a named corporation. A numbered corporation skips the name search.
• Federal corporation: Incorporate through Corporations Canada for $200 online. Federal incorporation protects your corporate name across Canada, but you still register extra-provincially in Ontario (no additional Ontario fee) and in any other province where you carry on business.

The business number↗ is your single identifier with the CRA, and program accounts hang off it: GST/HST, payroll, corporate income tax, import-export. Incorporating usually generates one automatically; sole proprietors register when they first need a program account.

The one that catches people is GST/HST. Registration is mandatory once your worldwide taxable revenues pass $30,000 over four consecutive calendar quarters. And the moment you cross the line matters, because you must start charging HST even if you have not registered. Many founders register voluntarily before the threshold: you charge 13% HST in Ontario either way once registered, and in exchange you recover the HST you pay on your own expenses through input tax credits.

There is no single business licence in Ontario. What you need depends on what you do and where you do it: municipalities license everything from restaurants to contractors to home businesses, the province regulates sectors from real estate to security to liquor, and federal rules cover food, transport, and imports. BizPaL↗, a joint federal-provincial tool, generates a permit list from your business type and location, and the federal starting a business hub↗ collects the rest of the paperwork in one place. Check municipal zoning before you sign a lease: a commercial unit that cannot legally house your use is still a unit you owe rent on. And if you are running the business from home, check your municipality's home occupation rules and tell your home insurer. An undisclosed business is a classic reason for a denied claim.

Hire your first worker in most Ontario industries and you have ten calendar days to register with the Workplace Safety and Insurance Board↗. Some sectors are exempt, but the exemptions are narrower than owners assume, and registering late means retroactive premiums plus penalties. If an unregistered worker is injured, the exposure is far worse. Payroll deductions follow the same logic: a payroll account with the CRA, income tax, CPP, and EI withheld from the first paycheque.

• A separate business bank account from day one. For a corporation it is non-negotiable: mixing corporate and personal funds is how owners hand the CRA an audit trail and creditors an argument that the corporation is a sham.
• Insurance matched to the business: commercial general liability at minimum, professional liability if you advise, coverage for premises and stock if you have them.
• Written contracts for whatever the business actually does: client terms, supplier agreements, and, if there is more than one owner, a shareholders' or partnership agreement. That agreement is the single most skipped document on this list.
• A record-keeping system. The CRA requires you to keep business records for six years, and the corporation's minute book has to exist somewhere other than your intentions.

Founders rarely do these steps in a tidy sequence, and mostly that is fine. What is not fine is the permanent gap: the business that crossed $30,000 two years ago and never registered for HST, the employee hired in March with no WSIB registration in December, the corporation whose only bank account is the owner's personal chequing. Each of those is cheap to fix early and expensive to fix late.

Every business on this checklist is different, and the checklist is where the standard advice ends. If you want the setup done right the first time, Telesh Law Firm Professional Corp works with new Ontario businesses at exactly this stage.

• For businesses
• Step-by-step guide
• Cost & fees

This article is general information, not legal advice, and does not create a solicitor-client relationship. It is current as at its publication date and is not revised as the law changes. For advice on your specific situation, book a consultation or call 416-639-0887.

Written by

Caleesis Telesh

Founder & Principal Lawyer

LL.B. · B.A., York University · Member, Law Society of Ontario

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