Starting a business in Ontario: a setup checklist

Settle the structure and the name first

Almost every later step depends on two early choices: how the business is owned and what it is called. Ontario describes four structures: sole proprietorship, partnership, corporation and co-operative. A sole proprietorship is the simplest to start, and you can incorporate later. A corporation separates the business from you, but it costs more to set up and brings annual filings and corporate records.

Whether to incorporate is a tax and risk question, not just a paperwork one, so talk it through with an accountant and a lawyer before you file anything. Our guide on whether you should incorporate and our note on what incorporating costs in Ontario cover that decision, and this checklist assumes you have made it.

Then check the name. The province says a sole proprietor who does not use their own name as the business name needs to register it. A new corporation that does not use a number name needs an Ontario-biased Nuans name search report, and the province says a federally biased report will not be accepted.

Register with Ontario

If your business has employees, facilities or offices in Ontario, the province says you must register through the Ontario Business Registry. You need a working email address and a debit or credit card, and you will be asked to create an Ontario.ca Login and an Ontario Business Account along the way. You can search the registry for free to see whether a name is already taken.

The government registration fee depends on the structure. The province lists $60 for a sole proprietorship or general partnership and $300 for a business corporation, and a business name registration expires every five years, so put the renewal in your calendar. These are government fees only. Any lawyer, search company or filing service charges extra.

You will receive a nine-digit Ontario Business Identification Number. It is not the same as the business number the CRA issues, and the CRA lists it among the numbers you cannot use as an existing business number when you register. Keep the two clearly labelled in your records.

Registration does not tell you whether you need a licence. Ontario points to BizPaL, a free tool that lists federal, provincial and municipal licences and permits by location and activity. Check it before you open.

Get your CRA business number and program accounts

The CRA identifies a business by a nine-digit business number, and you add program accounts to it for the activities you report. The common ones are GST/HST, payroll deductions, corporation income tax for an incorporated business, and information returns. Each account adds a two-letter code and a four-digit reference to the same number, so one business number can carry several accounts.

Before you register, gather the owners’ names and social insurance numbers, the legal and operating names, mailing and physical addresses, the type of business and a description of what it does. A corporation also needs its incorporation date, jurisdiction and certificate number. For GST/HST, the CRA may also ask for your annual taxable sales, an effective date of registration, a fiscal year-end and a reporting period.

Decide the fiscal year-end deliberately if you are incorporating. It sets your T2 and annual return timing from the first year, so agree it with your accountant before you file.

Decide whether to register for GST/HST

Most businesses are small suppliers until their taxable sales pass $30,000 over four consecutive calendar quarters, and then registration is required. If you pass $30,000 in a single quarter, you must register and charge tax on the sale that took you over. You may also register voluntarily before that point, for example so you can claim input tax credits on business purchases. A voluntary registrant may need to stay registered for at least a year, so weigh it first.

Track sales by calendar quarter from the first month, not by your fiscal year, because that is how the test is applied. Our HST registration guide and checker walk through the rule in detail, so this checklist only flags the decision. The effective date matters because you charge tax from that date, which can be earlier than the day you apply, so do not wait once you are close to the limit.

Set up payroll before the first wage

You generally need a payroll account if you pay salaries, wages, bonuses, vacation pay or tips, or provide certain taxable benefits. The CRA says to register before your first remittance is due, and in practice that means before the first pay date so the right deductions are taken. It also says new employers are treated as regular remitters, who send deductions monthly unless the CRA tells them otherwise.

If a worker is a contractor and not an employee, the facts of the relationship decide the status, not the label in the contract. Settle that before you hire, using our employee or contractor tool and the first payroll checklist, and ask the CRA for a ruling if you are unsure.

Put records and a bank account in place

Open a bank account and, if you can, a card used only for the business. Mixed personal and business spending is the most common reason new owners’ books are hard to finish. Choose bookkeeping software and a month-end routine in the first month, and keep receipts, contracts, registration confirmations and the numbers from every account in one place.

If you incorporate, also keep the corporation’s own records: articles, directors and shareholders resolutions, share ownership and loans between you and the company. Our annual corporate compliance checklist covers what to maintain each year. Finally, ask your accountant for a first-year calendar of filing and payment dates, and bring the registration confirmations to that conversation.