How to start a business in Ontario

Most guides start with registration. That is backwards. Registering a name costs money and starts a five-year clock, and it does nothing to tell you whether the business will work. The cheapest thing you can do in the first week is talk to ten people who fit your customer description and ask what they do today, what it costs them, and whether they would pay for your version.

Write down the answer to four questions: who the customer is, what problem you solve for them, what you will charge, and what it costs you to deliver one unit or one hour. If you cannot answer those in a paragraph each, you are not ready to spend money on registration yet. Launch League's free Business 101 course walks through exactly these four questions in about 45 minutes.

A sole proprietorship means you and the business are the same legal person. It is the fastest and cheapest structure, profits are taxed as your personal income, and you are personally responsible for the business's debts. A partnership is the same idea with two or more owners. A corporation is a separate legal entity: it limits your personal liability, protects the name, and can be taxed at the small-business corporate rate, in exchange for annual filings and higher setup cost.

There is no LLC in Ontario or anywhere in Canada. If limited liability is what you are after, a corporation is the structure that provides it. You can also start as a sole proprietor and incorporate later, which is what many people do once revenue or risk makes the paperwork worth it. Structure has real tax consequences, so an hour with an accountant before you file is money well spent if you are unsure.

If you are a sole proprietor operating under your own legal name, such as "Jordan Lee", you do not have to register a name at all. If you use anything else, even "Jordan Lee Consulting", you register it through the Ontario Business Registry. A business name registration does not protect the name; it is a public record of who is behind it. Search the registry first so you are not registering something a competitor already uses.

To incorporate in Ontario, you file articles of incorporation through the Ontario Business Registry. A named corporation needs an Ontario-biased NUANS name search report dated within 90 days; a numbered corporation (for example 1234567 Ontario Inc.) skips that step. Federal incorporation is filed with Corporations Canada, gives you name protection across the country, and requires an extra-provincial registration in Ontario afterwards, which is free. Both routes are online and usually processed the same or next business day. Ontario corporations must also file an Initial Return within 60 days of incorporating.

The Business Number is the nine-digit identifier the CRA uses for your business. Corporations get one automatically when they incorporate; sole proprietors request one through Business Registration Online. It costs nothing and you can do it in a sitting.

You only need a GST/HST account once your taxable sales exceed $30,000 in a single calendar quarter or over four consecutive quarters. Below that you are a "small supplier" and registration is voluntary. Many people register early anyway, because it lets them claim back the HST they pay on business purchases and because business customers expect an HST number on invoices. Once registered you must charge 13% HST in Ontario and file returns, annually by default for smaller businesses. If you will pay anyone, including yourself through a corporation, open a payroll account before the first pay date; you remit income tax, CPP and EI deductions on a schedule the CRA assigns.

Registration is provincial, but permission to operate in a particular place is municipal. Toronto licenses dozens of business categories through Municipal Licensing and Standards; smaller municipalities license fewer, but almost all regulate signage, home occupations and food. If you are working from home, confirm your zoning allows a home-based business and check limits on client visits, employees and storage.

Food of any kind, including a bakery run from a home kitchen, requires notifying your local public health unit and passing inspection. Skilled trades such as electrical, plumbing and HVAC require the tradesperson to be certified or registered with Skilled Trades Ontario, and electrical work is licensed through the Electrical Safety Authority. Personal services such as tattooing and aesthetics are inspected by public health. When in doubt, the municipal clerk's office or your local Small Business Enterprise Centre will tell you exactly which permits apply.

Banks will ask for your registration or articles of incorporation, your Business Number, and photo ID. Most of the big five banks and many credit unions offer small-business accounts with low or zero monthly fees for the first year, and online-only options exist for sole proprietors. Get a business debit or credit card at the same time so every expense lands in one place.

Set up bookkeeping before your first sale rather than reconstructing it in April. A spreadsheet is fine at the start; software such as Wave (free), QuickBooks or Xero becomes worth it once you are invoicing regularly or registered for HST. Keep every receipt for six years, which is the CRA's retention rule.

Commercial general liability (CGL) is the policy almost every business needs, and a $1 to $2 million policy for a low-risk home-based business is often a few hundred dollars a year. Consultants, designers and anyone selling advice should add professional liability (errors and omissions). If you have a vehicle used for business, tell your insurer; personal auto policies exclude commercial use. Product businesses should ask about product liability, and anyone with inventory or equipment should insure it.

The Workplace Safety and Insurance Board (WSIB) is Ontario's workplace injury insurance. Coverage is mandatory in most industries, including construction, manufacturing, retail and food service, from the day you hire your first worker, and you must register within 10 days. Independent operators in construction must have their own coverage. Sole proprietors in other industries can buy optional insurance for themselves. Some client contracts, especially with municipalities and larger companies, will not proceed without a WSIB clearance certificate.

Lenders and grant programs will ask for one, but that is not the main reason to write it. The plan is where you discover that your price does not cover your costs, or that you need $8,000 of equipment before the first sale, while it is still cheap to change course. Keep it short and honest. Nine sections is the conventional structure; the cash-flow forecast is the one everyone reads first.

Launch League's competition is built around exactly this document. Every entrant writes a plan, submits a short pitch, and receives written feedback from judges who run businesses in Ontario, scored against a published 100-point rubric. It is free, and the feedback is the point whether you place or not.

Start with the free help. Ontario funds 52 Small Business Enterprise Centres, usually run by your municipality or economic development office, that offer free one-on-one advice, workshops and access to the province's startup programs. Starter Company Plus, delivered through those centres, provides training, mentoring and a grant of up to $5,000 to adults starting or expanding a business. Summer Company gives students aged 15 to 29 up to $3,000 plus mentoring to run a business over the summer.

For loans, Futurpreneur Canada offers up to $75,000 in combined financing with the Business Development Bank of Canada to founders aged 18 to 39, with two years of mentoring attached. The Canada Small Business Financing Program guarantees loans made by ordinary banks and credit unions for equipment, leaseholds and working capital. Community Futures Development Corporations serve rural Ontario with loans that banks often will not make. Our guide to small business grants in Ontario lists what is real and what is a loan in disguise. Every one of these asks for the plan from the previous step.

A launch is your first paying customer, not a website. Aim for a first sale in the first 30 days after registration, even a small one, because real customers tell you things surveys do not. Set aside a percentage of every payment for tax from the start; sole proprietors are often surprised by their first spring bill because nothing was withheld during the year.

Know your deadlines. As a sole proprietor you report business income on your personal T1 return using form T2125; the return is due June 15 but any tax owing is due April 30. A corporation files a T2 corporate return within six months of its fiscal year-end and generally pays within two or three months of it. HST returns are annual by default for businesses under $1.5 million in sales. Once you owe more than $3,000 in tax in a year, the CRA will expect quarterly instalments the following year. Put all of these in a calendar now.