Starting a business is a thrilling yet complex journey. The decision to incorporate your small business in Ontario is a big one, and many entrepreneurs are unsure where to start.
Whether you’re a sole proprietor or have been operating informally, incorporating offers several advantages—particularly the ability to access the small business tax rate of 12.2% on the first $500,000 of active business income.
However, the incorporation process involves more than just filling out a few forms. It’s a series of important steps that require attention to detail.
This guide will walk you through the incorporation process step by step, pointing out the important elements that might get missed along the way. We’ll discuss the timeline, the cost, and the hidden challenges, so you feel empowered and prepared.
Step 1: Decide If Incorporation is Right for You
Before diving into the paperwork, it’s important to understand whether incorporating your small business is the right move. As a small business owner in Ontario, incorporating will:
- Limit your personal liability: Incorporation creates a separate legal entity, meaning that your personal assets are protected from business debts and liabilities.
- Access the small business tax rate: If your business earns under $500,000 in active income, you can take advantage of Ontario’s 12.2% corporate tax rate, which is much lower than personal tax rates.
- Build credibility: Being incorporated can increase your business’s credibility with customers, investors, and financial institutions.
- Allow you to raise capital: Incorporation can make it easier to raise funds through investors or loans.
However, incorporation also comes with increased administrative responsibilities, such as filing annual reports and maintaining corporate records. Additionally, there are costs to consider (we’ll get into that shortly).
Step 2: Choose Your Business Name
A critical part of incorporating a business in Ontario is choosing the right business name. Your business name is not just a brand—it’s a legal entity. Here’s what you need to keep in mind:
- Uniqueness: Your business name must be distinct and not conflict with other businesses already registered in Ontario. This can be checked through a name search.
- Legal Requirements: If you’re incorporating under a name other than your personal name, ensure it includes a legal ending such as “Incorporated,” “Corporation,” or “Ltd.”
- Reserve Your Name (Optional): While you can skip this step if you’re registering your business under your own name, you might want to reserve your corporate name if you want to ensure no one else can use it. Name reservation through Ontario’s Ministry of Government and Consumer Services costs around $8.
Step 3: Register Your Business and File Articles of Incorporation
Now that you’ve chosen your business name, you’re ready to incorporate. This is where the formal paperwork begins. You can incorporate your business either federally or provincially in Ontario, but this guide focuses on provincial incorporation. Here’s how to get started:
-
Gather Necessary Documents: You’ll need to provide basic details such as:
- Business name and address
- The names of the directors
- The business purpose (this is usually a broad statement like “To operate a business in the industry of…”)
-
File Articles of Incorporation: You’ll need to file the Articles of Incorporation with the Ontario government. This is the official document that establishes your corporation. The filing process can be done online or via mail.
- Online Filing: The Ontario Business Registry allows you to file online at a cost of around $360 (as of 2025). This is the quickest and most efficient method.
- By Mail: If you prefer, you can file by mail for a slightly higher fee of $400. The mail process may take a bit longer.
- Prepare Corporate Bylaws: Though not legally required, preparing a corporate bylaws document is important for guiding how your corporation will be managed. This is particularly important if there are multiple shareholders or directors.
Step 4: Obtain Your Business Number (BN) and Tax Accounts
Once your incorporation documents are filed, the next step is to obtain a Business Number (BN) from the Canada Revenue Agency (CRA). This is a unique identifier for your business that’s required for tax filings and other government-related matters.
Here’s what you’ll need to do:
- Register for a BN: You can register for a BN online via the CRA website. If you’re operating in Ontario, you must also register for the Ontario Corporate Tax Account (this is for remitting corporate taxes).
- Set up GST/HST and Payroll Accounts (if applicable): If your business will be collecting GST/HST (because you expect revenues over $30,000 annually) or hiring employees, you will also need to register for a GST/HST account and payroll account through the CRA.
Step 5: Get Your Corporate Records in Order
Once your business is incorporated, there are legal responsibilities that come with maintaining your corporation’s records. Here are some of the key items you’ll need to keep track of:
- Minute Book: This is a record of your corporation’s important decisions and meetings. The minute book should contain the Articles of Incorporation, corporate bylaws, director/shareholder meeting minutes, and resolutions.
- Shareholder Registers: Maintain an accurate record of shareholders and the number of shares they hold. This will be essential for tax and governance purposes.
While some business owners overlook the minute book and shareholder registers, they’re vital to maintaining your business’s corporate status and avoiding future legal complications.
Step 6: Prepare for Ongoing Compliance
Once your business is incorporated, you’ll need to stay on top of ongoing responsibilities. Here are the key compliance requirements:
- Annual Return: Each year, you must file an annual return with the Ontario government. The fee for this is approximately $20, and the return must be filed online.
- Corporate Tax Filings: As an incorporated business, you’ll be required to file an annual corporate income tax return (T2) with the CRA, even if your business did not make a profit. You’ll need to ensure your business is keeping accurate financial records for tax purposes.
Step 7: How Long Does the Incorporation Process Take?
The timeframe for incorporation in Ontario can vary depending on the method you use:
- Online Incorporation: If you file online, you can expect your incorporation to be completed within 1-2 business days.
- Mail Filing: If you choose to file by mail, it may take around 3-4 weeks for your incorporation to be finalized.
Step 8: What Will It Cost?
The cost of incorporating your small business in Ontario can vary depending on your choices. Here are the estimated costs:
- Incorporation fee: Around $360 for online filing and $400 for mail filing.
- Name Reservation (Optional): $8 if you decide to reserve your business name.
- BN Registration: Free through the CRA.
- Annual Return: $20.
Overall, you’re looking at a one-time cost of around $360 – $400 to incorporate, with annual costs for maintaining your business records and filing your annual return.
Conclusion: Taking the Leap into Incorporation
Incorporating your business in Ontario is an exciting step toward building a legitimate, protected, and scalable business. While it’s a process that requires time, effort, and attention to detail, the benefits—such as limited liability protection, tax advantages, and credibility—make it worthwhile.
By following this step-by-step guide, you can confidently navigate the process of incorporating your small business and ensure you’re setting it up for long-term success. Take your time with each step, consult professionals if needed, and don’t rush—this is your business’s future.