Business Portal

In the Business Portal, you could find everything you need to know about the Business Types according to the business purpose.

Financials Portal

In the Financials Portal, you could find everything you need to know about the Financial Statements according to the business types.

Income Taxes Portal

In the Income Taxes Portal, you could find everything you need to know about the Income Taxes according to the business types.

Software Solutions Portal

In the Software Solutions Portal, you could find everything you need to know about the Software Solutions according to the purpose.

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Business Registrations

There are different ways of setting up your business in Ontario. There are some legal steps that should be taken before you start any sort of business. If you have never started a business before, you may not be familiar with the different ways your business can be run, and what legal steps need to be put in place. Here is what you need to know about setting up your business in Ontario.

Sole Proprietorship

A sole proprietorship is an unincorporated business that is owned by one individual. It is the simplest kind of business structure. The owner of a sole proprietorship has sole responsibility for making decisions, receives all the profits, claims all losses, and does not have separate legal status from the business.

If you are a sole proprietor, you also assume all the risks of the business. The risks extend even to your personal property and assets. If you are a sole proprietor, you pay personal income tax on the net income generated by your business. You may choose to register a business name or operate under your own name or both.

If you operate as an individual, just bill your customers or clients in your own name. If you operate under a registered business name, bill your clients and customers in the business's name. If your business has a name other than your own, you'll need a separate bank account to process cheques payable to your business.

Partnership

A partnership is an association or relationship between two or more individuals, corporations, trusts, or partnerships that join together to carry on a trade or business.

Each partner contributes money, labour, property, or skills to the partnership. In return, each partner is entitled to a share of the profits or losses of the business. The business profits (or losses) are usually divided among the partners based on the partnership agreement.

Like a sole proprietorship, a partnership is easy to form. In fact, a simple verbal agreement is enough to form a partnership. However, most partnerships are governed by a written agreement setting out rules for partners entering or leaving the partnership, the division of partnership income, and other matters. The partnership is bound by the actions of any member of the partnership, as long as these are within the usual scope of the operations.

Corporation

A corporation is another type of business entity in Ontario and Canada; they will have 'Ltd.', 'Limited', 'Inc.', 'Incorporated', 'Corp.' or 'Corporation' at the end of their name. A corporation is a separate legal entity so it is treated differently from sole proprietors. Corporations have to file separate corporate tax returns, and they have annual record-keeping requirements, meaning that corporations will have annual legal and accounting expenses.

Companies can be formed at either the federal or provincial level; where you incorporate depends a lot on what business you conduct and where. Companies have different people involved; shareholders are the ultimate owners of the company while the business of the company is directed by the company's officers and directors.

The law treats the company as a distinct and separate legal person from its owners, meaning that the owners (being the shareholders), are not personally liable for the company's actions (please note that there are certain specific exceptions to this non-liability).

One main advantage of running your business through a corporation is that you do not have the same level of personal liability. In addition, being incorporated can be good for marketing as it makes your business appear more legitimate. The downside to incorporating is largely cost-based; you have to file separate tax returns and you will have annual record-keeping obligations, as well as the up-front cost of the initial incorporation.

The difference between a provincial and federal corporation is that provincial incorporation means only conducting business in that province, whereas federal incorporation allows you to conduct business across the country. Provincial incorporation protects your business name in that province only, whereas federal incorporation protects your business name across Canada.

Registration of your Business Entity

The Business Names Act sets out certain requirements if you are conducting business other than in your own name. Registration can be fairly easy, and the consequences of using a name that is not properly registered can be severe. Always ensure that you have properly registered your business name before you invest any time or money into marketing your business with any name.

Summary

Before you start conducting business in Ontario you need to decide the type of business that you want to operate and the business vehicle you want to use to operate it. You should talk to a professional such as a lawyer so you know your rights and what is going to be required of you with the various business types, both at the outset and on an annual basis. Make sure you have a proper business plan before you start your business to ensure that everything runs smoothly. If you have any questions regarding the business registration or the types of businesses, please contact us and we will be glad to be helpful.


Applying for a Mortgage or a Loan

If you are planning to apply to a financial institution for a mortgage or a loan, make sure your documents are in order.

Usually, if you are employed, the lender requires the two most recent paystubs and the previous year T4 slip: Statement of Remuneration Paid, but some lenders will request two years T1 Income Tax Returns and two years Notice of Assessment (NOA) instead.

Please keep in mind that If your employer is your corporation, then the lender might also require the Financial Statements and/or T2 Corporation Income Tax Returns of your corporation for two years.

However, if you are self-employed, the lender will be looking for a two years T1 Income Tax Returns and two years Notice of Assessment (NOA).

Sometimes, the income shown on your paystubs, T4s, T1s, NOAs, Financial Statements and T2s might not be enough for you to be approved for a mortgage or a loan.

If you need help with that, please feel free to contact us, we will be able to help, so do not hesitate to write us a message under the Contact Us tab.