For an expanding business, incorporating is a logical step forward. Incorporating your business means creating a corporation, a legal entity possessing its rights and obligations. Through its directors, a corporation can open a bank account, enter into contracts, and pay the salaries of its employees. Typically, the law considers a corporation as a separate entity from the individuals who own it.
A corporation can be owned by many people, who are also called ‘shareholders.’ The shareholders own a piece (also known as a stock or stocks) of the corporation. Profit (also called ‘dividends’) is distributed to these shareholders. Dividends can be cash, stocks, or other forms of remuneration.
Turning your business into a corporation is a fairly straightforward process. In Ontario, completing your incorporation can take just a few minutes if you do it online. But first, there are a few steps you have to take to meet the requirements. Read below a guide on how to incorporate a business in Ontario.
1. Choose A Name For Your Business
Deciding on a name is typically the first step to incorporating your business. Your corporate name is your legal identity, the legal name you use in documents such as invoices and contracts. Keep in mind, however, that a corporate name is distinct from a domain name or trademark.
Your corporate name can be either of two things:
- Word Name: A corporate word name may include symbols and letters. It should be unique and not cause any confusion with other trademarks or corporate names. It shouldn’t also contain prohibited terms and must follow these naming requirements.
- Numbered Name: This is probably the simplest way of naming your corporation because Corporations Canada can assign a numbered name to your business. This assignation can happen if an entity hasn’t yet established a brand identity or for shell corporations.
A NUANS (Newly Upgraded Automated Name Search) report can ensure that your corporate name is unique. Getting one means no company was registered in your jurisdiction using your chosen name.
2. Provide The Necessary Information And Documentation
If you’re incorporating your business in Ontario, you’re required to provide the following:
- Name and address of the company
- An Ontario-biased NUANS report not more than 90 days old
- Description of your organization’s activity
- Name and address of your Directors
- Name and address of your Shareholders
- Share structure, i.e., series and classes of shares the corporation is allowed to issue
- NAICS (North American Industry Classification System) Code, a six-digit code industry classification system created for legislation and administrative purposes
Your corporation must have at least one Shareholder and one Director. There’s no limit to how many Shareholders a corporation can have, but with Directors, the maximum number is ten.
Check the requirements and ensure your directors meet all the criteria for eligibility. You also have to include the information regarding their residency, whether they reside in Canada or not.
Another vital document you’d have to submit is the Articles of Incorporation. This document contains information on how your business will operate. It’s best to use a lawyer specializing in corporate law to prepare the Articles of Incorporation.
You also need to adopt Corporate Bylaws containing the corporation’s internal rules regarding its management. The Bylaws should also describe the officers’ and directors’ duties and obligations.
3. Set Up A Registered Corporate Address
All corporations need a registered business address. It’s where corporate records are kept. All official documents meant for the corporation will be sent to this address. So, ensure that your address can receive official letters and documents. And as you’re in Ontario, your corporation’s address should also be in Ontario.
4. Registration
After you’ve readied all documentation and completed the details, it’s time for the registration. You can submit your documentation online, which is infinitely more convenient. You’ll be paying fees, so prepare your credit card. If everything is in order, it’ll only take a few minutes to complete the incorporation.
5. Don’t Forget The Minute Book
The next step can go in any direction. But one thing you shouldn’t forget is organizing your corporate supplies, particularly the minute book. The minute book can be just a simple physical binder. But nowadays, it pays to have an online minute book.
Briefly, a minute book is where you keep all important corporation documents and decision papers. And because you’re incorporating in Ontario, the minute book is mandatory. Here are just a few of the items you can include in this nifty corporate repository:
- Minutes of relevant meetings
- Articles of Incorporation
- Government filings
- Agreements with stakeholders
- Bylaws
- Names of corporate officers
Remember to update this central store of documents constantly.
6. Launch Your Company
After getting an organizational system in place to manage your business operations, you can launch your corporation. Launching involves opening the doors for your customers. However, it’d be a good idea to market your company to enhance its visibility to clients.
You also need to note that you may have to set up your tax account structure once you reach CAD$30,000. Check for this milestone after your first fiscal year.
Takeaway
Completing the necessary documents and requirements may take a few days, especially if you have help and know what steps to take. After completing the requirements, incorporating a business in Ontario can take just a few minutes through an online portal.
The steps listed here can guide you and give you an idea of how best to proceed when incorporating your business in Ontario. Good luck!
