If you want to open a business, there are two main ways of going about it. First, you can simply open the business and register its name with the government. If you do this, you will be responsible for all of the business’s debts. Alternatively, you can incorporate, in which case the corporation is a separate entity, and you are not personally liable for its debts.
One person alone may carry on business without incorporating, in which case he or she is called a sole proprietor. If two or more people operate a business together, they are a partnership. In either case, the individuals should register the business name, even if it is their own name or names, with the Corporations Branch of the Ministry of Consumer and Business Services. The office is located at 375 University Avenue in Toronto.
Whatever kind of business you operate, and whether you are incorporated or not, there are other government requirements you must meet. For instance, you need a federal business number, and may also need a vendor permit. If two or more people are carrying on business as a partnership, they should have a partnership agreement. However, they should have a lawyer prepare this for them. You should also obtain a lawyer's assistance if you intend to incorporate. For details about the further government requirements mentioned above, contact the Canada-Ontario Business Service Centre.
Incorporating a Company
If one or more people wish to form a corporation, they must decide whether to incorporate federally or provincially. You would incorporate federally if you intended to have offices in more than one province, or if you expected the corporation to amalgamate with existing corporations that are incorporated either federally or in other provinces. However, in most cases you would incorporate provincially. The remainder of this section will focus on provincial incorporation, however the procedure for federal incorporation can be determined by contacting Industry Canada.
A corporation may have a name, or may be a numbered company. If you choose a corporate name, ask a corporate search company to search the names of existing companies to determine whether the name is available. If the name doesn't adequately describe the business or may be confused with the names of existing companies, the search company will advise that the name is not available, and the government will not allow it to be used. If the name is available, the government will allow it to be used, as long as incorporation is completed within 90 days after a paper copy of the search is issued.
Once a name is determined, articles of incorporation must be completed. This form may be obtained from a legal stationer. Two original copies must be completed. They must show the full name and home address of at least one individual, who will become the corporation’s first director. The articles must also show a corporate head office address. The head office address must be an address that can be located, not a post office box.
The articles of incorporation also have to describe the share structure, which may be as simple as an unlimited number of shares of one class, however this simple a structure would not be appropriate in all cases. Unless you have been involved in incorporating other companies, you should obtain legal advice before submitting completed articles of incorporation to the government.
When you are sure the articles are ready, make sure they are signed by the one or more individuals named in them, and submit them to the Corporations Branch of the Ministry of Consumer and Business Services at 375 University Avenue in Toronto. You will also have to submit a filing fee.
After a corporation is incorporated, certain notices must be filed with the government. Further documentation should also be considered, such as directors’ and shareholders’ resolutions organizing the company, and a shareholders’ agreement. Again, legal advice should be obtained in connection with these documents.