You have decided to join the Ontario business community and start your own company. In addition to the technical aspects of starting a new business, you must also incorporate in Ontario. Ontario Incorporation is required under provincial law. By carefully following the necessary requirements of incorporating in Ontario, you will start off your new business right foot forward. It is advisable to consult with your accountant or other business professional who can advise you properly of the complete regulations for Ontario incorporation.
Begin by choosing a name for your corporation. When incorporating in Ontario, the name must be in English, French, or may have a version in both these languages. While choosing a name may sound like a simple task, it is not always so. Try to choose a unique name that best describes your business. First, this is a strategic marketing tactic to help potential customers identify you. Second, should you select a name that is similar to an existing corporation, the name may be rejected. Another alternative is to be assigned a number when you incorporate in Ontario. This would become the legal name of the corporation but you can register a trade name, which would be the name known to customers.
Incorporating in Ontario requires an address for the corporation within the province. This should not be a post office box but, rather, a commercial or residential address. If your business has several locations, choose one that will be the primary address.
The shareholders of your corporation must be registered. These are the individuals who essentially own the corporation. Ontario incorporation laws require a minimum of 1 shareholder but no more than 50. You will be required to list the complete residential address of each shareholder. Again, post office boxes are not acceptable.
Does Ontario incorporation require issuing a specific amount of shares? No; you and your shareholders will decide. When you create your company, you determine how many shares to issue. Your financial advisor can best guide you about the amount and value of the company's shares. From the incorporation standpoint, the total number of shares must be divided proportionately amongst all the shareholders.
Selecting directors and officers is part of the incorporation process. The directors are the individuals who make the major administrative decisions of the corporation while the officers hold the senior management positions. When incorporating in Ontario, the law requires that the majority of the directors be residents of Canada. Should your corporation have only 2 directors, one must be a Canadian resident. There is no reason, though, to think that you must now involve a large number of individuals to create your corporation. Directors may also be shareholders as well as officers. This is the case in most small corporations. While a corporation can create numerous senior management positions, incorporating in Ontario requires the appointment of a President and a Secretary. Other positions may be created as necessary but are not required for incorporation.
Another requirement is deciding on the date of the end of the fiscal year for your corporation. Any 12-month period designated by a corporation as its official accounting period is known as its fiscal year. Many corporations prefer to operate their fiscal year to correspond with the calendar year, such that their fiscal year ends on December 31, although Ontario incorporation regulations do not require this.
While you may feel quite competent about maintaining proper accounting records, many corporations prefer to appoint an independent outside auditor to prepare an annual financial statement. An auditor is, generally, a chartered accountant who checks the corporation's financial records and attests professionally to their accuracy. The auditor may be an accountant employed by the corporation but may not be a director or an officer of the corporation. Incorporating in Ontario does not require your employing an auditor. In fact, the corporation's shareholders may decide not to appoint an auditor for a specific fiscal year. However, it is generally considered good business practice.
Having prepared all your information, you are ready to incorporate in Ontario. Registering Ontario incorporations requires payment of a government incorporation fee of $360. If you have chosen a name for your corporation, rather than a number, you will be required to pay an additional search report fee of $30. Upon satisfactory completion of the incorporation process, the Articles of Incorporation will be delivered to your registered address. This is your license to operate your incorporated business in the province of Ontario.
Corporation Centre is Ontario’s premier incorporation resource for Canadian small businesses and speeds up the Ontario incorporation process to incorporate in Ontario.