Starting a Business in Ontario: The Complete Guide
Incorporation, business registration, HST registration, payroll setup, business bank account, NUANS name search, minute book. Every step, every decision, every deadline covered. From a licensed CPA with 1300+ five-star reviews.
What This Guide Covers
1. Choosing Your Business Structure 2. Incorporation: Federal vs. Ontario 3. NUANS Name Search 4. Minute Book: What It Is and What It Contains 5. Business Registration and CRA Accounts 6. HST Registration 7. Payroll Setup 8. Business Bank Account 9. Complete Timeline: Day 1 to Day 30 10. Total Startup Costs 11. Common Mistakes That Cost Ontario Business Owners Money 12. Frequently Asked Questions1. Choosing Your Business Structure
The first decision every Ontario business owner makes is the legal structure. This decision determines your tax rate, personal liability, ability to raise capital and how you pay yourself. There are three structures available in Ontario: sole proprietorship, partnership and corporation. For most business owners earning above $80,000 in annual income, incorporation is the correct answer.
| Feature | Sole Proprietorship | Partnership | Corporation |
|---|---|---|---|
| Tax rate | Personal rate: up to 53.53% in Ontario. | Personal rate for each partner. | 12.2% on first $500,000 (SBD). 26.5% above $500,000. |
| Liability | Unlimited personal liability. | Unlimited personal liability for each partner (joint and several). | Limited to corporate assets. Personal assets are protected. |
| Setup cost | $60 master business licence (Ontario). | $60 registration + partnership agreement. | $273 (federal) or $335 (Ontario) + CPA service fee from $35. |
| Annual filing | T1 personal tax return with T2125 business income. | T5013 partnership return + each partner's T1. | T2 corporate tax return (separate from personal). |
| CRA audit risk | Higher. CRA frequently audits sole proprietors for unreported income and inflated expenses. | Moderate. Partnership allocations can trigger scrutiny. | Lower for compliant corporations. Clear separation of personal and business. |
| Ability to income split | Very limited (employment of family members only). | Limited to partnership allocation. | Salary, dividends, share classes. Multiple tax planning strategies available. |
| LCGE on sale | Not available. | Not available (at partnership level). | $1,281,866 per shareholder (2026). Can be multiplied with family shares. |
| When to choose | Income under $40,000. Testing a business idea. No liability exposure. | Two or more owners who want simplicity. | Income above $80,000. Any liability exposure. Planning to grow or raise capital. |
Tax Impact by Income Level
| Annual Business Income | Sole Proprietor Tax | Corporation Tax (12.2%) | Annual Tax Savings |
|---|---|---|---|
| $60,000 | $12,200 | $7,320 | $4,880 |
| $80,000 | $18,200 | $9,760 | $8,440 |
| $100,000 | $24,600 | $12,200 | $12,400 |
| $150,000 | $42,300 | $18,300 | $24,000 |
| $200,000 | $62,400 | $24,400 | $38,000 |
| $300,000 | $104,600 | $36,600 | $68,000 |
| $500,000 | $196,900 | $61,000 | $135,900 |
The Cost of Waiting: Every year you operate as a sole proprietor above $80,000 in income, you pay at least $8,440 more in tax than you would as a corporation. Two years at $150,000: $48,000 in additional tax you will never recover. Our incorporation service fee is $35. The government filing fee is $273 (federal). Incorporate before your first dollar of revenue. Incorporation Services →
2. Incorporation: Federal vs. Ontario
| Feature | Federal (CBCA) | Ontario (OBCA) |
|---|---|---|
| Filing fee | $273 (Corporations Canada) | $335 to $360 (ServiceOntario) |
| Name protection | Canada-wide. | Ontario only. |
| Operating across provinces | Automatic in every province. No extra-provincial registration needed. | Ontario only. Must register in each additional province. |
| Named vs. numbered | Numbered: $273. Named: $273 + $13.80 NUANS. | Numbered: $335. Named: $335 + $13.80 NUANS. |
| Director residency | 25% of directors must be Canadian residents. | No residency requirement. Better for businesses with non-resident directors. |
| Timeline | Numbered: 1 to 3 business days. Named: 1 to 3 after NUANS. | 1 to 5 business days. |
| Annual filing | Annual return with Corporations Canada. $12 online. | Annual information return with ServiceOntario. No fee if filed on time. |
| Professional corporations | Not available. Medical, dental, veterinary and other regulated professions require OBCA. | Required for MPCs, DPCs, VPCs, engineering, architecture, optometry and other regulated professions. |
Our Recommendation: Federal for Most Ontario Businesses. Lower cost ($273 vs. $335), automatic cross-province operation and Canada-wide name protection. Ontario OBCA is required only for professional corporations (medical, dental, veterinary) and preferred when directors include non-Canadian residents. We recommend federal for contractors, consultants, IT companies, restaurants, retail, construction and the vast majority of Ontario businesses. Incorporation Services →
What We Include in Every Incorporation
| Deliverable | Details |
|---|---|
| Articles of incorporation | Filed with Corporations Canada or ServiceOntario. Your corporation is legally created. |
| Multi-class share structure | Class A voting common (founders), Class B non-voting common (family), Class C preferred (investors, holdco). Designed for tax planning from day one. |
| Complete minute book | Articles, bylaws, resolutions, share certificates, registers. See Section 4 for full details. |
| Business Number (BN) | 9-digit CRA registration. Required for all CRA accounts, banking and government filings. |
| HST account | RT program account registered with CRA. See Section 6 for when to register. |
| Payroll account | RP program account registered with CRA. See Section 7 for when you need payroll. |
| Tax planning consultation | Salary-dividend optimization, RRSP room strategy, HST method selection, SBD eligibility, holdco timeline discussion. Included at no additional charge. |
3. NUANS Name Search
NUANS (Newly Upgraded Automated Name Search) is the federal database used to check whether a proposed corporate name is available. If you want a named corporation (instead of a numbered company like "12345678 Canada Inc."), you must obtain a NUANS report before filing your articles of incorporation. The report confirms that your proposed name does not conflict with existing corporations, trademarks or business names registered in Canada.
| NUANS Component | Details |
|---|---|
| Cost | $13.80 per search (ordered through a NUANS search provider or directly through Corporations Canada). |
| What it searches | All federal and provincial corporate names, registered trademarks, business names and trade names across Canada. |
| Validity period | 90 days from the date of the report. If you do not file your articles within 90 days, you must order a new NUANS report. |
| When required | Only for named corporations. Not required for numbered companies. Not required for sole proprietorship registrations (but you should still check for conflicts). |
| Name format rules | A corporate name in Ontario must have 3 elements: a distinctive element (e.g., "Maple"), a descriptive element (e.g., "Consulting") and a legal element (e.g., "Inc.", "Ltd.", "Corp."). Example: "Maple Consulting Inc." |
| Conflicts | If the NUANS report shows conflicting names, you must modify your proposed name or choose a different one. We review the report and advise on the likelihood of approval. |
| Numbered company alternative | No NUANS required. Corporation is assigned a number by Corporations Canada or ServiceOntario. You can register a business name (trade name) separately for $60. Most small businesses choose numbered corporations with a registered trade name. |
Our Recommendation: Numbered Corporation + Trade Name. Saves $13.80, avoids the NUANS process and avoids the risk of name rejection. Register a $60 trade name for your business name. You operate under the trade name while the numbered corporation handles all legal and tax filings. This is the fastest and most cost-effective approach for most Ontario businesses.
4. Minute Book: What It Is and What It Contains
The minute book is the official corporate record of your corporation. It contains all foundational documents, resolutions, share records and governance documents. Every corporation in Ontario is required to maintain a minute book. Banks, investors, lenders and CRA may request to review the minute book. An incomplete minute book can delay financing, trigger CRA questions during an audit and complicate a future sale of the business.
| Minute Book Contents | What It Is | Why It Matters |
|---|---|---|
| Articles of incorporation | The founding document filed with Corporations Canada or ServiceOntario that creates the corporation. | Proof the corporation legally exists. Required by every bank. |
| Corporate bylaws | Rules governing internal operations: meetings, voting, officer appointments, financial year-end, banking authority. | Defines how the corporation is managed. Standard bylaws are included. |
| Organizational resolutions | First resolutions of the directors: appointment of officers, approval of bylaws, authorization of bank account, fiscal year-end selection, registered office. | Establishes the initial governance structure. Banks require a certified copy. |
| Share certificates | Physical or digital certificates issued to shareholders showing the number and class of shares owned. | Proof of ownership. Required for LCGE claims, dividend declarations and share transfers. |
| Shareholder register | Ledger tracking all shareholders: name, address, SIN, number of shares, class of shares, date acquired, date transferred. | CRA reviews this during audits. Required for T2 Schedule 50 (shareholder information). |
| Director register | Ledger tracking all directors: name, address, date appointed, date resigned or removed. | Required by the CBCA/OBCA. Directors are personally liable for certain tax obligations. |
| Transfer register | Records every share transfer: from whom, to whom, how many shares, date, consideration. | Critical for tracking adjusted cost base (ACB) for capital gains calculations on a future sale. |
| Annual resolutions | Annual directors' resolutions approving financial statements, declaring dividends, appointing auditors (if required), confirming officers. | Must be prepared annually. Required for CDA elections, dividend declarations and corporate governance compliance. |
| Special resolutions | Any significant corporate event: share issuance, share redemption, change of registered office, amendment to articles, amalgamation. | Must be documented at the time of the event. Banks and CRA require supporting resolutions for corporate changes. |
We Prepare the Complete Minute Book at Incorporation. Articles, bylaws, organizational resolutions, share certificates, all registers. The minute book is maintained annually as part of your corporate tax engagement. We prepare dividend resolutions, annual resolutions and any special resolutions throughout the year. A complete minute book is included with every incorporation.
5. Business Registration and CRA Accounts
After incorporation, you must register your corporation with CRA and obtain the necessary program accounts. CRA assigns a 9-digit Business Number (BN) to every corporation. Program accounts (RT for HST, RP for payroll, RC for corporate income tax, RR for charity) are attached to the BN. All CRA filings, remittances and correspondence use the BN.
CRA Program Accounts
| Account | Code | When Required | How to Register |
|---|---|---|---|
| Business Number | BN (9 digits) | Every corporation. Assigned at incorporation or upon first CRA registration. | CRA Business Registration Online or Form RC1. We register as part of incorporation. |
| Corporate income tax | RC | Every corporation. The T2 return is filed under this account. | Automatic when BN is registered for a corporation. |
| GST/HST | RT | Mandatory if revenue exceeds $30,000 in 4 consecutive calendar quarters. Voluntary registration available anytime. | CRA Business Registration Online or Form RC1. We register as part of incorporation. |
| Payroll deductions | RP | Required when you pay salary or wages to any employee (including yourself as shareholder-employee). | CRA Business Registration Online. We register when payroll is set up. |
| Import/export | RM | If importing goods into Canada. Required for customs declarations and duty payments. | CBSA registration linked to BN. |
| Information returns | RZ | If filing T5 slips (investment income), NR4 slips (payments to non-residents) or other information returns. | CRA registration. We set up when needed. |
Ontario Business Registration
| Registration | Cost | When Required |
|---|---|---|
| Master Business Licence (OBCA corps) | Included in Ontario incorporation | Automatic for Ontario-incorporated companies. |
| Extra-provincial registration (federal corps operating in Ontario) | $80 | Federal corporations with a registered office or carrying on business in Ontario. Most federal corps register immediately. |
| Business name registration (trade name) | $60 | If operating under a name different from the corporate name. Example: "1234567 Canada Inc. operating as Maple Consulting." |
| Professional regulatory registration | Varies | If operating a professional corporation (medical, dental, veterinary). Regulatory college certificate of authorization required. |
| Municipal business licence | Varies by municipality | Some municipalities require business licences for specific activities (food service, personal services, contractors). Check with your local municipality. |
6. HST Registration
HST (Harmonized Sales Tax) is a 13% consumption tax in Ontario (5% federal GST + 8% provincial PST). Every business that makes taxable supplies in Ontario must collect HST from customers once revenue exceeds $30,000 in any four consecutive calendar quarters. Voluntary registration is available at any time, even before reaching $30,000, and is recommended for most businesses.
When to Register for HST
| Scenario | Registration Required? | Recommendation |
|---|---|---|
| Revenue under $30,000 | Not mandatory (small supplier exemption). | Register voluntarily if you have significant startup expenses. You recover ITCs on all expenses while collecting HST on revenue. |
| Revenue over $30,000 | Mandatory. Must register within 29 days of exceeding $30,000. | Register before you reach $30,000 to start claiming ITCs immediately. |
| Construction or trades | Mandatory in practice. Clients expect HST on invoices. | Register at incorporation. You must charge HST from the first job. |
| Exporting to the US | Not mandatory (exports are zero-rated). | Register voluntarily. Exports are 0% HST but you claim full ITCs on all Canadian expenses. This produces quarterly HST refund cheques from CRA. |
| Professional services (consulting, IT) | Mandatory once over $30,000. | Register at incorporation. Most consultants exceed $30,000 within 2 to 3 months. |
| Exempt supplies only (residential rent, most financial services, certain health services) | Not required. Cannot register. | If you make only exempt supplies, you cannot register for HST and cannot claim ITCs. |
HST Filing Methods
| Method | How It Works | Best For |
|---|---|---|
| Regular Method | Collect HST on sales. Claim ITCs on expenses. Remit the difference. If ITCs exceed HST collected, CRA sends a refund. | Businesses with significant expenses (construction, manufacturing, import/export, any business buying equipment or inventory). |
| Quick Method | Collect 13% HST but remit only 8.8% (services) or 4.4% (goods) of HST-included revenue. No ITCs claimed (except on capital purchases over $30,000). | Service businesses with low expenses: consultants, IT contractors, freelancers, professional services. HST-included revenue must be under $400,000. |
Quick Method Savings Example (Ontario, Service Business)
| Item | Regular Method | Quick Method |
|---|---|---|
| Revenue | $200,000 | $200,000 |
| HST collected (13%) | $26,000 | $26,000 |
| HST-included revenue | $226,000 | $226,000 |
| ITCs claimed / Quick Method remittance | $3,900 (ITCs on $30,000 expenses) | $19,448 (8.8% x $226,000 less 1% credit on first $30,000) |
| Amount remitted to CRA | $22,100 | $19,448 |
| Annual savings | $2,652 |
We Advise on the Best HST Method at Incorporation. The Quick Method saves money for low-expense service businesses. The Regular Method is better for businesses with significant expenses. The wrong choice costs you money every filing period. We calculate both methods based on your projected revenue and expenses and recommend the optimal approach. You can switch methods once per year. GST/HST Filing Services →
7. Payroll Setup
If you pay yourself a salary or hire any employees, you need a CRA payroll account (RP). The employer is responsible for calculating, withholding and remitting CPP, EI and income tax from every pay cheque. The employer also pays employer CPP (matching the employee's contribution) and employer EI (1.4 times the employee's contribution).
When You Need Payroll
| Scenario | Payroll Required? | Notes |
|---|---|---|
| Paying yourself a salary | Yes. | Most common. A salary-dividend split is the standard for owner-managed corporations. The salary portion requires payroll. |
| Paying yourself dividends only | No. | Dividends are not employment income. No CPP, EI or income tax is withheld. But: no RRSP room is created. |
| Hiring employees | Yes. | From the first pay period. Employer must withhold and remit CPP, EI and income tax. |
| Using subcontractors only | No (if genuinely independent). | No payroll obligations. But CRA may reclassify contractors as employees (see CRA risk below). |
Employer Costs per Employee (2026 Ontario)
| Component | Rate | On $60,000 Salary |
|---|---|---|
| Employer CPP | 5.95% (on $3,500 to $71,300) | $3,361.75 |
| Employer CPP2 | 4.00% (on $71,300 to $81,200) | $0 (below threshold) |
| Employer EI | 2.30% (1.4x employee rate) | $1,378.00 |
| Vacation pay (4%) | 4% of gross | $2,400.00 |
| WSIB (if mandatory) | Varies by industry | $1,260 (at $2.10/$100 example) |
| EHT | 0% if under $1M payroll | $0 |
| Total employer cost above salary | $8,399.75 |
Shareholder-Employees Owning 40%+ of Voting Shares Are Exempt from EI. Neither the employee nor the employer pays EI. On a $100,000 salary: $2,585 saved annually. CPP is still required. This exemption must be configured correctly in your payroll software from the first pay run. We set this up as part of every incorporation where the shareholder plans to take salary. Payroll Services →
8. Business Bank Account
Every corporation must have a separate business bank account. Mixing personal and corporate funds is one of the most common mistakes Ontario business owners make. CRA uses commingled funds as evidence that the corporation is not operating at arm's length, which can lead to piercing the corporate veil (making the shareholder personally liable for corporate debts) and triggering a net worth assessment during an audit.
Documents Your Bank Requires
| Document | Where to Get It |
|---|---|
| Articles of incorporation | From Corporations Canada or ServiceOntario (included in your minute book). |
| Certificate of incorporation | Issued with the articles (included in your minute book). |
| Banking resolution (directors' resolution authorizing the bank account) | Prepared by us as part of the minute book organizational resolutions. |
| Business Number (BN) confirmation | CRA confirmation letter or My Business Account printout. We provide this after registration. |
| Government-issued ID for all signing officers | Two pieces of ID for each director/officer authorized to sign (driver's licence, passport). |
Choosing a Bank
| Factor | What to Look For |
|---|---|
| Monthly fees | Most business accounts: $5 to $30/month. Some banks waive fees for the first year or with a minimum balance. Compare the fee to the number of included transactions. |
| Transaction limits | Standard accounts include 25 to 100 transactions/month. Restaurants and retail need unlimited transaction accounts. |
| Integration | Confirm the bank connects to your accounting software (QuickBooks Online, Xero). Automatic bank feeds save hours of bookkeeping each month. |
| Credit card processing | If accepting credit card payments, compare merchant processing rates (typically 1.5% to 2.7%). Some banks bundle processing with the business account. |
| Line of credit | Establishing a relationship early makes future credit applications easier. A business credit card builds the corporate credit profile. |
Open Your Business Bank Account Within the First Week. Every dollar of revenue must flow through the corporate bank account. Every business expense must be paid from the corporate account. Personal expenses paid from the corporate account are recorded as shareholder loans and may be taxable. We provide all required bank documents as part of the incorporation package.
9. Complete Timeline: Day 1 to Day 30
Day 1 to 3: Incorporation
Articles of incorporation filed. Corporation legally created. Minute book prepared: articles, bylaws, organizational resolutions, share certificates, all registers. Share structure: Class A (voting common), Class B (non-voting), Class C (preferred). Federal: 1 to 3 business days. Ontario: 1 to 5 days.
Day 3 to 5: CRA Registration
Business Number (BN) registered with CRA. Corporate income tax account (RC) created. HST account (RT) registered. Payroll account (RP) registered if paying salary. All confirmations received from CRA within 5 to 10 business days.
Day 5 to 7: Bank Account
Business bank account opened at your chosen bank. Documents provided: articles, certificate, banking resolution, BN confirmation, director ID. Online banking and business debit card activated. Connect bank feed to QBO or Xero.
Day 7 to 10: Insurance and Licensing
Commercial general liability (CGL) insurance obtained if required. Professional liability (E&O) obtained for consultants and professionals. WSIB registration if mandatory industry. Municipal business licence if required by your city.
Day 10 to 14: Payroll and First Pay
Payroll configured in Wagepoint, QBO Payroll or your chosen system. TD1 and TD1ON forms completed by all employees. First pay run processed. Remittance schedule confirmed with CRA. EI exemption applied for 40%+ shareholders.
Day 14 to 30: Tax Planning and Operations
Initial tax planning consultation completed: salary-dividend split modelled, RRSP room strategy confirmed, HST method selected (Regular vs. Quick), fiscal year-end confirmed, holdco timeline discussed. Bookkeeping system configured. First invoices sent through the corporation. You are operating.
10. Total Startup Costs
| Item | Cost | Notes |
|---|---|---|
| Our incorporation service fee | From $35 | Articles, share structure, minute book, BN, HST, payroll, banking resolution, tax planning consultation. |
| Government filing fee (federal) | $273 | Paid to Corporations Canada for articles of incorporation. |
| Government filing fee (Ontario) | $335 to $360 | Paid to ServiceOntario. Only if Ontario incorporation (OBCA) is chosen. |
| NUANS search (named companies only) | $13.80 | Not required for numbered corporations. |
| Extra-provincial registration (federal corps in Ontario) | $80 | One-time. Required for federal corporations operating in Ontario. |
| Trade name registration | $60 | Optional. Register a business name for a numbered corporation. |
| Business bank account | $0 to $30/month | Many banks waive first-year fees for new corporations. |
| CGL insurance | $500 to $2,000/year | Varies by industry and coverage. Construction: higher. Consulting: lower. |
| Total (federal, numbered, typical) | $308 to $388 | Our fee ($35) + government ($273) + extra-provincial ($80 if Ontario). The corporation saves you $8,440+ in tax in the first year at $80,000 income. |
Bookkeeping Clients Receive Incorporation FREE: Ontario business owners who sign up for bookkeeping ($100/month) receive incorporation at no service charge (government filing fee only). Bank reconciliation, HST filing, monthly financials and the T2 filed FREE every year. CRA audit support FREE. Book Free Consultation →
11. Common Mistakes That Cost Ontario Business Owners Money
| # | Mistake | Cost |
|---|---|---|
| 1 | Operating as a sole proprietor at $150,000+ income for 2 years before incorporating. | $48,000+ in excess tax that is never recovered. |
| 2 | Not registering for HST voluntarily and missing ITCs on startup expenses. | $3,000 to $15,000 in unrecoverable ITCs depending on equipment purchased. |
| 3 | Issuing only one class of shares at incorporation. | Expensive corporate reorganization (section 86) later. $2,000 to $5,000+ in professional fees. |
| 4 | Not issuing non-voting shares to spouse at incorporation. | LCGE not multiplied. On a $2M business sale: $300,000+ in additional capital gains tax. |
| 5 | Mixing personal and corporate bank accounts. | CRA net worth assessment. Shareholder benefit assessments. Loss of corporate liability protection. |
| 6 | Paying 100% dividends with no salary. | Zero RRSP room created. On $200,000 over 5 years: $360,000 in lost RRSP contribution room. |
| 7 | Not tracking the shareholder loan account from day one. | CRA assesses the entire balance as income under section 15(2). Tax on $50,000 shareholder loan: $26,765. |
| 8 | Classifying employees as contractors to avoid payroll. | CRA reclassification: back CPP, EI, tax, WSIB, penalties for all years. 5 workers over 3 years: $68,000 to $95,000. |
| 9 | Not maintaining the minute book after incorporation. | Bank declines financing. Buyer walks away from deal. CRA questions share structure during audit. |
| 10 | Missing the 180-day bonus accrual deadline. | A $50,000 year-end bonus accrued but not paid within 180 days: the corporation loses the entire deduction ($50,000 x 12.2% = $6,100 minimum). |
Frequently Asked Questions: Starting a Business in Ontario
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