How to Incorporate a Business in Ontario

Incorporation transforms your business from a sole proprietorship or partnership into a separate legal entity — a corporation. This separation provides significant legal and tax advantages for many Ontario businesses.

Provincial vs Federal Incorporation

Ontario incorporation (under the Business Corporations Act) allows you to operate primarily in Ontario. You'll need to register as an extra-provincial corporation if you expand to other provinces.

Federal incorporation (under the Canada Business Corporations Act) gives you the right to use your corporate name across Canada and may offer more name protection. It typically costs slightly more but provides greater flexibility for businesses planning national expansion.

Steps to Incorporate in Ontario

1. Choose a name (conduct NUANS name search) or use a numbered company
2. Complete articles of incorporation
3. Register with the Ontario government through ServiceOntario
4. Set up corporate minute book (records of directors, shareholders, bylaws)
5. Obtain a Business Number from the CRA
6. Open a corporate bank account

Key Advantages of Incorporation

• Limited liability: Your personal assets are generally protected from business debts
• Tax advantages: Small business tax rate on active business income is significantly lower than personal rates
• Credibility: Many clients and suppliers prefer dealing with corporations
• Income splitting: Ability to pay family members reasonable salaries
• Perpetual existence: The corporation continues even if ownership changes

Costs of Incorporation in Ontario

Provincial incorporation filing costs approximately $300 online. Adding legal fees for proper setup (minute book, shareholder agreements, bylaws) typically brings total costs to $1,500-$3,000 for a straightforward incorporation.