Registering a Business in Ontario
Registering a business in Ontario so you can open a bank account, accept payment in your business name, cement a partnership with a friend or colleague does not require hiring a lawyer or incorporating a company, which together will cost you at least $900 or, more probably, $1,200.
No, you can do it for $60*. You can register as a sole proprietorship or partnership. It is much less complicated than an incorporation, and when it comes time to file your taxes, you are just filing one (personal) return not two–one for you and one for your corporation. You can probably figure out how to file a personal income tax return yourself with help from some amazingly good cheap software, but fuggedaboutit when it comes to corporate tax returns–you’ll need an expensive professional accountant for that so KISS, keep it simple IMHO.
Lawyers will tell you there are benefits from incorporating like, say, limited liability. But there are many things that pierce the corporate veil in Ontario like income source deductions, HST, PAT, income taxes owed, environmental liabilities so I think creditor protection is overblown. Also, Canadians in general tend to be much less litigious than, say, Americans so I tell my students in Canada to worry about business 1st and legals 2nd. In the US, which has around 3% of the world’s population and 66% of the world’s supply of lawyers, it’s the reverse.
If I could get a do-over for my business career, I would not have had such a complicated corporate or financial structure. Every financial “engineer” I’ve ever met, has failed, many of them repeatedly.
I would also have closely followed Warren Buffett’s value investing methodology–being much more patient and combined with tax-free re-financing from time to time. Less flipping, more build/hold/refinance/do it again…
@ profbruce @ quantum_entity
* Here’s an Ontario government site where you can get your master business license for $60, CLICK HERE
They’ll help you search for, register or renew a business name.
A printer to print the Receipt, Summary Registration, Profile Summary, Master Business Licence and/or the Enhanced Business Name Report
Note there are other sites that’ll charge you over $200 for the same service… so be careful.
Postscript: you should also register for HST if you expect your revenues to be over $30,000 annually. It’s free to register and HST is a GOOD TAX, at least from a business POV.
What’s that? A good tax you say?
Yes. HST allows you to keep track of all your ITCs (input tax credits, ie, all the HST you pay on your business inputs) and deduct them from HST you collected. Trust me, it’s very efficient.
It also allows you to self-declare HST on any commercial property or land you buy so you don’t have to pay it. Let’s say you are buying a nice industrial condo for your business for $300,000, there is 13% (in Ontario) tax due on the purchase. That’s $39,000, a big chunk of change… If you or your business are already registered for HST (easy to do, just visit CRA’s website), then you self declare and don’t pay a cent.
Because of me. Yep, moi.
Back in the day when we were buying an NHL franchise (the Ottawa Senators in 1991), we argued that because the NHL is headquartered in Manhattan, HST (actually it was called GST at the time) did not apply. CRA did not accept that argument.
But what they did accept was that if we paid 7% (the GST rate at the time) of the purchase price ($50 million USD) or $3.5 million, CRA would just have to turn around a few weeks later and refund that money because we would claim it (correctly) as an ITC.
So what it meant was that CRA would collect billions of GST/HST dollars on commercial transactions only to refund it when corporations or individuals or sole proprietorships or partnerships next filed their annual/quarterly or monthly GST/HST returns. It would be a hopeless bookkeeping nightmare for Canada for 0 net benefit.
So they caved–the Sens gave CRA a cheque for $3.5 million USD and they put their cheque for the same amount in the NHL/Ottawa Senators escrow closing account. It was a wash. Now, they don’t bother exchanging cheques; you just sign a form (that your lawyer prepares) and self declare.
From a business or individual’s POV though, missing $3.5 million or, for that matter, $39,000 from your cashflow even if it’s only for a few weeks or months can be a big deal; for entrepreneurs CASH IS KING (OR QUEEN), brothers and sisters.
More about registering your business in Ontario https://profbruce.tumblr.com/post/138216199164/register-your-business-name
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