How to Start a Business in Ontario: A Step-by-Step Guide

Starting a business in Ontario involves choosing the right business structure, completing any required registration, setting up applicable tax accounts, and checking licences and permits. The exact requirements and costs vary depending on the business structure, industry, location, employees, and expected revenue.

1. Validate Your Business Idea Before Registering

Before paying registration fees or incorporating, confirm that there is a realistic market for what you plan to sell.

Start by identifying your target customer, the problem you solve, competing businesses, expected pricing, and how customers currently meet the same need. Ontario’s official startup guidance recommends conducting market research before developing and registering a business.

Market research does not have to become a months-long project. A small service business might begin by interviewing prospective customers, studying local competitors, comparing prices, and testing demand with a simple landing page or small pilot.

For example, someone planning a residential cleaning business in Mississauga could compare competitors’ prices, service areas, minimum booking requirements, customer reviews, and available appointment times. If competitors consistently have long waiting lists, that may indicate demand. If the market is crowded and competitors compete primarily on price, the owner may need a clearer point of differentiation.

Try to answer four questions before moving forward:

1. Who is likely to buy from the business?
2. Why would that customer choose you instead of an alternative?
3. What will it cost to deliver the product or service?
4. Can you charge enough to produce a sustainable margin?

Registration creates a business on paper. It does not establish whether customers actually want what the business sells.

2. Prepare a Practical Business Plan

A business plan explains what you intend to sell, who will buy it, how the business will operate, and how the numbers are expected to work. Ontario includes business planning among its recommended steps for starting a business.

A small owner-operated business may not need a lengthy formal plan. A concise working plan can cover:

• Products or services
• Target customers
• Competitors
• Pricing
• Sales and marketing channels
• Startup expenses
• Monthly operating costs
• Revenue assumptions
• Staffing requirements
• Financing
• Cash-flow expectations
• Short-term milestones

Pay particular attention to cash flow.

Suppose a new business expects $8,000 in monthly sales but has $5,000 in monthly operating expenses. Those numbers initially appear workable. However, if customers pay invoices 30 to 60 days after receiving them while rent, wages, software subscriptions, and suppliers must be paid immediately, the business can still experience a cash shortage.

Your plan should therefore distinguish profitability from the amount of cash actually available at a particular time.

3. Choose a Business Structure

One of the most consequential early decisions is choosing how the business will be legally structured. Common choices for Ontario entrepreneurs include a sole proprietorship, partnership, and corporation. Ontario also recognizes structures such as co-operatives.

The best structure depends on ownership, liability exposure, taxes, administrative complexity, financing plans, and long-term objectives.

Structure	Typically suitable for	Liability	Setup and administration
Sole proprietorship	Individual owners starting relatively simple businesses	Owner is generally personally responsible for business liabilities	Usually simplest
General partnership	Two or more people operating together	Partners can be responsible for partnership debts and losses	Relatively simple, but a partnership agreement is advisable
Corporation	Businesses seeking a separate legal entity, limited liability or more sophisticated ownership arrangements	Corporation is legally separate from its owners	More complex and costly
Co-operative	Member-owned enterprises	Structured as a corporation	More specialized governance requirements

Sole proprietorship

A sole proprietorship is often attractive to someone launching a straightforward owner-operated business because it is comparatively inexpensive and simple to establish.

The tradeoff is separation. Unlike a corporation, the business is not a separate legal entity from its sole owner in the same way. Personal liability therefore deserves serious consideration, particularly for businesses with significant contractual, financial, or operational risks.

Partnership

A partnership can work when two or more people are going into business together. Ontario notes that partners can share costs, skills, debts, and losses.

A written partnership agreement can address issues such as ownership percentages, contributions, responsibilities, decision-making, profit distributions, adding partners, disputes, and what happens if a partner wants to leave.

Corporation

A corporation is a separate legal entity from its owners. Ontario identifies limited liability and easier transfer of ownership among the potential advantages, while higher setup costs, more complicated tax rules, annual filings, and corporate recordkeeping add complexity.

Limited liability should not be interpreted as absolute personal protection. Personal guarantees, certain director liabilities, and individual misconduct can create personal exposure in some circumstances.

Ontario recommends consulting a lawyer or professional adviser before incorporating.

4. Choose and Check Your Business Name

Your business name affects both registration and branding, so check it before investing heavily in signage, packaging, advertising, domain names, or other materials.

Ontario allows users to search the Ontario Business Registry for basic information about businesses and not-for-profit organizations. The province’s registration guidance also recommends checking whether a proposed business name is already being used.

A business name registration should not be confused with comprehensive intellectual property protection. Before building a valuable brand around a name, consider whether additional trademark research or professional advice is appropriate.

The requirements also differ when incorporating. If you incorporate an Ontario business corporation using a proposed name rather than a numbered corporation, Ontario requires an Ontario-biased or weighted NUANS name search report.

This creates an important distinction:

Registering a business name, incorporating a company, and protecting a trademark are not the same process.

Treat them as separate legal and branding questions.

5. Register Your Business in Ontario

Ontario businesses can complete registration and incorporation transactions through the Ontario Business Registry (OBR). The registry supports more than 90 online transactions involving businesses and not-for-profit corporations.

Ontario’s current online registration fees include:

Registration type	Ontario government fee
Sole proprietorship	$60
General partnership	$60
Ontario limited liability partnership	$60
Extra-provincial limited liability partnership	$60
Ontario limited partnership	$210
Ontario business corporation incorporation	$300

These are government filing fees listed by Ontario and do not include potential professional, intermediary, name-search, or other costs.

For example, an entrepreneur registering a sole proprietorship could pay the $60 government registration fee, while someone incorporating an Ontario business corporation would face a $300 government incorporation fee plus any additional applicable expenses.

Online incorporation under Ontario’s Business Corporations Act is listed as immediate with a $300 government fee, although processing circumstances and additional requirements can vary.

Ontario’s current system uses an Ontario.ca Login and Ontario Business Account to access business registration services.

Understand your Ontario BIN

A registered Ontario business may receive a nine-digit Ontario Business Identification Number (BIN).

Do not confuse this with the federal Business Number (BN) issued through the Canada Revenue Agency. Ontario specifically distinguishes the provincial BIN from the CRA’s BN.

Keeping those identifiers clearly labelled in your records can prevent unnecessary confusion when dealing with government accounts later.

6. Determine Whether You Need a CRA Business Number and Tax Accounts

Provincial business registration and federal tax registration are related but separate processes.

The Canada Revenue Agency uses the Business Number, or BN, to identify businesses interacting with applicable federal tax programs. Depending on your circumstances, CRA program accounts can include GST/HST, payroll, and corporate income tax accounts.

A business should determine which accounts it actually needs rather than assuming every startup needs every account immediately.

For example, hiring employees may create payroll obligations, while making taxable supplies may eventually trigger GST/HST registration requirements.

Canada Revenue Agency business registration information

7. Know When to Register for GST/HST

GST/HST is an area where new entrepreneurs commonly need to pay close attention to their revenue.

For most businesses, the CRA’s small-supplier threshold is $30,000. A business that does not exceed $30,000 in taxable supplies over four consecutive calendar quarters generally remains a small supplier and normally does not have to register for GST/HST, although voluntary registration may be possible. Different rules and calculations can apply in certain situations.

Timing matters.

If you exceed $30,000 in a single calendar quarter, you generally cease being a small supplier on the supply that pushes you above the threshold. The CRA says you must charge GST/HST on that supply and register accordingly.

If instead you cross the threshold over the previous four or fewer consecutive calendar quarters without exceeding it in a single quarter, the timing rules are different.

Example

Suppose an Ontario consulting business generates taxable supplies of:

• Q1: $8,000
• Q2: $7,000
• Q3: $9,000
• Q4: $9,000

That totals $33,000 over four consecutive calendar quarters.

The owner should not simply assume that GST/HST begins the instant cumulative revenue hits $30,001. The CRA has specific rules determining when small-supplier status ends depending on whether the threshold is exceeded in one quarter or across multiple quarters.

That distinction is worth checking carefully as revenue approaches the threshold.

Should you register voluntarily?

An eligible small supplier making taxable supplies can choose to register before mandatory registration is triggered. Once voluntarily registered, the business generally has to charge, collect, and remit applicable GST/HST, file GST/HST returns, and normally remain registered for at least one year unless commercial activities cease.

Voluntary registration can make sense in some circumstances, but it also creates administrative obligations. An accountant can help assess the tax implications for a particular business.

8. Check Your Licences and Permits Before Opening

Registering a business does not automatically give you permission to conduct every type of commercial activity.

Depending on the business, you may need federal, provincial, or municipal permits, licences, registrations, inspections, or approvals.

Ontario recommends using BizPaL, which identifies potential requirements based on the business’s location, industry, and activities.

Ontario permits and licences search

Requirements can vary substantially between businesses. Food processing, construction, professional services, transportation, childcare, importing, and businesses handling regulated materials can face very different obligations. Municipal rules can also affect zoning, signage, home-based businesses, patios, renovations, and other activities.

Canada’s federal business guidance similarly notes that permits and regulations can arise at federal, provincial or territorial, and municipal levels.

Check requirements based on both what the business does and where it operates, rather than relying on a generic startup checklist.

9. Set Up Banking, Bookkeeping, and Financial Controls

Once the legal and tax structure is established, build a financial system before transactions become difficult to track.

Your setup may include a business bank account, accounting software, invoice numbering, receipt storage, expense categorization, payment processing, tax tracking, and a procedure for reconciling bank transactions.

Even a very small operation benefits from separating business activity from personal spending as much as practical. Corporations, in particular, should maintain the separation appropriate to their status as distinct legal entities.

Create a simple cash-flow forecast as well.

For example, suppose a landscaping startup expects:

• Equipment and initial supplies: $7,500
• Insurance and registrations: $1,500
• Marketing and website: $2,000
• Three months of operating costs: $9,000

The business would need approximately $20,000 for those assumed startup and early operating costs.

That does not mean $20,000 is a typical amount required to start a landscaping company. It is simply a planning example showing why registration fees represent only a small part of the real cost of launching many businesses.

10. Address Insurance, Employees, and Operational Risks

Insurance needs depend on the business’s activities and risk profile. Depending on the situation, owners may investigate commercial general liability, professional liability, commercial property, cyber coverage, commercial auto insurance, or other industry-specific policies.

Hiring employees adds another layer of obligations. Payroll accounts, employment standards, workplace safety requirements, recordkeeping, deductions, and potentially other regulatory requirements may apply.

Do not assume that using the word “contractor” in an agreement automatically makes a worker an independent contractor for every legal or tax purpose. Worker classification depends on the applicable facts and legal tests.

Businesses with employees should therefore review Ontario employment requirements and CRA payroll obligations before the first payroll is due.

11. Create a Launch Checklist

A useful way to start a business in Ontario is to separate tasks that must happen before launch from tasks that can happen afterward.

Before accepting customers

Confirm your:

• Business structure
• Business name
• Required Ontario registration or incorporation
• CRA accounts that are already required
• Licences and permits
• Insurance needs
• Banking and payment system
• Bookkeeping process
• Pricing
• Contracts and customer terms where appropriate
• Tax collection obligations

During the first months

Monitor:

• Revenue against your GST/HST threshold
• Cash flow
• Tax amounts that need to be set aside
• Customer acquisition costs
• Profit margins
• Permit renewal dates
• Payroll requirements if you hire
• Changes to registered business information
• Filing deadlines

This two-stage approach helps prevent entrepreneurs from spending weeks perfecting nonessential details while overlooking a legal, tax, or licensing requirement that could actually delay opening.

How Much Does It Cost to Start a Business in Ontario?

There is no universal startup cost because government registration may represent only a small portion of the total investment.

A basic sole proprietorship with few assets could be inexpensive to establish. A restaurant, construction company, retail store, or manufacturing business may require substantially more capital because of premises, equipment, inventory, insurance, employees, professional services, and regulatory requirements.

For government registration itself, Ontario currently lists $60 for a sole proprietorship or general partnership registration and $300 for incorporating an Ontario business corporation online.

A better startup budget separates costs into categories:

Cost category	Examples
Government	Registration, incorporation, permits
Professional	Accountant, lawyer, specialized advice
Premises	Deposit, rent, renovations, utilities
Equipment	Computers, machinery, tools, vehicles
Technology	Website, software, payment systems
Risk management	Insurance, security
Sales	Branding, advertising, initial promotions
Working capital	Payroll, inventory and expenses before customer payments arrive

The amount of working capital needed can be more important than the registration fee itself.

Common Mistakes When Starting an Ontario Business

One mistake is incorporating automatically without first determining whether the additional cost and administration fit the owner’s situation. Incorporation has meaningful advantages in appropriate circumstances, but it is not automatically the best structure for every small business.

Another is confusing Ontario registration with CRA registration. An Ontario BIN and a federal BN are different identifiers.

A third is waiting too long to investigate GST/HST. Businesses approaching the $30,000 small-supplier threshold should understand the CRA’s threshold and timing rules before crossing it, not afterward.

Other avoidable problems include launching before checking municipal requirements, mixing personal and business transactions, underestimating working capital, failing to document agreements between partners, and assuming that registering a name provides complete trademark protection.

Conclusion

Learning how to start a business in Ontario begins with making the right decisions in the right order. Validate the market first, choose a structure that fits the business’s ownership and risk, register or incorporate where required, determine your CRA tax obligations, and confirm all applicable licences and permits before opening.

The provincial filing itself can be relatively straightforward. The decisions surrounding liability, taxes, cash flow, licensing, employees, and ongoing compliance deserve more attention.

For a starting point tailored to your circumstances, Ontario also provides a questionnaire that creates a custom startup guide covering matters such as registration, licences, permits, funding opportunities, HST, payroll, and insurance.

Because legal, tax, licensing, and employment requirements depend on the business and can change, verify current requirements with the relevant government authority and seek qualified legal or accounting advice when the decision has significant financial or legal consequences.

FAQ’s