Incorporating Your Business in Ontario: Step-by-Step Guide

Arshya Mittal
Aug 17
4 min read

Updated: Aug 17

Starting a business in Ontario is exciting — but one of the biggest decisions you’ll face is whether to incorporate or run your business as a sole proprietor. Incorporation can offer important tax savings, liability protection, and long-term growth opportunities.

At Mittal CPA Professional Corporation, we help entrepreneurs and small business owners navigate the incorporation process in Ontario, ensuring you get it right from day one.

What Does it Mean to Incorporate?

When you incorporate, your business becomes a separate legal entity. Instead of operating under your personal name, your corporation has its own legal identity — able to own property, sign contracts, and pay taxes separately from you.

This separation protects your personal assets and opens the door to more tax and growth opportunities.

Benefits of Incorporating in Ontario

Limited Liability Protection – Your personal assets are generally shielded if the business is sued or takes on debt.
Lower Taxes – Incorporated businesses may benefit from the small business tax rate in Ontario, which is lower than personal income tax rates.
Income Splitting & Tax Planning – Ability to pay dividends to family members, defer income, and use advanced tax strategies.
Professional Credibility – Clients, lenders, and investors often see incorporated businesses as more established.
Business Continuity – Corporations continue even if ownership changes, making succession planning easier.
Access to Capital – You can issue shares or attract investors more easily.

Step-by-Step: How to Incorporate in Ontario

Choose Your Business Name
- Conduct a NUANS® (Newly Upgraded Automated Name Search) report to to confirm your business name is unique.
Decide on Federal vs. Provincial Incorporation
- Provincial (Ontario): Easier and less expensive if you only operate in Ontario.
- Federal: Stronger name protection across Canada if you plan to expand nationally.
Prepare Articles of Incorporation
- This legal document sets out your structure, share classes, and director information.
- You can file online with the Ontario Business Registry or through a service provider.
Register with the Government
- Submit your incorporation documents and NUANS® report.
- Pay the incorporation fee (currently around $360 online for Ontario).
Set Up Corporate Records
- Maintain a minute book with bylaws, share certificates, and meeting records. This is required for compliance.
Register for Taxes and Accounts
- CRA will issue a Business Number (BN).
- Register for GST/HST if annual revenue exceeds $30,000.
- Open a payroll account if you plan to hire employees.
Open a Business Bank Account
- Keep your business finances separate to protect your liability status and simplify accounting.

After Incorporation: Your Ongoing Obligations

Incorporating isn’t “one and done.” You must:

File an annual corporate tax return (T2).
File an annual return with the Ontario Business Registry.
Maintain proper bookkeeping and corporate records.
Hold annual meetings of directors and shareholders (even if you’re the only one).

Failing to maintain compliance can result in penalties or even the dissolution of your corporation.

Example: Tax Savings from Incorporation

Scenario 1: Sole Proprietor Earning $120,000
- Taxed at personal marginal rates, possibly 40%+.
Scenario 2: Incorporated Business Earning $120,000
- First $500,000 eligible for the small business tax rate (≈12.2% in Ontario).
- Income can be left in the corporation or paid out strategically as salary/dividends.
- Potential tax savings: $15,000–$20,000+ annually, depending on planning.

This is why many Ontario professionals (consultants, contractors, IT workers, doctors, real estate agents) choose to incorporate.

Common Mistakes When Incorporating

Using a name without running a NUANS® search.
Not maintaining corporate records or annual filings.
Mixing personal and business expenses in one account.
Failing to register for GST/HST at the right time.
Incorporating without considering tax planning or long-term goals.

FAQ: Incorporating in Ontario

Should I incorporate federally or provincially?

If your business will mainly operate in Ontario, provincial incorporation is simpler. Federal incorporation is ideal if you plan to expand nationwide or need stronger name protection.

How much does it cost to incorporate in Ontario?

Government fees are about $360 online. Additional costs may apply for NUANS® reports, legal support, and professional setup.

Do I need a lawyer or accountant to incorporate?

You can file online yourself, but working with an Mittal CPA ensures your structure (share classes, tax planning) is set up properly from day one.

Can I incorporate later if I start as a sole proprietor?

Yes — many businesses start as sole proprietors and later transition to a corporation. However, planning early can help avoid tax and legal complications.

What ongoing filings are required?

You must file:

Annual corporate tax returns (T2).
An annual return with the Ontario Business Registry.
Proper bookkeeping and corporate records.

How Mittal CPA Can Help

Incorporation is more than paperwork — it’s about creating the right tax-efficient and legally sound structure for your business. At Mittal CPA Professional Corporation, we:

Advise whether incorporation is the right move for you.
Assist with NUANS® searches, incorporation filings, and CRA registrations.
Help structure your corporation for maximum tax savings.
Provide bookkeeping, payroll, and corporate tax filing services.
Guide you with ongoing tax planning and compliance.

With the right setup, incorporation can save you money and protect your business for years to come.

Thinking of incorporating your business in Ontario? Contact Mittal CPA Professional Corporation today — we’ll guide you step by step, maximize your tax benefits, and keep your corporation compliant.