How to Register Ontario Sole Proprietorship?

What is Sole Proprietorship in Ontario?

Sole Proprietorship is an unincorporated business that is owned by a single person. This business structure is the simplest, easiest, and least expensive in Canada. Only one single person owns and manages this business structure to produce goods or offer services (professional, handicraft, etc.)

There is no legal distinction between the owner and the business. This means that the owner is personally responsible for all the business’s debts and obligations. The owner of the Sole Proprietorship is called “Sole Proprietor”.

Table of Contents:

1. What is Sole Proprietorship in Ontario?
2. What is the Difference Between a Sole Proprietor, Director, and Shareholder?
3. Benefits of Registering an Ontario Sole Proprietorship
4. Disadvantages of Registering an Ontario Sole Proprietorship
5. Do I Need to Register a Sole Proprietorship in Ontario
6. What Information is Required to Register an Ontario Sole Proprietorship?
7. How to Register a Sole Proprietorship in Ontario?
8. What will you get after registering your Ontario Sole proprietorship?
9. Can Ontario Sole proprietorship register Extra provincial in other provinces?
10. Can I Change Ontario Sole Proprietorship to an Ontario Corporation?
11. Can I Register a Sole Proprietorship at the Federal Level
12. Under Which Law and Section is a Sole Proprietorship Registered in Ontario?
13. How RegiCorp Inc. Can Help You Register a Sole Proprietorship?
14. How to launch your own company and become an entrepreneur?
15. FAQs on Ontario Sole Proprietorship

What is the Difference Between a Sole Proprietor, Director, and Shareholder?

• Sole Proprietor:  Ontario Sole Proprietorship business owner is known as a “Sole Proprietor”. This single person owns and operates the business, personally liable for all debts, profits, and losses.
• Director: A director is an individual who is elected or appointed by a corporation’s shareholders to oversee the company’s core management and make key policy and strategic decisions.
• Shareholder: A shareholder is an individual who owns one or more shares of a corporation.

Benefits of Registering an Ontario Sole Proprietorship

1. Simplicity of Registration: It is the easiest and simplest business structure in Ontario to set up and manage.
2. Use of Own Name: You can use your legal name to register Ontario Sole proprietorship, or you can use a business name or both.
3. Sole Control: A Sole Proprietor has the full responsibility for making all business decisions. This way, a sole proprietor is fully responsible for business decisions.
4. All Profits Receive: The business owner receives All Business profits that are generated from sole proprietorship business.
5. Tax benefits: Business losses can be deducted from Sole Proprietor’s personal income.
6. Cost: To register a sole proprietorship there is a minimum cost of around $60. That is lower costs compared to other business structures like Ontario Corporation.

Disadvantages of Registering an Ontario Sole Proprietorship

1. Unlimited Liability: If you are a sole proprietor, you are solely responsible for all liabilities of your business. The risk also extends to your personal assets and property.
2. No legal status: Ontario Sole proprietorship business is an unincorporated business which is why the Sole proprietorship has no legal status in Ontario.
3. No Name Protection: As it is registered as an unincorporated business, so anyone can use the same name as the business name in Ontario.
4. Higher tax: Business tax is filed under personal tax return. That’s why it can be higher than a corporate tax rate.
5. Registration Renewal: Every Ontario Sole proprietorship business needs to renew its registration every 5 years. After 5 years if not renewed the registration it automatically inactive or cancelled by the Ontario Business Registry.
6. Longevity: The business ends if the owner dies or retires.

Do I Need to Register a Sole Proprietorship in Ontario?

In Ontario, if you plan to operate under a business name that is different from your legal name then registering a sole proprietorship is necessary.
If you want to operate under your own legal name, then technically Sole proprietorship business registration is not mandatory in Canada.
However, registering your business name can give you to open a bank account under your business name. That will help you to get business loans and government grants. It also gives you an professional image that you do not have with an unregistered business. If you do not register your business, it can limit benefits from your suppliers.

What Information is Required to Register an Ontario Sole Proprietorship?

When registering your sole proprietorship, you will need the following information:

• Your full legal name
• Proposed business name
• Business address
• Owner Address
• A description of the business activities according to NAICS

Note: Many of our clients ask “Can I use same address as business address and owner address? The answer is Yes, you can use own home address as your business address. Even if you want you can later change your Ontario sole proprietorship business address.

How to Register a Sole Proprietorship in Ontario?

Registering an Ontario sole proprietorship is a straightforward process. Before registering you have to decide whether the Business structure is suitable for you or not. There is an alternative option to incorporate your business under the Ontario Business Corporations Act as a single or sole director. However, here are the steps you need to follow:

1. Register Ontario Sole Proprietorship Business Name: We already mentioned that if you want to operate your business under your legal name you do not need to register your Sole proprietorship. If you want to operate under a business name you must need to register your business name.
2. Conduct a Name Search: After deciding the name you need to search the name for availability. According to Ontario Business Name Act an Ontario sole proprietorship name is not protected. This means many people can use the same Sole proprietorship business Name. So, it is recommended to choose a unique business name for your Ontario Sole proprietorship. For this, you need to perform an Ontario NUANS Report (Newly Upgraded Automated Name Search) to check the availability of your chosen business name.
If you want to make a website, you also may search for domain name availability. If you register your sole proprietorship business with RegiCorp, you will have the opportunity to do unlimited nuans name searches to make sure your proposed business name is available to use.
3. Fill out Online form: If you read the previous part of the blog, you already know that an Ontario Sole proprietorship is the easiest type of business to register in Ontario. You can register entire process with our easy-to-use online form. You can register online through Service Ontario or by visiting a Service Ontario center. But for hassle and flawless process RegiCorp is always ready to make your journey smooth. You just need to fill up our online form, we will take care all registering process of your Ontario Sole proprietorship.

What will you get after registering your Ontario Sole proprietorship?

After you successfully register your Ontario Sole proprietorship you will get a certificate Business Name Registration for a Sole Proprietorship and Registration Information sheet. With these documents, you can open a business account under your Ontario Sole proprietorship business.

Can Ontario Sole proprietorship register Extra provincial in other provinces?

You can not register extra-provincial registration using your Ontario Sole proprietorship. If your business is growing and you want to operate your business in other provinces like Alberta, you just need to register an Alberta Sole proprietorship. This is the limitation of an Ontario Sole proprietorship. But if you incorporate an Ontario Corporation you can register your business in Alberta as an extra provincial registration and can operate your business.

Can I Change Ontario Sole Proprietorship to an Ontario Corporation?

Yes, a sole proprietorship business name can be converted into an Ontario corporation. But for this process, you have to incorporate Ontario Corporation and need to cancel your Ontario Sole Proprietorship registration. Remember, this process involves more paperwork and regulatory compliance.

Can I Register a Sole Proprietorship at the Federal Level?

To register Ontario sole proprietorship or other unincorporated business, you must register your business with the provinces and territories where you plan to do business. At the Federal level, unincorporated business registration is not allowed. But you need to get a Federal Business Number and Tax account from CRA.

Under Which Law and Section is a Sole Proprietorship Registered in Ontario?

Sole proprietorships are registered under the Business Names Act in Ontario. The specific sections outlining the requirements and procedures can be found in this act.

How RegiCorp Inc. Can Help You Register a Sole Proprietorship?

RegiCorp Inc. offers comprehensive services to help you register your sole proprietorship in Ontario. Our services include:

• Review your order to ensure compliance is met under the Business Name Act.
• Conducting a business name search to ensure the name is available to register on the Nuans database.
• Register your sole proprietorship online on your chosen timeline.
• Provide Business registration documents
• Guiding necessary permits and licenses
• Domain (.ca or .com) search and registration
• Free Reminder email and call to renew your sole proprietorship business.
• Register Business number, GST/HST. Payroll, export-import & other tax accounts with CRA

How to launch your own business and become an entrepreneur?

After reading this article now you decide this sole proprietorship structure suits your goals and needs. If your business is grown up, you can incorporate your business later.

Once these steps are complete, focus on launching your business, and consider using a business plan template to guide you. RegiCorp can support you through every step, whether you register a sole proprietorship or incorporate your business.

FAQs on Ontario Sole Proprietorship

Do I need a separate bank account for my sole proprietorship?

Legally it is not required. But it is recommended to keep your personal and business finances separate. For better financial management and tax purposes, you may open a separate bank account.

How long does it take to register a sole proprietorship in Ontario?

If you register your Ontario sole proprietorship with RegiCorp Online is typically processed within a few days. But we offer a 1-hour Rush timeline that will take less than 1 hour to register your Ontario sole proprietorship. But, while mail-in registration may take several weeks.

Can I hire employees for your Ontario sole proprietorship?

Yes, you can hire employees. However, you must comply with employment laws and regulations. You also need to register a CRA Payroll account.

Do I need an accountant for my sole proprietorship?

While not mandatory, hiring an accountant can help manage your finances, especially during tax season. RegiCorp also offers filing small business tax return services at very low cost.

What happens if I don’t register my sole proprietorship?

Operating without registering your business name (if different from your legal name) can result in fines and legal consequences.

Is my business name protected after registration?

As per the Ontario Business Name Act, a sole proprietorship business name is not protected. To protect your brand, consider Canada trademark registration.

Can I use my home address as my business address?

Yes, you can use your home address as your business address but be aware of any zoning bylaws that may apply.

My name is available on search engines (Google, Bing, etc.), Can I reserve my Sole proprietorship name?

Business registration and search engine results both are different. If you find any name available in search engines it does not mean you can register that name because registration, follows the rules and regulations of specific jurisdiction laws.

Can I register My sole proprietorship and Domain name together?

Part of our service and our commitment to new business owners and entrepreneurs, we can register your sole proprietorship and domain both together. If you choose to register business name and domain together with us, we first search the name both on NUANS and domain database, if name is not available, we wait for new name from you then we proceed with that one. Ontario sole proprietorship is register for 5 years and domain is register for 1 years if you want, we can reserve for whatever term you want.

How much tax do sole proprietors have to pay?

When it comes to taxes, sole proprietors must pay their personal income tax rate on the net income that their business generates.

What is the cost to register a Ontario sole proprietorship?

The cost depends what service do you want to take from RegiCorp. The cost is around $200 with all paperwork.