Introduction

Starting your own business is an exciting journey. You’ve got the idea, the passion, maybe even your first few clients, but how do you make it official in Ontario?

Whether you’re launching a home-based business in Waterloo or setting up a retail shop in Toronto, there are specific legal and administrative steps you must follow to start your business the right way. From choosing a business structure to registering your business and staying compliant with Ontario laws, proper planning makes all the difference.

In this guide, we’ll break down everything you need to know before starting a business in Ontario, from legal setup to tax registration, insurance, and more. Let’s help you build a solid legal foundation so your business can grow with confidence.

Need help registering or setting up contracts? Visit our Business Law Services page.

1. Choosing the Right Business Structure

Your business structure affects everything from your personal liability and taxes to how much paperwork you’ll need to file.

Common Business Structures in Ontario:

a. Sole Proprietorship

  • Easiest and cheapest to start
  • Full control—but full liability too
  • Business income is taxed as personal income

b. Partnership

  • Two or more people share ownership
  • Shared profits and responsibilities
  • Personal liability for each partner unless you form a limited partnership

c. Corporation

  • A separate legal entity
  • Limited personal liability for owners
  • More complex setup, but preferred for scalability and protection

Legal Tip: A corporation protects your personal assets from business liabilities. It also opens the door to tax planning strategies, investment, and credibility with banks.

2. Registering Your Business in Ontario

When Is Registration Required?

If you’re using a name other than your own personal name, you must register your business with the province.

Steps to Register:

  • Choose a unique business name
  • Perform a NUANS name search to check availability
  • Register through Service Ontario or federally via Corporations Canada (if you plan to operate nationwide)

Register your business online via Ontario Business Registry

3. Get the Necessary Licences and Permits

Depending on your business type and location, you may need:

  • A municipal business licence
  • Zoning clearance (especially for home-based businesses)
  • Health permits (for food service or health-related businesses)
  • Alcohol or gaming licences (if applicable)

How to Check What You Need:

Use the BizPaL tool to find out which licenses and permits apply to your business and location.

4. Understand Your Tax Responsibilities

Every new business owner must understand and comply with federal and provincial tax rules.

Key Tax Obligations:

a. HST Registration

If your business earns $30,000+ in gross revenue annually, you must register for a Harmonized Sales Tax (HST) number.

b. Payroll Deductions

If you hire employees, you need to:

  • Deduct CPP, EI, and income tax
  • Remit payments to the CRA regularly

c. Corporate Income Tax

If you incorporate, you’ll file a T2 corporate tax return annually.

Pro Tip: Keep your business finances separate from your personal finances. Open a business bank account and track expenses with accounting software like QuickBooks or Wave.

5. Protect Your Business Legally

Launching without legal protection can leave your business exposed to lawsuits, fines, or losses. Get ahead of potential problems with a proactive legal approach.

Must-Have Legal Protections:

a. Contracts

Whether it’s for suppliers, freelancers, or clients, use written contracts that clearly define:

  • Payment terms
  • Responsibilities
  • Termination clauses
  • Dispute resolution

b. Privacy Policy & Terms of Use

If you operate online or collect personal data, you’re legally required to have a privacy policy under Canada’s PIPEDA law.

c. Intellectual Property

Consider protecting your name, logo, or products with a trademark or copyright.

Not sure what contracts you need? See our blog on Common Legal Issues in Real Estate Closings and How to Avoid Them

6. Obtain Business Insurance

Insurance isn’t just for large corporations; it’s essential for small businesses, too.

Common Types of Business Insurance:

  • General Liability Insurance: Covers injury or damage caused to others
  • Professional Liability Insurance: Covers mistakes or negligence in services
  • Product Liability Insurance: Ideal for those selling physical goods
  • Commercial Property Insurance: Protects your office or inventory

Speak with a local insurance broker to get coverage tailored to your business type and risk level.

7. Build a Strong Team and Business Culture

If you plan to hire employees, Ontario has strict employment laws under the Employment Standards Act (ESA). You must:

  • Provide written employment contracts
  • Follow rules on hours, overtime, vacation, and termination
  • Register with the Workplace Safety and Insurance Board (WSIB) if applicable

HR Essentials:

  • Keep clear employee policies
  • Have a harassment and workplace conduct policy
  • Document everything from onboarding to offboarding

Learn about employee rights from the Ontario Ministry of Labour

8. Plan for Long-Term Success

Beyond the legal checklist, think about how you’ll grow and sustain your business long-term.

Growth Tips:

  • Write a business plan even a one-pager will help
  • Set measurable goals and track cash flow
  • Market yourself online with a strong website and SEO (search engine optimization)
  • Network with other business owners and attend local events

Don’t be afraid to ask for help. Accountants, lawyers, marketing professionals, and business coaches can all support your success.

Frequently Asked Questions (FAQs)

Q1: Can I run a small business from home in Ontario?

A1: Yes, many businesses start at home. However, you must follow zoning laws and may require municipal approval, especially for high-traffic or client-facing businesses.

Q2: Do I need to incorporate to run a business in Ontario?

A2: No. You can operate as a sole proprietorship or partnership. But incorporation offers legal protections and tax advantages, especially as your business grows.

Q3: What is the cost of starting a small business in Ontario?

A3: Costs vary based on structure and industry. At a minimum:

  • Sole proprietorship registration: ~$60–$80
  • Incorporation: $300–$500
  • Legal help: ~$500+ for setup and contracts
  • Licences and insurance costs vary

Conclusion: Build Smart, Start Strong

Starting a business in Ontario doesn’t have to be overwhelming, but it does require structure, strategy, and legal care. From choosing the right business structure and registering properly to protecting your brand and contracts, these steps lay the foundation for long-term success.

The best part? You don’t have to do it alone.

Let Beacon Law Professional Corporation Help You Launch with Confidence

Whether you need help registering, drafting contracts, or staying compliant, we’re here to support your growth.

👉 Contact us today to book a business startup consultation with one of our experienced lawyers.