Business incorporation is the process of turning a general partnership or a sole proprietorship into a formally recognized company. An enterprise that goes through this process becomes a legal structure that’s separate from the individual founders. In other words, the company’s resources are set apart from the personal resources of the people who founded it.
The new limited liability company (LLC) changes how the law views the business as a whole. In most cases, this setup also has more credibility with employees and prospective clients. It’s worth noting that the process of incorporation and the laws governing the world of business may vary with government policies. As such, it’s imperative that you research all the requirements beforehand.
RELATED ARTICLE: WHY COMPLEX BUSINESSES NEED A CUSTOMIZED PLATFORM
If you’re looking to incorporate in Ontario, then you’ve landed in the right place. This article discusses all the details you need to know before and during the process of incorporation.
The Process of Business Incorporation in Ontario
Incorporating a partnership or sole proprietorship in Ontario isn’t as complicated as many people think. Provided you have all the requirements and understand the necessary steps, you can complete the whole process within a very short time. Read on to learn some of the main steps.
Step 1: Name Registration
The first thing you’ll need to do is come up with a name that is not only unique, but also describes your business adequately. You’d want to use a word or phrase that prints a memorable identity in the minds of the clients. For instance, for Ontario companies as well as companies elsewhere, a word that your target audience can relate to is a perfect option because it’s a lot easier to remember.
Other factors to consider when choosing a business name is where else you will be utilizing it. For instance, in this world and age, it’s important to have a website. The domain of this website should be the company’s name. Therefore, in the selection process, it would be a wise idea to confirm the domain’s availability for every proposed name.
The same goes for social media handles. Having a social media name that matches that of another business can be confusing to customers. While you’re at it, you might also want to keep in mind visual marketing aspects, like logos.
Based on the aforementioned reasons, you can already see why your business name will need to be as unique as possible. However, that’s not to say you should choose a complex word because that will make it difficult for potential clients to remember it.
Step 2: Completing the Documentation
The next step is to ensure that you complete all the necessary forms. The most important document is the Articles of Incorporation. It’s basically a legal document that sets out how a limited liability company will be run within Ontario. The rules and laws presented here are governed by the Business Corporations Act. Another thing to note is that the Articles of Incorporation document is publicly available for anyone to use.
When filling out this form, it’s recommended that you get help from the experts where possible. Even if you’re a trained lawyer, getting independent advice from experienced people in Ontario will ensure that you don’t mess up the details. It will also save you money and time that you would have otherwise used while making corrections in the future.
Step 3: Submitting the Documentation
After filling out all the necessary information, the next step will be to submit your forms. There are a number of ways you could do this, with the most traditional one being physical delivery at a government office. A convenient one, however, would be electronic submission, which can save you time and money.
Many people, however, prefer a third-party processing company to finalize the process. Such firms offer important incorporation services at a fee. Of course, if you go this route, you’re likely to enjoy greater convenience. Since you’ll be served by experts in Ontario, you can ask the necessary questions to avoid future frustrations, too.
Step 4: The Processing Stage
Once you’ve done your part, you can sit back and wait for the Ontario provincial government to assess your documents. If everything checks out and the application is approved, you’ll be given a certificate of incorporation and a Business Identification Number (BIN). After this stage, your business will then be considered an official entity and can only be dissolved through a legally approved process.
Reasons for Incorporating in Ontario
Incorporation might be among the last things on your to-do list, probably because you’re not sure if it’s right for you. But why are many people looking to form a limited liability company rather than running a small individual business? Here are the benefits that seem to attract many entrepreneurs:
When you start a small business, everything runs through you. As the owner, you’re not only required to invest money but also to ensure that everything is running smoothly and service any existing loans. In case the business fails to clear its debts, a creditor may claim your property and use any means possible to recover their money.
RELATED ARTICLE: STARTING YOUR OWN BUSINESS? HERE’S WHAT YOU’LL NEED
On the other hand, an LLC runs separately. It isn’t linked to the founders’ personal resources. As such, if the company finds itself in a similar situation mentioned above, the creditor won’t have any legal backing to claim your personal assets as a way of recovering the debts accrued by the business. This is as true in Ontario as it is elsewhere in the world.
This is, therefore, beneficial to you because you can work on stabilizing the company without any worries of losing your personal wealth.
Easier to Transfer Ownership
One thing that many investors consider before choosing where to channel their money is the ease of ownership transfer. It’s quite easy to complete this process in an incorporated business in Ontario because, as a founder, you only own part of the shares and not the company’s assets. As such, all you’ll need to do to transfer ownership is to sell your shares. Such set-ups end up attracting many investors, especially those who are looking for a long-term partnership.
Apart from investors, employees and potential clients are also always looking for a business in which they can partner or work for a long-term period. You might lose many potential business partners no matter how well-performing your sole proprietorship is because it doesn’t hold as much credibility as a corporation.
With an LLC, employees, suppliers, and investors will see that you’re serious and can work with them long term. This level of credibility is crucial for any business success.
RELATED ARTICLE: HOW A VA WILL HELP YOU MANAGE CUSTOMER RELATIONSHIPS
The incorporation of your business can be beneficial to your entrepreneurship career. You’ll enjoy limited liability, higher credibility, and ease of ownership transfer. The process of incorporating a company in Ontario involves name selection, filling out the necessary documentation, and submitting the forms. Once done, you’ll then wait for your business identification number and certificate of incorporation upon the approval of your application.
RELATED ARTICLE: PAYING YOUR FAIR SHARE: A BRIEF GUIDE TO PAYING YOUR TAXES AS A FREELANCER