How to Start a Business in Ontario

Starting a new business can be a daunting task. Among many of the hats that you must wear as a budding entrepreneur one is that of legal compliance. Ranging from paperwork, to permits, to registrations, it can seem like an endless amount of legal hoops to jump through when starting a new business. The purpose of this blog is to provide you with some guidance on the legal side of starting a new business.


Legal Structure

One of the most important questions you will have to ask yourself when starting a new business is – what legal structure should I use when registering my business? Well, two of your options are a sole proprietorship or a corporation. As a sole proprietor you would carry on business in your personal capacity without the “shield” of a corporation. With a corporation you would be able to take advantage the “separate legal personality” of a corporation, which means that your personal liabilities would be split from your corporation’s liabilities. This may be advantageous to you in protecting your personal assets such as your home. Further, with a corporation you can take advantage of taxation benefits, which include, but are not limited to, income splitting, tax deferrals, and so on. It is critical to discuss the best legal structure for your business with your accountant, lawyer, and other advisors.


Regulatory Requirements

In your industry of business, it may not be as simple as registering a business and commencing work under the business. You may be required to seek approval from a regulator in your industry to conduct your business. For example, if you are a health professional you may be required to register your corporation with your respective regulator and obtain a “certificate of authorization” to operate your business. Further, if you are builder you may be required to obtain a Tarion license to undertake home building activities in Ontario. It’s important to determine at outset whether your business requires any regulatory approvals. Engaging in any business which you are not permitted to may result in fines and other repercussions.


Customer Contracts

Chances are your business will have customers. While you may be very passionate and excited to serve your customers, you must also ensure that you are legally protected when dealing with your customers. Many new businesses make the mistake of foregoing legal contracts with their clients. Legal contracts can assist you in many ways including defining your scope of work. A legal contract will allow you to curate your scope of work to your needs and ensure that you are not

performing which work which you are not being paid for. It’s critical to review your customer contracts with your lawyer.


Other Agreements

In addition to customer contractors, it is likely that you will require other agreement such as employment contracts, service provider contracts, and independent contractor agreements. It is important that you do not skip these agreements as they may protect you in the event of disagreements or disputes. If you are operating as a partner or shareholder with others then it is important to enter into some form of a founder, partnership, or shareholder agreement with such parties. These agreements set out important rules for your business such as dealing with shares upon death and other events, management duties, ownership percentages, and so on.


Our Services

If you have any questions about your new business, one of our lawyers at Falcon Law PC would be happy to provide you with a free consultation. The following are some of the legal services that Falcon Law PC offers:

  • Incorporation of new businesses
  • Shareholder and founder agreements
  •  Employment and customer agreements
  • Minute book management


By: Raz Toor, Lawyer

November 06, 2021

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