In this blog, we’ll show you how to set up your sole proprietorship in Ontario, Canada. If you’re still in the “idea” stage, head to our recent blog which outlines the first steps in planning your business model.
If you’re trying to move your business plan from idea to reality, you’re most likely deep into Google. Don’t worry, we’re here to save you from your most recent internet tail-chase. To keep you from running in circles, we’ve compiled everything you need to know in this blog. From licensing, to insurance, to registering as a sole proprietorship in Ontario, we’ve got your answers.
Naming your sole proprietor business
Pick a name
When it comes to a name, choose one that appropriately represents your services. There are a few areas to consider when picking a business name in Ontario. Keep in mind that submitting a name request for a partnership or sole proprietorship doesn’t secure the name’s availability if you incorporate later. The Ontario Business Central website walks you through some tips for choosing the best name.
Check the availability of your name
A great way to make sure you’re not picking a name that’s already in use is to check the Ontario Business Registry. This will tell you if there’s a business out there that’s already using your chosen name or if there are businesses with a similar name. Although there is no requirement for your name to be unique, you still want your business name to stand out!
Registering as a sole proprietorship in Ontario
Next, you’ll need to register your business name with the Ontario government. Start by creating a ONe-key account and registering for a Service Ontario account. Once in your Service Ontario account, you’ll be able to register as a sole proprietorship. If you’re using your full legal name only, you’re not required to register. However, when using your full legal name, plus any other clarifying words like “Jane Smith Accounting”, you need to register as a trade name. Here are some forms you might need when registering your business name.
Getting a business number
Registering as a sole proprietor which will give you access to a 9-digit Ontario Business Identification number. Having a business number can be an important part of being a business owner. It gives you an identifier if you need to create a CRA account or decide to incorporate later. Keep in mind this number is different from the business number assigned by the CRA.
Does a sole proprietorship in Ontario need a business license?
The government of Ontario suggests using BizPal to check which businesses require a license to operate. BizPaL is a platform that filters permits based on your location, industry, and business activities.
What you might need to apply for…
WSIB
WSIB, or Workplace Safety and Insurance Board, isn’t mandatory for every sole proprietorship in Ontario. The Government of Ontario decides who needs to have coverage. You can find these industries and businesses listed in the Workplace Safety and Insurance Act.
CRA
A CRA account is necessary to meet certain tax obligations and receive certain benefits, rebates, and refunds. For example, you’ll need to register with the CRA for GST/HST remittance and payroll deductions. If your sole proprietorship has no employees and is not required to register for GST/HST, you do not need a CRA account.
HST
You are required to register for GST/HST if you are not a small supplier or if you make taxable sales, leases, or other supplies in Canada. Find out if your business applies on this Government of Canada page.
Are you a small supplier for HST purposes?
A small supplier is defined as someone whose revenue (and revenue of persons associated) from worldwide taxable supplies is equal to or less than $30,000 in a single calendar quarter and over the last four consecutive calendar quarters.
Keep track of your money
A sole proprietor is not legally obligated to open a separate business bank account. However, having a separate account has lots of perks. It helps you keep your finances tidy, understand growth, and makes it easier to file your personal and business taxes. In the end, keeping your business and personal deposits and transactions separate allows for happy books.
Organize your income and expenses
The best way to track your income is through QuickBooks Online. Doing this correctly gives you important information, like when to start charging GST. The best way to ensure your QuickBooks is on track is through LearnQBO. You can learn how to set your QuickBooks up for easy and accurate bookkeeping.
Before you get into the thick of it…
Start the general set-up. Add your clients, products/services, and any other information that will make your job easier in the long run. This helps you track how much you make and spend on each product or service and keeps your clients organized.
Does a sole proprietor need insurance?
Consider setting up business insurance to cover yourself from any claims or property damage. As a sole proprietor business owner, you have the same legal responsibilities and liabilities as large corporations. Any claims against your business such as someone injuring themselves on your property could result in destructive legal fees. Researching which insurance you require is always a good idea before committing.
Cover all bases with a contract
Although you want to think everything will run smoothly, you should be prepared for difficulties. Save any miscommunications with a customized contract for your services. Have your client agree and sign your terms before you start a project or partnership. You might be able to find a free contract template online, but we suggest chatting with a lawyer to get one drawn up. Like we said before, better safe than sorry!
Visit Learn QBO for more bookkeeping tips and fun ways to learn QuickBooks Online.