How To Register A Business In Canada

A step-by-step walkthrough of choosing a business structure and registering it, based on almost a decade of running my own business in Canada.

I’ve actually been running my business for almost a decade now. It started as a side hustle that I worked on nights and weekends on top of my full-time job. In 2017, I quit that job to run the business full-time, and in 2021 I switched from being a sole proprietor to a corporation. If you’re weighing whether a side hustle is even worth pursuing in the first place, it’s worth reading this breakdown of the best side hustles in Canada that actually pay before you get into the registration weeds below.

That’s actually where I want to start: choosing the right business structure for you. In Canada, you can operate as a sole proprietor, a partnership, or a corporation. Each one has a different registration process, a different tax treatment, and a different level of personal risk. Let’s break down all three, starting with the simplest.

Sole Proprietorship: The Simplest Business Structure

You may not know this, but you can start a sole proprietor business right now without doing anything extra or fancy, as long as you plan on using your personal legal name as your business name. So if your legal name is Jane Smith and you want to start your own graphic design business under the name Jane Smith, you can do that right now. You don’t have to register anything. You’re good to start finding clients and getting paid.

This is actually what I did when I first started my side hustle. I ran my business under my legal name, which is Jessica Bowman, but my brand name has always been Jessica Morehouse. At a certain point, once the business started earning more money and getting more recognition, I wanted to invoice clients and accept cheques under the name Jessica Morehouse. That meant I had to register my business under that trade name.

Here’s another example. If your name is Jane Smith and you want your business name to be “Smith Graphic Designs,” you do need to register that trade name with your province’s business registry first.

Check Name Availability Before You Register

Before registering your business, you have to do one really important thing: make sure no one else is already using that business name. To find out if your chosen name is free to use, check the federal government’s guidance on choosing a business name, and run a search through NUANS, the national name search system most provinces rely on.

Name registration isn’t the same thing as name ownership, and it’s not the same as a trademark. Registering a trade name with your province only proves you’re using that name locally; it doesn’t stop someone else from trademarking it later or owning a similar name elsewhere. If your brand is going to matter long-term, it’s worth a separate search through the Canadian Intellectual Property Office’s trademark database.

How To Register Your Trade Name

Once you’ve confirmed your trade name is free to use, you have to register that name with your province. There are a couple of ways to do this. The first is to go directly through your province’s web registration portal. The second is to go old school, the way I did when I registered my side hustle all those years ago, and visit a physical registration office.

Government fee schedules vary by province, but you can generally expect to pay somewhere in the range of $40 to $80 to register a sole proprietorship trade name, with some provinces running higher depending on the filing method. Ontario’s own fee schedule, for example, lists current name registration costs on its government site, and it’s worth checking your own province’s registry directly since these numbers do get updated.

Another option, and personally I think it’s a much easier route, is to go through a private filing platform like Owner. The process is smoother in my opinion, and they include name searches as part of the package. When you compare prices, it ends up being roughly in the same ballpark as going directly through your province, but with less back-and-forth.

Partnerships: Almost Identical To A Sole Proprietorship

If you want to start a partnership, the process is almost identical to a sole proprietorship. I actually have experience with this. I ran a partnership with a friend a number of years ago.

The first thing you and your business partner need to decide is whether this is going to be a general partnership, where everything is split 50/50, or a limited partnership, where there’s an uneven split between partners. You can also have more than two people involved; partnerships can include multiple partners.

For our business, we did a general partnership, so we split everything 50/50. All we had to do was register our trade name with our province, Ontario, which is where the business was based, and then we were good to start making money. Unfortunately, we did not, and the business failed miserably. That’s a story for a future post.

Although sole proprietorships and partnerships are simple and inexpensive to set up, the downside is that neither one provides real liability protection. All business income gets taxed at your personal marginal tax rate, before factoring in any deductible business expenses. If you’re trying to figure out what counts as a deductible expense and how business income gets taxed, it’s worth reading up on how the CRA treats sole proprietorship and partnership income.

Corporations: More Protection, More Paperwork

If a sole proprietorship or partnership doesn’t make sense for the type of business you want to run, a corporation may be a better fit. When you set up a corporation, your business becomes its own legal entity. That’s a big deal for a couple of reasons.

First, you get liability protection. If your business gets sued, it’s the corporation that gets sued, not you personally. Second, your business income gets taxed at federal and provincial corporate tax rates, not your personal marginal tax rate.

A corporation also gives you a lot more flexibility. You can choose to keep some of your business income inside the corporation; there’s no deadline on when you have to pay yourself out. When you do decide to pay yourself, you can do it through salary, bonuses, dividends, or a combination of all three. Whatever you pay yourself does get taxed at your personal marginal tax rate, though dividends come with their own tax credit that softens the hit somewhat.

Federal Vs. Provincial Incorporation

Registering a corporation is obviously more complex than registering a sole proprietorship or partnership. You can register a corporation yourself, DIY style, and it’s a lot cheaper to do it that way. Word of warning, though: I’ve seen too many people jump the gun, register their corporation, and realize afterward they made a mistake, or wish they’d gotten advice from an accountant or lawyer first.

That’s actually how I registered my corporation. I consulted with my accountant first to get some advice, and she forwarded me to a lawyer to help me incorporate. I’m really glad I went that route. It was more costly, but I got advice while we went through the paperwork, and I felt confident everything was set up properly. My lawyer handled the incorporation, did the business name search for me, and also handled my section 85 rollover, which is the process of rolling over existing business assets, in my case a trademark, from a sole proprietorship into a corporation.

All together, that route cost me about $2,600. I know that’s a lot if you’re starting from scratch. There’s a cheaper, and still fairly easy, option: going through the CRA and your province’s incorporation portal directly, or using a private filing platform like Owner, which generally runs between $500 and $700 depending on whether you incorporate federally or provincially.

If you’re curious what those numbers look like at the government level directly, federal incorporation through Corporations Canada currently runs about $200 online, while provincial incorporation fees vary a fair bit; Ontario sits around $300 online, and British Columbia is around $350 plus a name approval fee. Both routes also typically require a NUANS name search report before you file.

If you didn’t already know you had to choose between federal and provincial, here’s the simple version. Incorporating federally means you can conduct business throughout any province or territory in Canada. Incorporating provincially means you can only conduct business within that one province. To be clear, you can still serve clients outside your province even with a provincial incorporation; it just means your business is legally operating only within that province.

For example, if you incorporate in Ontario and set up an office there, and a few years later you want to open an office in British Columbia, you’d need to incorporate your business in British Columbia as well. One easy workaround, if you think you might expand or relocate down the road, is to incorporate federally from the start so you don’t have to redo that paperwork later.

After You Register: A Few Things People Forget

Registering your name or incorporating is the first step, not the last. A few things tend to catch new business owners off guard after registration:

You may need a business number. Whether you’re a sole proprietor, partnership, or corporation, you’ll likely need to register for a business number through the CRA once you need a GST/HST account, a payroll account, or you’ve incorporated. If you incorporate, your business number is usually generated automatically as part of that process.

GST/HST registration kicks in around $30,000. Once your revenue crosses that threshold across four consecutive quarters, you’re required to register for GST/HST and start charging it. You can register voluntarily earlier if you want to start claiming input tax credits on startup expenses.

You’ll need a way to actually get paid. Once your business name or corporation is registered, you’ll want to set up business banking and a way to invoice and collect payment from clients. If you haven’t picked a payment system yet, this comparison of online payment solutions for small businesses in Canada is a good place to start.

Permits and licenses are separate from registration. Registering your name or incorporating doesn’t automatically cover municipal business licenses or industry-specific permits. You can check what applies to your business through BizPal, a free tool run jointly by federal, provincial, and municipal governments.

Choosing The Right Structure For Your Business

No matter which structure you land on, the registration process in Canada is fairly straightforward once you know which steps apply to you. If you’re still in the early stages of deciding what kind of business to start in the first place, it’s worth browsing through these low-startup-cost service business ideas in Canada before you commit to a structure, since the right entity often depends on the type of work you’re doing and how much liability risk comes with it.

If you have any questions about your own registration process, feel free to leave them in the comments.

Frequently Asked Questions