Establishing a Business in Toronto
All levels of government recognize the importance of making Toronto, Ontario and Canada welcoming to new business investments. According to the World Bank, Canada is ranked 2nd overall for starting a business (Doing Business, 2010).
Establishing a business in Toronto is an efficient and inexpensive process that is regulated by either the federal or provincial government. When establishing a business in Toronto, businesses determine whether to incorporate provincially or federally, and which licences, permits and insurance to obtain.
Important Considerations: Federal versus Provincial Incorporation
There are two ways to incorporate a business in Toronto, federally or provincially. Businesses must decide whether operations will occur solely within the province of Ontario, or will occur throughout Canada. If operations will be conducted throughout the country, the corporation must register both federally and within the individual provinces that business is conducted in. Legal information about provincial and federal incorporation can be found below:
Please note it is highly recommended that a lawyer evaluate the considerations.
Federal Incorporation
- 25% of a federal corporation's board of directors are required to be Canadian residents (or a minimum of 1, if there are fewer than 4 directors).
- A federal corporation is permitted to use the same name in each province and territory, provided it is not conflicting with a previously established corporate name or trademark.
- Federal corporations can headquarter in any Canadian province.
- A federal corporation requires greater disclosure and filing requirements. Filling must be sent to:
- Federal Director of Corporations, The Canada Business Corporations Act; and
- The Business Corporations Act of each province the corporation is active.
For more iinformation on federal incorporation, please visit
Industry Canada's website.
Ontario Incorporation
- Ontario corporations that are not registered federally may only operate in the province.
- Professional corporations are only available at the provincial level. Typically, professional corporations include: Accountants, Architects, Attorneys, Physicians, Dentists, Veterinarians, Engineers and others.
- Ontario corporations require 25% of the directors to be Canadian residents.
Branch Offices: An Alternative to Incorporation:
An alternative to provincial or federal incorporation is opening a branch office. A branch is an extension of its non-Canadian parent corporation, whereas a subsidiary, a federally or provincially incorporated business, is a separate legal entity from its parent. The key distinction between a branch and a subsidiary is that a branch is not a separate legal entity; the non-Canadian corporation is subject to liabilities incurred by the branch in Canada. Additionally, the benefits of incorporating federally or provincially do not apply to a branch office.
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Registration with Canada Revenue Agency (CRA)
All businesses operating in Ontario and Canada are required to register with the Canada Revenue Agency to receive a business number. This number will allow the business to pay and claim sales tax, income taxes, and payroll taxes such as the Canadian Pension Plan.
To acquiring an Ontario business number, visit the
Canada Revenue Agency.
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Workplace Safety Insurance Board (WSIB)
Under the Workplace Safety and Insurance Act most businesses in Ontario that employ workers (including family members and sub-contractors) must register with the WSIB within 10 days of hiring their first full or part-time worker.
Registering with the WSIB provides workplace insurance coverage for all workers and access to experts in health and safety guidelines for your business activities. To register please visit the
Workers Safety Insurance Board.
There are specific industries that do not have to register. These include:
- Banks, trusts and insurance companies
- Private health care practices (such as those of doctors and chiropractors)
- Trade unions
- Travel agencies
- Clubs (such as health clubs)
- Funeral directing and embalming
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Permits and Licenses
Businesses in Ontario are required to obtain the correct permits and licensing for specific business activities.
- Canada Business provides a useful tool that generates a list of permits and licenses applicable to specific business activities.
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Immigration
The various options for temporary and permanent immigration are overseen by the federal government in consultation with the provinces. For more details on immigration, please see Citizenship and Immigration Canada.
There are 3 categories of Canadian business immigration. These are:
Investors must have a personal net worth of C$800,000, accumulated through the successful management or ownership of a business. Additionally, Investor category applicants must invest a minimum of C$400,000 for a period of five years, into a Canadian government fund. The investment is completely guaranteed by the Canadian government and will be returned to the Investor interest-free after the five year period. A financing option is available to meet this requirement.
NOTE: Presently, Citizenship and Immigration Canada (CIC) has temporarily stopped accepting applications for the Investor immigration category. It is expected to restart, pending certain regulatory amendments, near the end of 2010 or the beginning of 2011. Please check the website for further information: http://www.cic.gc.ca/english/immigrate/business/investors/index.asp
Entrepreneurs must have a minimum net worth of C$300,000 and possess business experience which demonstrates the successful starting and management of a qualifying business as measured by number of employees, sales, net income and equity share. The Entrepreneur will then have to demonstrate that he/she can similarly establish, invest in, or acquire a Canadian business according to the same criteria. For a complete overview of the Entrepreneur immigration category, please see: http://www.cic.gc.ca/english/immigrate/business/entrepreneurs/index.asp
A Self-Employed applicant must be in a line of work that significantly benefits Canada culturally; specifically, artisans, athletes and farmers. The Self-Employed applicant must demonstrate relevant experience – a demanding threshold – and the funds necessary to support their own employment in Canada.
All business immigrants must apply at 1 of 9 Business Immigration Centres located outside Canada at the Canadian Embassy, Canadian High Commission, or Canadian Consulate in Beijing, Berlin, Buffalo, Damascus, Hong Kong, London, Paris, Seoul and Singapore.
Each application can be made for only one class and cannot be changed once the application is submitted. The criteria regarding the various qualifications for each class can be found here.
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Useful Resources
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