How to Start a Small Business in Ontario 2026: Complete Step-by-Step Guide

Choosing Your Business Structure in Ontario

The first decision every Ontario entrepreneur must make is what business structure to use. The three main options are sole proprietorship, partnership, and corporation — each with different legal, tax, and administrative implications.

A sole proprietorship is the simplest structure. You operate as an individual under your own name or a registered business name. There is no legal separation between you and the business — you are personally liable for all debts. Income is reported on your personal tax return. Registration costs approximately $60 for a business name or nothing if you operate under your own name.

A corporation is a separate legal entity from its owner. It provides personal liability protection — your personal assets are generally protected from business debts. Corporate tax rates in Ontario are lower than personal tax rates for income retained in the business. Incorporating in Ontario costs approximately $300 federally or $360 provincially. Annual maintenance costs including accountant fees make corporations more expensive to operate.

How to Register Your Business in Ontario

Registering a business in Ontario is done through the Ontario Business Registry at ontario.ca/businessregistry. The process is fully online and can be completed in under 30 minutes for most business types.

If you are operating as a sole proprietor under your own legal name, no registration is required in Ontario. If you want to use a business name (trading as or DBA), you must register that name for approximately $60. The registration is valid for 5 years and must be renewed.

Before registering your business name, search the Ontario Business Registry and NUANS (Newly Upgraded Automated Name Search) to ensure your chosen name is not already in use. A unique business name protects your brand and avoids legal complications with existing businesses.

Once registered, you will receive a Business Identification Number (BIN). If you incorporate, you receive a Business Number (BN) from the CRA which is used for all federal tax accounts including HST, payroll, and corporate income tax.

HST Registration: When Do You Need It?

In Ontario, you must register for HST with the Canada Revenue Agency when your business revenue exceeds $30,000 in any calendar quarter or in the preceding four consecutive calendar quarters. Registration is optional below this threshold — you are considered a small supplier and do not need to collect or remit HST.

Once registered, you collect 13% HST on most goods and services sold in Ontario. You remit the collected HST to the CRA minus the Input Tax Credits (ITCs) for HST you paid on business expenses. This means HST is essentially neutral for registered businesses — you collect it from customers and recover what you paid to suppliers.

Registering for HST voluntarily before reaching $30,000 can be beneficial if you have significant business expenses — you can claim ITCs to recover HST paid on equipment, supplies, and services. However it adds administrative requirements including filing HST returns quarterly or annually.

💡 Pro Tips for New Ontario Business Owners

• Open a separate business bank account immediately: Mixing personal and business finances is one of the most common and costly mistakes new entrepreneurs make. A dedicated business account makes bookkeeping, tax preparation, and HST filing dramatically easier and protects you in case of a CRA audit.
• Track every expense from day one: Business expenses reduce your taxable income. Keep receipts and records for everything — vehicle expenses, home office, equipment, software, marketing, professional development, and meals with clients. Use free apps like Wave or affordable tools like QuickBooks to track in real time.
• Pay yourself a reasonable salary: If incorporated, pay yourself a salary rather than taking dividends if you have employment income needs — salary generates RRSP contribution room and CPP benefits. A combination of salary and dividends often produces the lowest total tax bill.
• Register for CRA My Business Account: This free online portal gives you access to all your business tax accounts including HST, payroll, and corporate income tax. You can file returns, make payments, and view correspondence all in one place.
• Join Ontario's small business support programs: The Ontario Small Business Support Grant has provided relief to businesses in the past. Small Business Enterprise Centres across Ontario offer free business advisory services, workshops, and resources for entrepreneurs at all stages.

⚠️ Common Mistakes New Ontario Business Owners Make

• Not registering the business name: Operating under an unregistered business name in Ontario is technically illegal and prevents you from opening a business bank account or signing contracts under that name. Registration takes 15 minutes and costs $60.
• Missing HST remittance deadlines: Late HST remittances trigger interest and penalties that accumulate quickly. Set up pre-authorized payments or calendar reminders for your HST filing deadlines. Quarterly filers must remit by April 30, July 31, October 31, and January 31.
• Not setting aside money for taxes: Unlike employment income where taxes are withheld at source, self-employed income requires you to save money throughout the year for taxes. A common guideline is to set aside 25% to 30% of net business income for income tax and CPP contributions.
• Trying to do everything yourself: An accountant who specializes in small business pays for themselves through tax savings. The cost of a good accountant — typically $500 to $2,000 per year for a simple small business — is almost always less than the tax savings and penalties avoided.

❓ Frequently Asked Questions