The idea of starting a business can be exciting. However, it can be challenging to know where to begin. Starting a small business in Ontario is one of the best choices in your life. Ontario is a good place with a strong economy and a growing startup ecosystem. Whether you plan to open a coffee shop, launch an online store, or build a tech startup, there are a variety of opportunities waiting for you.
Why Start a Business in Ontario?
A business in Ontario can be exciting but challenging at the same time. Ontario is the heart of Canada’s economy. According to Statistics Canada, Ontario is home to nearly 40% of all Canadian businesses. There are amazing opportunities if you want to start a service business or a local restaurant. The Government of Ontario also offers many supportive programs, including funds for entrepreneurs. These services make it easier for entrepreneurs to grow.
According to the cleanlist in August 2024, there were 14,104 new business registries. That’s a 32.3% increase from July 2024. This amazing increase shows the growing trend of entrepreneurship worldwide.
Continue to read this guide to know everything from your business name to registration to understanding loss. If you plan to operate as a sole proprietor or need professional help, we’ve included practical tips. In this guide, we provide you with all the answers in the simplest way.
Steps to Start a Small Business in Ontario
Starting a business comes up with many challenges. You often feel overwhelmed. Here are the important steps you need to follow to start a small business in Ontario. from planning to execution. Whether you’re local or new to Ontario, these simple core steps will help you move through the process smoothly.
1. Develop Your Business Plan
The first thing before anything else is to develop a business plan. Your plan should clearly define your business idea. It is more like a road map towards your goals. You need to fill an existing market gap and provide a unique solution to common problems. Your business idea reflects your business services and your target customer.
Your business plan should include:
- What product or service are you offering
- Who your target customers are
- How you’ll market your business
- Startup costs and financing options
For tips on creating a business plan, consider factors like competition, trends, and demographics. You can use the Canada Business App for more details.
2. Choose Your Business Structure
In Ontario, it’s important to decide on the business structure. You can register your business under three main structures. Each option has its own rules and regulations, including
1. Sole Proprietorship
- A Sole Proprietorship is simple, low-cost, and owned by one person. It is one of the easiest and most common ways to start a business. You are the only owner of your business. Great for freelancers and small shops. It comes with many pros and cons.
Pros:
- You are the boss and have full control.
- Cheap and simple to set up.
- You can claim business losses and expenses on your personal tax return.
- You keep all the profits.
Cons:
- You are personally responsible for any debts.
- Creditors can go after your personal assets.
- Your business name is not protected.
- All income is taxed at your personal tax rate.
2. Partnership
A partnership includes two or more people sharing ownership. Beneficial for family and business partners.
Pros:
- Easy and low-cost to set up.
- Costs, skills, and work are shared.
- Business losses and expenses can be included in each partner’s tax return.
Cons:
- You share debts and losses with your partner(s).
- Disagreements can cause problems.
- Finding the right partner can be tough.
3. Corporation
A corporation is its own legal entity, separate from the owners. It is more complex but offers tax benefits. Best opportunity for a growing business.
Pros:
- Limited liability: your personal assets are protected.
- Easier to sell or transfer ownership.
- More access to capital, investors, and grants.
- Your business name is protected (if federally incorporated).
Cons:
- Costs more to set up and maintain.
- Taxes and rules are more complex.
- You must file annual reports and keep corporate records.
3. Register Your Business Name
Once you’ve chosen your business structure, the next step is to register your business. This can be done online through the Ontario Business Registry.
Requirements for Online Registration:
- A working email address
- A valid debit or credit card
- Payment based on the type of business structure:
- Sole Proprietorship: $60
- General Partnership: $60
- Limited Liability Partnership: $60
- Limited Partnership: $210
- Business Corporation: $300
Most businesses need licences and permits. For this reason, it is important to contact local, provincial, and federal authorities for compliance.
4. Get a Business Number from CRA
It’s important to understand your tax responsibilities. It’s an essential step in running your small business in Ontario. Important tax information you should know includes.
- Business Number (BN): Are you registering for one or more Canada Revenue Agency (CRA) Program Accounts, like GST/HST or Import/Export?
- Goods and Services Tax (GST)/Harmonized Sales Tax (HST): Most Ontario businesses must register, collect, and remit the GST/HST. The current HST rate in Ontario is 13%.
- Income Tax: Every year, all business owners must file an income tax return. This is based on the chosen business entity.
- Payroll Taxes: Employers must remit payroll taxes by deducting CPP contributions, EI premiums, and income tax.
5. Find Out What Permits and Licences You Need
When starting a business in Ontario, depending on your business, you need a licence and permits. Having the right to permit is important for meeting the federal and provisional regulations. You need a proper licence to protect your business and build trust with your customers.
For example, for a restaurant business, you need a health permit. And for a construction business, you need a building permit. It’s important to take this step seriously to avoid unexpected finds and delays.
6. Open a Business Bank Account
When starting a new business, it’s important to have a separate bank account. This process makes it easier for you to track the expenses and handle taxes. Many Canadian banks offer small business accounts with advanced tools to manage payments and invoices.
7. Apply for Financing or Grants
Starting a business in Ontario can be costly. Luckily, Ontario offers loans and grants to small business entrepreneurs. For example, some options include the Canada Small Business Financing Program and Ontario business grants and support programs.
8. Protect Your Business
It is important to protect your business from unexpected risk. For this, you need business insurance, including protection from liabilities and legal claims. Business insurance helps cover costs linked to unexpected incidents. For example, natural disasters or lawsuits.
9. Validate Your Business Idea
It’s important to understand and test your business ideas before spending your money. Learn about business regulations in Ontario. You can also talk to potential customers and run small ads online. These steps help you to see if your idea works in the market for operational success or not.
Things to focus on include
- Ensure your business meets accessibility standards
- Meet employment standards, including minimum wage and employee rights
- Maintain a safe and healthy environment for everyone
Best Small Business Ideas in Ontario (2025)
Here are the best small business ideas in Ontario if you are not sure what type of business to start.
- Food business in Ontario: Cafés, catering, or food delivery.
- Pet business in Ontario: Dog grooming, walking, or pet daycare.
- Service business in Ontario: Cleaning, landscaping, or handyman services.
- Home-based business in Ontario: Freelancing, tutoring, or online stores.
- Technology business in Ontario: Software development, AI tools, or IT support.
- Sustainable Business Ontario: Eco-friendly products and recycling services.
- Wellness services in Ontario: Fitness coaching, yoga, or mental health support.
Business Resources and Tools in Ontario
Here are some tools that will help you succeed in your small business setup.
- The Ontario Business Registry helps to register your business online.
- Canada Business App is a government tool for entrepreneurs.
- BizPal helps you find the required licenses and permits.
- Bestax CA provides accounting and tax support for small businesses
Ready to Start Your Business in Ontario?
Starting your small business may sound challenging. But with the right steps, it’s simple. With the right support, you can do it, from choosing your structure to registering your business online in a few days.
There is no need to do it alone; get expert help. That’s where Bestax comes in. With 10+ years of experience, our experts make the complicated parts simple. We’ll guide you step by step, whether it’s registering your business name, setting up your CRA business number, or ensuring tax compliance.
Think of us as your partners in success. You focus on growing your dream business. We’ll handle the paperwork, legalities, and heavy lifting.
Ready to turn your idea into reality? Contact Bestax today, and let’s launch your business the right way, stress-free and built for success from day one.
Quick FAQs
What are the first steps to start a small business in Ontario?
First, you need to make a business plan, then choose a business structure and register your name with the Ontario Business Registry.
How do I validate a startup idea before launching in Ontario?
Test with a small group of customers, run ads, or create a prototype before investing fully.
What is the Ontario Business Registry, and how does it work?
The Ontario Business Registry is the official online system to register, renew, or update your business in Ontario.
How do I get an HST number for my Ontario business?
You can apply for an HST number when registering for a Business Number with the CRA.
Can I start a business in Ontario as a newcomer or non-resident?
Yes, newcomers can start businesses, but some industries may have extra requirements according to the rules and regulations.
What is the difference between a sole proprietorship and a corporation in Ontario?
A sole proprietorship is cheaper and easier. On the other hand, a corporation offers tax benefits and protects your personal assets.
Do I need a business licence to operate in Ontario?
Yes, to open a business, you need to apply for permits or licenses. Use BizPal to check.
Disclaimer: The information provided in this blog is for general informational purposes only. For professional assistance and advice, please contact experts.
