Changing Your Small Business to an Incorporated Company
How to make the change from a small business to an incorporated company?
If you currently own a Sole Proprietorship or General Partnership and are looking to incorporate your business, here is some information to assist you in completing this process.
Why do people change from a Sole Proprietorship or General Partnership to Incorporation?
- Sales are increasing to a point where there may be tax savings by having an incorporated company
- Advertising the business and concerned about the business having name protection
- Liability protection for personal assets
- Contract reasons, where businesses prefer for your business to be incorporated
- Partnership with new company or individual
What if I want to use the same name for the incorporated business from my current registration?
Anytime you wish to change from your current registration to an incorporated company, you may do so. Your current registration will not interfere with you incorporating the same name business. As long as there are not any existing businesses listed with a similar or same, the process will be seamless.
What will need to be changed when I incorporate?
- Bank account – Incorporating puts your business in a new business category with most banks, so a new bank account may be needed.
- Cheques – New cheques will be needed with the business name including legal ending.
- Tax accounts – HST, payroll, WSIB, etc will need to be set up or changed.
- Business cards – New cards should reflect new corporate name.
- Letterhead – Should be updated to reflect new corporate name.
- Logo – If the logo contains the business name, it will need updating.
- Storefront/signage –Should be consistent with the new name and logo.
What do I do with my current Sole Proprietorship or General Partnership?
Setting up everything for the new corporation could take about a week or two, which includes getting a new bank account, cheques, business cards and anything else needed. After that’s all completed, you will want to cancel the current Sole Proprietorship or Partnership registration if you are no longer using it. If you have any existing HST, WSIB, payroll accounts with the registration being cancelled, these should be cancelled as well.
We can assist you with both the registration of your new incorporation and with the cancellation of your current Sole Proprietorship or General Partnership.
Cancel Your Sole Proprietorship or General Partnership
To use our services to complete an incorporated company, here are the links to either an Ontario or Federal Incorporated company.
There are several differences between Ontario and Federal Incorporations. You can find more details by reading Incorporating Your Business: Federal or Provincial? and we’ve also outlined the main differences and similarities below:
Ontario Incorporation vs. Federal Incorporation
Both jurisdictions for incorporation offer the following advantages:
- Corporations are seen as separate entities from their individual owners
- There is limited personal liability
- There may be potential tax rate advantages
- Potential for greater access to capital
- Continuous existence beyond the life of the owners
- Name protection within registered jurisdiction
In terms of differences, these are the main ones you’ll see between the two jurisdictions available for incorporation:
Ontario Incorporation
- Higher start-up costs, with a government fee of $360
- One mandatory filing after incorporation, called Initial Notice
- Less formalities
- Business name protection in Ontario only
- Limited foreign recognition (Ontario)
- Easier name acceptance
Federal Incorporation
- Lower start-up costs, with a government fee of $200
- Yearly mandatory filings that cost $50 per year to complete
- More formalities
- Higher name protection within Canada
- Higher foreign recognition (Canada)
- Business name must be accepted by federal examiner
Each type of corporation has its advantages and disadvantages. When deciding which is best for your business, take a look at what is most important to you, including the importance of name protection within Canada, name accessibility to register the corporation in other Provinces, the interaction of foreign individuals/corporations, the administration requirements each format of incorporation has its merits and limitations.
Should you have any questions about making these changes to your Master Business Licence or about Incorporating, please feel free to contact our office for more information and assistance.
inquiries@ontariobusinesscentral.ca
Toll-Free: 1-800-280-1913
Local: 1-416-599-9009
Fax: 1-866-294-4363
Office Hours: 9:00am – 5:00pm
Monday – Friday E.S.T.
Ontario Business Central Inc. is not a law firm and cannot provide a legal opinion or advice. This information is to assist you in understanding the requirements of registration within the chosen jurisdiction. It is always recommended, when you have legal or accounting questions that you speak to a qualified professional.
