Entrepreneurs Guide to Understanding Common Business Terms
Starting and managing a business in Canada requires a solid grasp of business terminology. Many common terms of the business vocabulary are not common in everyday English vocabulary.
This guide will answer common questions about business terms, helping you navigate the complexities of business ownership with confidence. Think of this as your business dictionary or business terms glossary.
Business Structures
Understanding the different types of business structures is important when starting a venture in Canada. This section covers common words for business structures and organizational forms. From sole proprietorships to corporations, each type has its own set of business vocabulary and implications.
What is a Sole Proprietorship?
A Sole Proprietorship is the simplest business structure, where one individual owns and operates the unincorporated business. This small business structure offers complete control but also comes with personal liability.
Learn more about Sole Proprietorships
What is a General Partnership?
A General Partnership involves two or more individuals sharing ownership and responsibilities of the unincorporated business. While it allows for shared resources, it also means shared liabilities.
Learn more about General Partnerships
What is Incorporation?
Incorporation creates a separate legal entity for your business called a Corporation, offering personal asset protection and potential tax benefits. The process involves filing Articles of Incorporation with the government.
Learn more about Articles of Incorporation
What is a Limited Liability Company (LLC)?
An LLC is a business structure used in countries around the world, including the United States. In Canada, the equivalent of a Limited Liability Company (LLC) would be a Corporation.
Foreign corporations can bring existing LLC’s into Canada, linking it to the existing foreign LLC. Forming a new LLC as its own separate business entity is not available in Canada.
Learn more about LLC’s in Canada
Business Documentation
Businesses in Canada often require additional documentation. This section explores business words used when adding to your existing registration. Learning these business terms will help you navigate the paperwork involved in establishing and operating your business.
What is a Company Key?
A Company Key is a unique 9-digit number assigned to your business by the Ontario government. The key acts like a password, and you need it to access or update business records to help prevent unauthorized changes. Company Keys began on October 19th 2021, so businesses registered or incorporated after this date receive a key automatically.
Understand the importance of a Company Key
What is a Trade Name?
A trade name is a name under which a business operates that’s different from its legal name. Also known as a “doing business as” (DBA) name or operating as name. This allows Corporations and General Partnerships to use a secondary business name.
Explore the benefits of using a trade name
What is a DBA?
DBA stands for “doing business as” and allows a business to operate under a name different from its legal name. People also refer to these alternate names as an operating name or trade name. Businesses often use these names to boost their brand and reach their target audience.
Learn more about DBAs and their uses
What Is An Extra Provincial License?
An Extra Provincial License (EPL) allows a corporation to operate in a province outside its home jurisdiction. If a company wants to expand beyond its home province, it needs this license to follow local rules and keep operating. This includes foreign corporations that are expanding operations from another country into a province.
Understand Extra Provincial Licenses and how to obtain them
Regulatory & Compliance Requirements
Remaining in compliance is an important part of running a business in Canada. This section covers business terms associated with regulatory filings and record-keeping. Understanding this part of the business English vocabulary can ensure you maintain good standing and avoid legal complications.
What is a Federal Annual Return?
A Federal Annual Return is a required filing that keeps a corporation’s information up-to-date with the government. It includes basic details like the company’s address and director information. Filing this return each year is necessary to maintain the corporation’s legal status and comply with federal regulations.
Learn about Federal Annual Return requirements
What is an Ontario Annual Return?
An Ontario Annual Return is a mandatory filing for corporations in Ontario. This filing ensures the government has up-to-date information about your business. It typically includes details such as the company’s registered office address, directors, and officers. You must file the Annual Return within six months of the corporation’s fiscal year end.
Understand the Ontario Annual Return filing
What is a Notice of Change?
A Notice of Change is a filing used by corporations to update their corporate records with the government. This may include changes in directors, officers, or the registered office address. Filing a Notice of Change is essential to ensure that your business remains compliant with Provincial or Federal regulations.
Learn when and how to file a Notice of Change
What is an Initial Notice?
An Initial Notice is the first filing required for newly formed corporations. This provides the government with the officer positions for the corporation. The most common positions are President, Secretary and Treasurer. You must file the Initial Notice within 60 days of incorporating in Ontario.
Understand the importance of the Initial Notice
What is a Minute Book?
A Minute Book is a vital record-keeping tool for Canadian businesses. The Minute Book contains important corporate documents, income statements and meeting minutes.
Discover why Minute Books are essential for corporations
What are Supplementary Letters Patent?
In Ontario, the Ministry now refers to Supplementary Letters Patent as Articles of Amendment. Non-profit organizations use these documents to amend their corporate structure or purpose after incorporation. You can use them to change the corporate name, objects clauses or structure.
Learn about Supplementary Letters Patent for Not for Profit or Charitable Corporations
Business Reports & Searches
Before or during your business operations, you may need to conduct various searches and obtain reports. This section explains the business vocabulary related to these important documents.
What is a Profile Report?
A Profile Report is a document that provides information about a business, including registered office address, directors, and officers.
Learn more about Profile Reports
What is a Certificate of Status?
A Certificate of Status is a single page document that provides if a corporation is in good standing. Also known as a Certificate of Good Standing or Certificate of Compliance, depending on the jurisdiction.
Discover how to obtain a Certificate of Status
What is a NUANS Report?
A NUANS (Newly Upgraded Automated Name Search) Report is a search of business names and trademarks in Canada. A NUANS report reserves your business name when incorporating.
Learn how to obtain a NUANS Report
What is a PPSA Search?
A PPSA Search helps identify if there are any existing liens or loans registered against a business or its assets. This search helps protect buyers and lenders by confirming if someone else has a claim on the property. This could affect the amount of money involved in a business transaction.
Understand how PPSA Searches protect lenders and borrowers
Financial & Operational Considerations
Managing finances and operations is at the heart of any successful business. This section covers essential business terms related to planning, licensing, and banking. These concepts form a core part of your business English vocabulary and are vital for protecting your balance sheet.
What is a Business Plan?
A Business Plan is a detailed document that outlines a company’s goals, strategies, and roadmap for success. It typically includes sections on the business’s products or services, target market, financial projections, and marketing strategies.
Learn how to write an effective business plan
What is a Business Bank Account?
A Business Bank Account is a dedicated account that businesses use to manage their finances, separate from personal accounts. It allows companies to manage accounts payable, accounts receivable, and track expenses more efficiently.
Legal & Protective Measures
Protecting your business interests is essential in today’s competitive landscape. This section introduces you to business terminology associated with legal protections and risk management. Teaching yourself these terms will help safeguard your business assets and reputation.
What is a Trademark?
A Trademark is a unique symbol, word, or phrase that identifies your products or services, protecting your brand identity.
Discover how to register a Trademark in Canada
What is a Shareholder Agreement?
A Shareholder Agreement is a legal document that outlines the rights, responsibilities, and obligations of a company’s shareholders. It covers details like how shareholders sell shares, what happens if the company sells, and how they handle decisions or disputes. Clarifying how the company distributes profits and losses can protect the bottom line.
What is a Corporate Seal?
A Corporate Seal is a tool used to emboss important company documents. Though it’s no longer legally required for most business transactions in Canada, many still choose to use a seal.
What is Business Insurance?
Business Insurance protects your company from various risks, including property damage, liability claims, and business interruption.
Business Models & Services
The business world offers various models and services to help entrepreneurs succeed. This final section explores some common business terms related to different operational approaches. Understanding these concepts can help you identify opportunities and strategies for your business growth.
What is Dropshipping?
Dropshipping is a business model where a company sells products online without keeping them in stock. When a customer places an order, the company buys the item from a supplier. The supplier then ships the item directly to the customer.
This allows businesses to offer many products without needing to manage inventory or shipping. Companies can easily scale their business by increasing the number of units offered online without upfront inventory costs.
Explore the benefits of Dropshipping
What is a Franchise?
A Franchise is a business model where someone buys the rights to run a business using an established brand’s name and system. The franchisee pays fees to the franchisor and follows their business practices, including using their products, services, and branding. In return, the franchisee gets support, training, and access to a proven business model. This allows entrepreneurs to run a business with the backing of a well-known name, often leading to a better return on investment (ROI).
Discover how to buy a Franchise in Canada
Navigating the Business Landscape with Ontario Business Central
Understanding business terms is just the first step in managing a successful business. At Ontario Business Central, we’ve been helping clients for over 30 years with expert guidance tailored to your needs.
If you’re starting a new business, making changes, or even closing, our team is here to make the process easy. We can also help you search for existing businesses and give you the information you need to make smart decisions. Let us help you navigate the complexities of the business world with confidence!
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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.
