Why Incorporate in Ontario?

Incorporating your business in Ontario is one of the highest-return decisions a successful entrepreneur can make. Beyond the well-known liability protection, incorporation unlocks Canada’s lowest corporate tax rate — 12.2% on active business income in Ontario (vs. up to 53.53% personal rate) — and opens the door to income splitting, the Lifetime Capital Gains Exemption on sale, RRSP maximization through salary, creditor protection, and a more professional business presence.

This step-by-step guide covers everything you need to know about how to incorporate in Ontario in 2025. Need professional guidance and CPA advisory on your incorporation? Pathak Professional Corporation in Mississauga has helped hundreds of Ontario business owners incorporate and structure for optimal tax outcomes. Call 437-872-7399.

Step 1: Choose Your Corporate Structure

You have two primary options for incorporating in Ontario:

For most small Ontario businesses, a provincial Ontario corporation is simpler and sufficient.

Step 2: Choose Your Corporate Name or Number

You can incorporate under either a chosen name or a government-assigned number:

• Named corporation (e.g., “Pathak Professional Corporation”): Requires a NUANS name search ($13.80) confirming the name is available and not confusingly similar to an existing name; more professional and marketable
• Numbered corporation (e.g., “1234567 Ontario Inc.”): No NUANS search required; faster; many businesses use a numbered corporation then register a trade name with ServiceOntario

Professional corporations: Certain professions (physicians, dentists, lawyers, accountants, engineers) can only incorporate as professional corporations — there are additional regulatory requirements and restrictions specific to each profession’s governing body.

Step 3: Determine Your Share Structure

This is where CPA advice is critical before incorporating. Your share structure should be designed to:

• Enable income splitting with a spouse or other family members (separate classes of shares with different dividend rights)
• Allow for future estate planning (growth shares for children or a family trust)
• Qualify for the Lifetime Capital Gains Exemption on sale (shares must be qualifying small business shares)

A typical flexible share structure for a small Ontario corporation includes:

• Class A Voting Common Shares — held by the controlling owner; voting rights and participation in growth
• Class B Non-Voting Common Shares — can be issued to spouse/family members for dividend income (subject to TOSI rules)
• Class C Preferred Shares — used for estate freeze transactions in the future

Getting the share structure right at incorporation costs little extra and saves enormous restructuring costs later. Getting it wrong means expensive corporate reorganizations when you try to sell, split income, or do estate planning.

Step 4: File Articles of Incorporation

File through the Ontario Business Registry (OBR) at ontario.ca:

1. Log in to the OBR with a Service Ontario account
2. Select “Incorporate an Ontario Corporation” (OBCA)
3. Provide: proposed corporate name, share structure classes and conditions, any restrictions on business the corporation can carry on, any restrictions on share transfers, first director information (name and address)
4. Pay the $300 + HST filing fee by credit card
5. Processing typically takes 1–5 business days; you receive a Certificate of Incorporation and a Corporate Number

Step 5: Complete the Organizational Resolutions (Critical — Often Skipped)

Within the first year of incorporation, you must complete the corporation’s organizational setup — this is where many DIY incorporations go wrong:

• Pass organizational resolutions appointing the President, Secretary, and other officers
• Adopt corporate by-laws
• Issue shares to the initial shareholders (with corresponding share subscriptions and payment)
• Waive the requirement for a formal audit (standard for private corporations)
• Establish the corporation’s fiscal year end
• Create the corporate minute book

Step 6: Register for CRA Accounts

Your corporation is automatically assigned a 9-digit Business Number when incorporated. Additionally register for:

• Corporate income tax account (RC): Automatically assigned — ensure your CRA My Business Account is set up
• HST/GST (RT account): Register when expected taxable revenues exceed $30,000; often beneficial to register immediately
• Payroll (RP account): Register when you hire your first employee (including yourself on T4 salary)
• Import/export (RM account): If you import or export goods

Step 7: Open a Corporate Bank Account

Open a dedicated corporate bank account immediately — never comingle corporate and personal funds. Major Canadian banks typically require: Certificate of Incorporation, corporate by-laws, resolution authorizing the account opening, and identification for all directors/signatories. Some banks also require the minute book or organizational resolutions.

Frequently Asked Questions: How to Incorporate in Ontario

How much does it cost to incorporate in Ontario in 2025?

The government filing fee for incorporating an Ontario corporation is $300 + HST = $339 online. A NUANS name search costs an additional $13.80 if you are using a named corporation. Beyond government fees, professional fees for CPA advisory (share structure design, fiscal year selection, organizational resolutions, and minute book setup) typically run $1,000–$2,500. This professional input is strongly recommended — a properly structured incorporation with the right share classes, fiscal year, and initial resolutions costs only a few hundred dollars more than a DIY online incorporation but provides significantly better tax planning flexibility. Total all-in cost including professional setup: $1,500–$3,000.

Should I incorporate as an Ontario corporation or a federal corporation?

For most small businesses operating primarily in Ontario, an Ontario provincial corporation is simpler and sufficient. Ontario corporations have full legal authority to operate across Canada (by registering as an extra-provincial corporation in other provinces as needed) — you do not need a federal corporation to operate nationally. Federal corporations offer stronger national name protection and allow you to use “Canada” in your corporate name — advantages that matter more for businesses with significant brand value or multi-provincial operations. The federal incorporation fee ($200) is lower than Ontario’s ($300), but Ontario extra-provincial registration adds back approximately $60–80.

What fiscal year end should I choose for my Ontario corporation?

The fiscal year end is one of the most impactful early decisions for a new corporation. The most common choice is December 31 (calendar year) for simplicity and alignment with personal tax filing. However, choosing a fiscal year end other than December 31 can offer timing advantages: you can control when you receive a salary or dividend from the corporation relative to your personal tax year. Many CPAs recommend a January 31 fiscal year end for business owners who want to defer personal income — a January 31 year-end allows you to pay yourself bonuses up to January 31 that are deductible to the corporation in the January fiscal year, but not personally taxable until April 30 of the following year. Discuss fiscal year selection with your CPA before filing the first T2 return.

Can I incorporate myself without a lawyer or accountant in Ontario?

Technically yes — the Ontario Business Registry allows anyone to incorporate online without professional assistance. However, the risks of DIY incorporation include: choosing a share structure that prevents future income splitting, failing to complete organizational resolutions (leaving the corporation legally incomplete), selecting an inefficient fiscal year, missing the window to elect S-Corp treatment for US activity if needed, and not connecting the incorporation to a coordinated tax plan. For a business generating $100,000+ per year, the tax savings from a properly structured incorporation far exceed professional fees. For most business owners, the real question is not whether to use a professional, but whether to use a lawyer, a CPA, or both — an experienced CPA can handle the tax planning aspects and coordinate with a corporate lawyer for the legal documents.