Corporations In Ontario: What You Need To Know
A corporation is a legal entity in Ontario. As a legal entity, it has the legal ability to contract, obligation to pay taxes and sue or be sued. People incorporate their business to protect them selves personally and save taxes. It legally separates you from your business. If you run a business under your own name or a trade name but as an individual, it often makes sense to incorporate. Read more below for more information so that you have the knowledge to make the right decision for yourself.
Know What Type Of Incorporation You Need
Many people have not given much thought to the type of corporations that are available to them and / or their shareholders. While people may have heard about numbered companies and also know that some companies have names, they may not know the other types of corporations that are available to them. Our corporate lawyers believe in education and allowing our clients to make informed choices. In some situations, you may not have a choice as to which specific type of the various corporations you can use but the corporate lawyers at Bassermann Law Firm assist in ensuring you incorporate the right type of Ontario corporation.
While many people think that the incorporation process is difficult, starting Ontario corporations is not hard with the right help. That is where we come in! Incorporating offers many advantages and benefits. It is important to note that the benefits of incorporating may be lost, if the corporation is not set up and maintained correctly. This is not an expensive process, but it is key! You risk losing these benefits if you fail to properly set up your company properly. The different types of Ontario Corporations and other legal entities similar to corporations include a number of choices. For example:
Named Ontario Corporations
Named corporations frequently make up the Ontario corporations used for business purposes. When incorporating a named corporation, you decide on the name of the corporation (so long as the name is not already in use) and named corporations offer all the advantages of numbered companies. This link will bring you to the specific details of named corporations in Ontario.
Numbered Corporations
Named corporations frequently make up the corporations used for business purposes. When incorporating a named corporation, you decide on the name of the corporation (so long as the name is not already in use) and named corporations offer all the advantages of numbered companies. This link will bring you to the specific details of named corporations in Ontario.
Professional Corporations
A professional corporation is a specific type of corporation which are used by professionals who are members of specific professions, including doctors, accountants, dentists, engineers and lawyers. While professional corporations allow for the tax advantages of incorporating, they often do not provide liability protection. Its ability to do so rests with the articular rules set up for each specific profession.
Condominium Corporations
Condominium corporations are one of the types of corporations which are not incorporated under Ontario’s Business Corporations Act, but are instead created pursuant to Ontario’s Condominium Property Act. A condominium corporation gets created legally, upon registration of a condominium plan at the Ontario Land Titles Office. In other words, the “shareholders” include all owners of units within the condominium plan. We highly suggest that all condo owners take a vested interest the running of the condominium corporation. Your investment and home merit the attention it deserves.
Societies
Societies are legal entities which are registered as organizations pursuant to the Societies Act of Ontario and are often used for non-profit purposes. Once properly established, societies may, in certain circumstances, obtain charitable status with the Canada Revenue Agency. Alternatively, societies, as a legal entity, frequently help maintain a legal standing for a group that is not in the business of making a profit but do not meet the requirements of a “charity”.
Cooperatives
A cooperative is similar to a society in many aspects but the legislation is different. A different set of laws govern cooperative. While not used often, they serve a legal purpose. For example, a housing cooperative is similar to a condo, but it allows more control over who lives in the cooperative. Essentially, a cooperative is a group of people who form a legal entity so that they can collectively manage a specific, ongoing endeavor.
Not-For-Profit Organizations
Non-profit organizations may obtain a charitable status from the Canada Revenue Agency. One of the advantages of a charitable organization is its ability to issue tax receipts to donors.This process often takes much longer than people expect. A charity does not exist as a legal entity on its own. Therefore, it must meet certain requirements pursuant to the Income Tax Act to registered as a charity.
Charities
Lastly, charities get their charitable status from the Canada Revenue Agency. The advantage to a charitable organization is that it can issue tax receipts. A charity does not exist as a legal entity on its own. Many rules govern the use of charitable status. Each rule requires strict compliance in order to maintain charitable status. Failure to follow these rules often results in the loss of charitable status or the loss of particular donation charitable status.
Trade Names Vs. Corporations
Trade names do not make up a type of corporation at all. They, in fact, lack any legal similarity or befit of a corporation. A trade name is a business name that people register with the Ontario Corporate Registry. It is not a legal entity. It cannot contract, pay taxes or protect you from liability like incorporating does. The trade name offers a very limited form intellectual property protection for a business name. Therefore, never use a trade name as a substitute for trademarking a name. Legally, the process offers much less protection to your business.
Ongoing Help For Ontario Corporations
A key aspect of a corporation is maintaining the corporate status. This involves several different components. For example, it includes maintaining minute books, annual returns, maintaining a corporate registered office, etc. Failing to maintain these aspect of the incorporation, will lead to its ultimate dissolving, the loss of the benefits of incorporation and potential costly negative outcomes. To make life easier for you to focus on your business, we offer low cost options for business owners. We do the work behind the scenes but work with you to ensure your company remains safe.