Starting a business in Ontario is an exciting journey filled with opportunities. It’s a chance to bring your ideas to life and create something meaningful. However, it requires careful planning and adherence to provincial regulations to ensure long-term success.
This guide will walk you through the essential steps to establish your business legally and effectively. Let’s break it down step by step, assuming you’re starting with no prior knowledge.
If you're looking for profitable business ideas, explore The Best Businesses to Start in Canada for inspiration on low-cost, high-potential opportunities.
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1. Understand Your Role and Responsibilities
Starting a small business in Ontario means wearing multiple hats. Whether you’re a solo entrepreneur or planning to build a team, you’ll need to manage planning, finances, marketing, operations, customer service, and legal compliance.
To succeed, you must understand not only your responsibilities but also the role that government agencies play in business regulation. Here’s a breakdown:
Your Responsibilities as a Business Owner
As the business owner, you are responsible for:
Developing a business idea – Ensuring your product/service meets market demand.
Funding the business – Securing personal savings, loans, grants, or investors.
Business registration and taxes – Registering your business and handling HST, payroll, and corporate taxes.
Marketing and sales – Building brand awareness and attracting customers.
Operations and logistics – Managing day-to-day tasks, hiring staff, and optimizing workflow.
Legal and regulatory compliance – Following industry regulations, employment laws, and tax obligations.
If you plan to hire employees, you take on additional responsibilities, such as:
Providing fair wages and benefits.
Ensuring a safe and compliant workplace.
Handling payroll deductions and remitting them to the Canada Revenue Agency (CRA).
Understanding these responsibilities will help you avoid costly mistakes and set the foundation for a successful business.
The Role of Government in Business Regulation
Businesses in Ontario must comply with federal, provincial, and municipal regulations. Different government bodies handle different aspects of business operations:
Agency | Responsibility | Website |
ServiceOntario | Business name registration, permits, licenses | |
Canada Revenue Agency (CRA) | Business Number (BN), HST/GST, payroll taxes, corporate tax | |
Local Municipalities | Zoning, business licenses, signage permits | Visit your city/town’s website |
Ontario Ministry of Labour, Training and Skills Development | Employment standards, workplace safety, workers' rights | |
Industry-Specific Regulators | Regulations for specific industries (e.g., food, construction, healthcare) | Varies by industry |
Each business may have different compliance requirements depending on its industry, size, and location. For example:
Restaurants need health permits and liquor licenses.
Construction businesses require zoning approvals.
E-commerce stores must register for HST if revenue exceeds $30,000/year.
👉 Pro Tip: Use the Ontario Business Information Hub to find specific regulations for your industry.
Legal and Tax Implications
Ignoring government regulations can lead to fines or legal trouble. Here are three common mistakes new business owners make and how to avoid them:
Mistake | Consequence | Solution |
Not registering your business | You may face fines or legal action | Register with ServiceOntario online |
Failing to collect and remit HST | The CRA can penalize you | Register for an HST number if making over $30K/year |
Not keeping financial records | Audits and tax issues | Use accounting software like QuickBooks or Wave |
By staying compliant from day one, you’ll avoid stress and potential penalties while focusing on growing your business.
2. Refine Your Business Idea
A great business starts with a strong, well-defined idea that meets a real market demand. Many entrepreneurs fail not because they lack passion but because they don’t validate their idea properly before investing time and money.
This step will help you ensure that your business idea is viable, profitable, and unique in the market.
A. Identify a Market Need
Your business must solve a problem or fulfill a need for a specific group of people. Ask yourself:
✅ What problem does my business solve?
✅ Who are my potential customers?
✅ Is there a demand for my product/service?
✅ How is my idea different from existing competitors?
For example:
Food Delivery Service → Targets busy professionals who need healthy meals delivered.
E-commerce Store for Handmade Jewelry → Appeals to people looking for unique, eco-friendly accessories.
Tech Repair Service → Solves the problem of slow and expensive repairs at big retailers.
👉 Pro Tip: Browse Reddit, Quora, and Facebook Groups to find out what frustrations people have in your industry.
B. Research Industry Trends
Understanding industry trends helps you determine if your business idea has long-term potential.
✅ Check market size & growth trends
Use Google Trends to see if demand is increasing or decreasing.
Visit Statista or IBISWorld for industry reports.
✅ Look at competitors
Search for similar businesses on Google, Yelp, or LinkedIn.
Analyze their strengths, weaknesses, pricing, and customer reviews.
✅ Consider emerging trends
Example: In the Canadian coffee market, roasted coffee accounted for 93% of total sales in 2020, showing a clear preference over instant coffee.
💡 If you see an industry shrinking, rethink your idea or find a unique angle to stand out.
C. Validate Your Idea with Real Customers
Market validation ensures that people are actually willing to pay for your product/service.
✅ Surveys & Polls
Use Google Forms, Typeform, or SurveyMonkey to collect feedback.
Ask people in your target audience what they like, what they’d pay, and what’s missing from competitors.
✅ Focus Groups & Interviews
Talk to potential customers directly to get real insights.
Find participants through social media, online forums, or networking events.
✅ Pre-Sell Your Idea
Create a landing page with a signup form and see if people are interested.
Offer pre-orders to test demand before launching.
👉 Pro Tip: Use Facebook Ads with a small budget ($50-$100) to see if your idea attracts real interest.
D. Define Your Unique Selling Proposition (USP)
Your USP is what makes your business different from competitors.
🔹 What do you offer that others don’t?
🔹 Why should customers choose you?
🔹 What is the biggest benefit of your product/service?
Business Type | Example USP |
Fitness App | "AI-powered workout plans customized to your fitness level." |
Vegan Bakery | "Ontario’s first 100% organic, gluten-free, and sugar-free bakery." |
Digital Marketing Agency | "Helping local businesses grow online with SEO-driven results." |
👉 Pro Tip: Keep your USP short, clear, and customer-focused.
E. Create a Simple Business Model
A business model outlines how you will make money. Answer these key questions:
✅ What will you sell? (Products, services, subscriptions, etc.)
✅ Who will buy it? (Target audience)
✅ How will you price it? (Premium, budget-friendly, tiered pricing)
✅ Where will you sell? (Online, physical store, social media)
✅ How will you reach customers? (Advertising, social media, referrals)
Business Model Type | Examples |
Subscription-Based | Netflix, Spotify, meal prep services |
E-commerce | Online stores (Etsy, Shopify, Amazon) |
Freelance/Consulting | Graphic design, digital marketing, coaching |
Brick-and-Mortar | Coffee shop, boutique, local service |
👉 Pro Tip: Use The Business Model Canvas (free online tool) to map out your business model in minutes.
Key Takeaways
✔ Identify a real market need – Solve a problem customers care about.
✔ Research industry trends – Validate that your idea has long-term potential.
✔ Test your idea – Conduct surveys, interviews, or pre-sales to confirm demand.
✔ Define your USP – Make sure your business stands out from competitors.
✔ Choose a business model – Know exactly how you’ll make money.
3. Create a Business Plan
A business plan is your roadmap to success, outlining goals, operations, and finances. It’s essential for securing funding, attracting investors, and guiding growth.
Key Sections of a Business Plan
1. Executive Summary – A brief overview of your business, including products/services, target market, and financial outlook.
2. Business Description – What problem your business solves and how it stands out.
3. Market Analysis – Industry trends, ideal customers, and competitor insights.
4. Business Structure & Operations – Your legal structure, daily operations, and hiring plans.
5. Products & Services – What you offer, pricing, and unique value.
6. Marketing & Sales Strategy – How you’ll attract and retain customers (SEO, social media, ads, networking).
7. Financial Projections – Startup costs, revenue estimates, and funding needs.
Where to Get Help
Use free business plan templates from:
Canada Business Network
BDC (Business Development Bank of Canada)
Ontario Small Business Centres
A solid plan keeps your business focused and ready for funding opportunities.
Pro Tip: Watch this step-by-step guide to writing a business plan for actionable insights.
4. Choose a Business Structure
Selecting the right business structure is one of the most important decisions when starting a business in Ontario. It affects legal liability, taxes, ownership, and growth potential.
The three main business structures in Ontario are:
Sole Proprietorship
Partnership
Corporation
Each has its own benefits, risks, and legal requirements. Let’s break them down.
A. Sole Proprietorship
A sole proprietorship is the simplest and most common business structure. You own and operate the business alone.
🔹 Best for: Freelancers, small business owners, and solo entrepreneurs.
🔹 Setup Cost: Low
🔹 Legal Liability: High (Personal assets are at risk)
✅ Pros and ❌ Cons
Pros | Cons |
Easy and inexpensive to set up | You are personally responsible for all debts |
Full control over decisions | Harder to raise capital |
Simple tax reporting (business income is filed with your personal tax return) | Less credibility compared to a corporation |
Minimal regulations | Higher personal financial risk |
📌 How to Register:
Register your business name with ServiceOntario.
Get a Business Number (BN) from the Canada Revenue Agency (CRA).
Register for HST/GST if you earn over $30,000/year.
👉 Pro Tip: If you’re starting a small side business, this is the easiest structure. But be aware that your personal assets (house, car, savings) are at risk if your business runs into financial trouble.
B. Partnership
A partnership is a business owned by two or more people. There are two main types:
General Partnership:
All partners share equal responsibility and liability.
Profits are split according to the partnership agreement.
Limited Partnership:
Some partners invest money but don’t participate in daily operations.
Limited partners have liability only up to the amount they invested.
🔹 Best for: Businesses with multiple founders or professionals like law firms, accounting firms, and consultancies.
🔹 Setup Cost: Moderate
🔹 Legal Liability: Shared among partners (unless limited partnership).
✅ Pros and ❌ Cons
Pros | Cons |
Shared responsibilities and costs | Each partner is personally liable for debts (unless limited) |
Combines different skills and expertise | Disagreements can cause business conflicts |
Easier to raise capital compared to sole proprietorship | Profits must be shared |
Lower tax rates than corporations in some cases | Requires a legal agreement to prevent disputes |
📌 How to Register:
Register the partnership name with ServiceOntario.
Draft a partnership agreement outlining profit-sharing, roles, and exit strategies.
Apply for a Business Number (BN) and HST/GST registration if earning over $30,000/year.
👉 Pro Tip: Always have a written partnership agreement to avoid conflicts later.
C. Corporation
A corporation is a separate legal entity from its owners, meaning the business can enter contracts, own assets, and take on debt in its own name.
🔹 Best for: Businesses planning to scale, raise funds, or minimize personal liability.
🔹 Setup Cost: High
🔹 Legal Liability: Limited (owners’ personal assets are protected).
Pros and Cons
Pros | Cons |
Owners (shareholders) are protected from personal liability | More expensive and complex to set up |
Potential tax benefits (corporate tax rates are lower than personal income tax) | More paperwork and regulatory requirements |
Easier to raise capital (can issue shares) | Must file annual corporate tax returns |
Can continue to exist beyond the original owners | Subject to more government regulations |
📌 How to Register:
Choose between federal incorporation (gives your business name protection across Canada) or provincial incorporation (Ontario-only).
File Articles of Incorporation with the Ontario Business Registry.
Get a Business Number (BN) and register for HST/GST if required.
Set up a corporate bank account.
👉 Pro Tip: If you’re serious about long-term growth and tax benefits, incorporation is a great choice. However, be prepared for more paperwork and accounting requirements.
D. Which Business Structure Should You Choose?
Factor | Sole Proprietorship | Partnership | Corporation |
Best For | Solo entrepreneurs | Businesses with multiple founders | Companies planning to scale |
Setup Cost | Low | Moderate | High |
Legal Liability | High | Shared | Limited |
Tax Benefits | None | Some (depends on agreement) | Lower tax rates for businesses |
Ease of Raising Funds | Difficult | Moderate | Easier (can issue shares) |
Paperwork & Compliance | Minimal | Requires a partnership agreement | High (annual filings & reports) |
👉 Pro Tip: If you’re just starting out and want low costs and full control, a sole proprietorship is ideal. But if you plan to grow, hire employees, or seek investors, consider incorporation.
Before you continue
Beyond registration and legal compliance, choosing the right tools can set your business up for efficiency and scalability. Selecting the best accounting software can help manage finances effortlessly—check out Best Accounting Software for Startups in the USA for top-rated options.
For those planning to sell online, having an optimized eCommerce presence is crucial. Learn Shopify SEO: eCommerce Tips for Small Businesses to boost traffic and sales.
If marketing is a priority, understanding digital growth strategies can make all the difference. See Marketing Strategy vs. Marketing Plan: How to Distinguish and Use Both Effectively to structure your business roadmap.
For entrepreneurs securing funding, Affiliate Marketing in Canada: Everything You Need to Know provides an additional revenue stream to support your business.
5. Register Your Business
Registering your business is a crucial legal step to ensure compliance, protect your business name, and establish your business officially in Ontario. Whether you’re operating as a sole proprietor, partnership, or corporation, the registration process varies.
Below is a step-by-step guide to ensure you register your business correctly.
A. Conduct a Name Search
Before you register, you need to check if your business name is available and not already taken by another company.
NUANS (Newly Upgraded Automated Name Search)
A database that checks for existing registered business names across Canada.
Mandatory for: Corporations (federal or provincial).
Optional for: Sole proprietorships & partnerships (but highly recommended).
📌 How to Perform a Name Search:
Go to NUANS and enter your desired business name.
The system will show if the name is available or if similar names exist.
If available, reserve the name (valid for 90 days).
🔹 Alternative: If you’re a sole proprietor, you can search the Ontario Business Registry for similar names before registering.
B. Register Your Business Name
Once you confirm your business name is available, you must officially register it.
📌 Where to Register:
Business Structure | Where to Register | Registration Method |
Sole Proprietorship | ServiceOntario | Online, in-person, or by mail |
Partnership | ServiceOntario | Online, in-person, or by mail |
Ontario Corporation | Ontario Business Registry | Online |
Federal Corporation | Corporations Canada | Online |
🔹 Cost of Registration:
Sole Proprietorship & Partnerships: $60 - $80 CAD
Ontario Corporation: $300 CAD
Federal Corporation: $200 - $300 CAD
👉 Pro Tip: If you plan to operate only in Ontario, registering provincially is enough. If you want to do business across Canada, consider federal incorporation for wider name protection.
C. Obtain a Business Number (BN) & Register for Taxes
A Business Number (BN) is a unique 9-digit number issued by the Canada Revenue Agency (CRA) to identify your business for tax purposes.
📌 Who Needs a BN?
All corporations (mandatory).
Sole proprietors & partnerships only if they need to collect HST/GST or have employees.
🔹 How to Get a Business Number:
Visit the CRA Business Registration portal: CRA Business Registration.
Choose “Get a Business Number.”
Provide your business details and ownership structure.
Once processed, the CRA will issue your BN immediately.
📌 Tax Accounts You May Need:
Tax Type | Who Needs It? | Where to Register |
HST/GST Number | Businesses earning over $30,000/year | CRA |
Payroll Account | If you plan to hire employees | CRA |
Import-Export Account | If you import/export goods | CRA |
👉 Pro Tip: Even if your revenue is under $30,000, registering for an HST/GST number allows you to claim tax refunds on business expenses.
D. Obtain Licenses & Permits
Some businesses need additional licenses or permits before operating legally. These vary by industry and location.
Common Licenses & Permits by Industry
Business Type | Required Permits | Where to Apply |
Restaurant or Café | Food handling permit, health inspection, liquor license | Ontario Ministry of Health |
Construction Business | Zoning permits, contractor license | Local municipality |
Retail Store | Signage permit, municipal business license | Local city hall |
E-commerce Business | HST/GST number, business license (if selling regulated products) | CRA, ServiceOntario |
Professional Services (Legal, Accounting, etc.) | Industry-specific certification or license | Provincial regulatory bodies |
📌 How to Find Required Permits:
Use the BizPal tool (www.bizpal.ca) to check what licenses and permits your business needs based on location and industry.
👉 Pro Tip: Failure to obtain the right permits can result in fines, legal issues, or business closure. Check your local municipal website for regulations before launching.
E. Final Checklist for Business Registration
✅ Conduct a Name Search (NUANS for corporations)
✅ Register Your Business Name (ServiceOntario or Corporations Canada)
✅ Obtain a Business Number (BN) from the CRA
✅ Register for Tax Accounts (HST/GST, Payroll, etc.)
✅ Apply for Licenses & Permits (if required)
Pro Tip: This video on registering your business in Ontario walks you through the steps visually.
Pro Tip 2: Consider tools like Ownr to simplify your business registration process, ensuring your venture is set up quickly and professionally while saving you time and effort.
Once these steps are complete, your business is legally registered and ready to operate! 🎉
6. Market Your Business
Marketing is the lifeline of your business. Without it, even the best products or services won’t attract customers.
A strong marketing strategy helps you build credibility, generate leads, and increase sales.
To get the best results, combine digital marketing, traditional marketing, and networking.
A. Build a Strong Online Presence
Most consumers search online before making a purchase. Having a website and active social media profiles makes your business more discoverable and credible.
A website acts as your digital storefront. It should clearly present your products or services, pricing, and contact information. Adding customer testimonials builds trust. Platforms like Wix, WordPress, or Shopify make website creation simple.
Search engine optimization (SEO) helps your site appear in Google searches. Local businesses should focus on local SEO by optimizing their Google Business Profile, adding location-based keywords, and encouraging customer reviews.
Social media allows direct interaction with customers. Choose platforms based on your industry. Instagram and TikTok work well for visually appealing products, while LinkedIn is better suited for B2B services. Regular posting, engaging content, and responding to messages help build an audience.
B. Traditional Marketing Strategies
Not all marketing happens online. Networking, local events, and print materials still provide value.
Attending business expos, trade shows, and networking meetups helps establish credibility and form valuable connections. Handing out business cards and flyers at events ensures people remember your brand.
Local businesses benefit from placing ads in newspapers, radio, or community magazines. Sponsoring local events can also increase brand recognition.
C.Leverage Paid Advertising
Organic reach takes time. Paid ads can speed up brand awareness.
Facebook and Instagram ads allow businesses to target specific demographics based on interests, location, and behavior. Well-designed ads with strong visuals and clear calls to action generate leads.
Google Ads place your business at the top of search results. Bidding on keywords related to your business increases visibility. This is especially useful for service-based businesses looking to attract local clients.
Email marketing keeps your business in front of potential and existing customers. Sending newsletters with promotions, updates, and educational content keeps subscribers engaged. Tools like Mailchimp or ConvertKit simplify the process.
D. Monitor & Adjust Your Strategy
Marketing efforts should be tracked and optimized over time.
Using tools like Google Analytics shows how visitors interact with your website. Facebook and Instagram provide insights into post engagement and ad performance. If an ad isn’t generating results, adjusting the targeting or messaging can improve effectiveness.
Marketing is an ongoing effort. Businesses that stay adaptable and refine their approach based on data tend to see long-term success.
Key Takeaways
✔ A strong online presence helps customers find you.
✔ Use social media, SEO, and paid ads to generate leads.
✔ Traditional marketing like networking and print ads can still be effective.
✔ Track your results and adjust your strategy to improve performance.
Pro Tip: Consider tools like ZoomInfo to identify and connect with potential customers or investors, giving you a competitive edge in targeted outreach.
7. Seek Ongoing Support and Resources
Starting a business is just the beginning. Continuous learning and networking help entrepreneurs stay competitive and grow their ventures.
Take Advantage of Government Resources
The Business Development Bank of Canada (BDC) provides financing, advisory services, and free resources to help small businesses succeed. Ontario also has Small Business Centres that offer free consultations, workshops, and networking opportunities.
Several government grants and funding programs exist to support entrepreneurs. The Government of Canada Grants Portal lists available funding options for different industries.
Join Business Networks and Mentorship Programs
Connecting with other entrepreneurs provides valuable insights and opportunities.
Local Chambers of Commerce organize networking events and provide resources to support small businesses. Industry-specific groups on Facebook and LinkedIn allow business owners to share advice and collaborate.
Mentorship programs like Futurpreneur Canada and SCORE pair new business owners with experienced mentors who offer guidance and support.
Keep Learning
Business trends change constantly. Staying informed helps businesses remain competitive.
Free online courses from platforms like Coursera, Udemy, and HubSpot Academy provide valuable knowledge in marketing, finance, and operations. Podcasts, books, and webinars also offer industry insights and success strategies.
Entrepreneurs who stay proactive, network regularly, and continue learning position themselves for long-term success.
Final Thoughts: How to Start a Small Business in Ontario
Starting a business in Ontario involves careful planning, legal registration, and strategic marketing. A solid business plan sets the foundation, while choosing the right business structure ensures legal compliance.
Registering your business, securing financing, and leveraging digital marketing will help attract customers and drive growth. Staying connected with mentorship programs and business resources will keep you ahead in a competitive market.
Success comes from continuous learning, adapting to market changes, and staying persistent. With the right approach, your business can thrive in Ontario’s growing economy.
Now, take the next step—start building your dream business today!
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