UNDERSTANDING SOLE PROPRIETORSHIPS IN THE PROVINCE OF ONTARIO 

A sole proprietorship is the most simple and cost-effective for-profit business entity in Ontario. To create a sole proprietorship, the prospective business owner must select a business name, register the business with the Ministry of Public and Business Service Delivery, and obtain a Business Number and HST number from the Canada Revenue Agency as necessary. This business entity may be ideal where a single individual creates a business without the involvement of other business partners. All business assets and profits accumulate to the sole proprietor. Similarly, the sole proprietor is liable for all damages, financial losses, and liabilities of the business. When conducting business as a sole proprietor, the assets of the sole proprietor may be exposed to liability from the business’s activities. For this reason, it is very important to consult an experienced business lawyer regarding the decision to use a sole proprietorship as a vehicle for conducting your business.

BUSINESS NAME

In Ontario, the Ontario Business Names Act states that all corporations, partnerships, and individuals must have their business name registered if they are carrying on business unless they are a sole proprietor carrying on business in their own name. In Ontario, if a business operates in any name other than the name of its owner, partners, or operating name, it must register the name with Service Ontario. When choosing a name, it is important to conduct a business name search or Newly Upgraded Automated Name Search (NUANS), which allows individuals to compare proposed business names with existing and reserved corporate names and trademarks.

TAX CONSIDERATIONS

Since the profits of a sole proprietorship flow through to the sole proprietor, they must be included in the sole proprietor’s personal income for tax purposes. One caveat of a sole proprietorship is that you may not be eligible for certain tax advantages that a corporation may be eligible for. It is important that you consult an experienced accountant or business lawyer regarding the tax consequences of conducting business as a sole proprietor.

If you are looking to form a sole proprietorship, contact us today to set up an initial consultation.

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Disclaimer: The information contained in this article is not to be construed as legal advice. The content is drafted and published only for the purpose of providing the public with general information regarding various real estate and business law topics. For legal advice, please contact us.

About the Author:

Shahriar Jahanshahi is the founder and principal lawyer at Jahanshahi Law Firm with a practice focus on representing business star-ups and investors in the province of Ontario. For further information about Shahriar Jahanshahi, click here.