If you are starting a business in Ontario, one of the first decisions you will face is whether to incorporate. For most founders building something with real ambition — something that will involve partners, employees, investors, or meaningful revenue — the answer is almost always yes. The corporation is the single most important legal vehicle available to entrepreneurs, and it has been for centuries. In my book The Law for Founders, I point out that one of the early uses of the corporation was to pool money to set sail and explore foreign lands from England. The Hudson’s Bay Company, founded in 1670, is one of the most famous examples. The core idea has not changed much since then: a corporation lets people pool resources, limit their personal risk, and build something bigger than any one person could manage alone.
This guide walks you through the full process of incorporating in Ontario, from deciding whether incorporation is right for you, all the way through to the steps most founders forget after the articles are filed. I have helped hundreds of founders through this process, and the mistakes I see most often are not in the filing itself — they happen before and after.
Why Incorporate at All?
Before getting into the mechanics, it is worth understanding why incorporation matters. There are three primary reasons, and they are all significant.
The first is limited liability. When you operate as a sole proprietor, there is no legal separation between you and your business. If the business is sued, your personal assets — your home, your savings, everything — are exposed. A corporation creates a separate legal entity. The concept is sometimes called the “corporate veil,” and it means that shareholders are generally not personally liable for the debts and obligations of the corporation. This is a powerful form of protection, and it is one of the main reasons the corporation exists as a legal structure.
The second reason is tax efficiency. In Ontario, the combined federal and provincial small business tax rate for Canadian-controlled private corporations is approximately 12.2% on the first $500,000 of active business income. Compare that to personal income tax rates that can climb above 53% at the highest brackets. The difference is substantial, and it gives incorporated businesses far more flexibility to reinvest profits, pay themselves strategically, and plan for the future.
The third reason is the ability to raise capital. A corporation can issue shares to investors, employees, and advisors. A sole proprietorship cannot. If you ever plan to bring on a co-founder, raise money from angel investors or venture capital, or offer stock options to key hires, you need a corporation. There is no way around it.
For a deeper dive on these three pillars and how they affect your specific situation, grab a free copy of The Law for Founders — the second chapter is devoted entirely to choosing the right business vehicle.
Step 1: Choosing Your Business Name
Choosing a name sounds simple, but it is one of the areas where founders run into trouble early. The name you want may already be taken, or worse, it may be confusingly similar to an existing trademark — which can lead to a legal dispute down the road even if you manage to register it.
In Ontario, if you want to incorporate with a name (as opposed to a numbered company), you need to obtain a NUANS report. NUANS stands for Newly Upgraded Automated Name Search, and it is a database that searches existing federal and provincial business names as well as registered trademarks across Canada. The report lists similar names and trademarks so you can assess whether your proposed name is likely to cause confusion.
Here is the important caveat: a clean NUANS report does not mean you are safe. The registrar does not deeply scrutinize names, so passing the NUANS search is not a guarantee that nobody will challenge your name later. In The Law for Founders, I recommend a three-step name validation process before you even get to the NUANS stage. First, do the Google test — search your proposed name and see what comes up. If another business in a similar space is already using it, that is a red flag. Second, do the ChatGPT test — ask an AI tool to check for potential trademark conflicts and similar business names. Third, check domain availability. If you cannot get a reasonable domain name for your business, that alone may be a reason to reconsider.
The reality is that there are not many names left to choose from that are short, catchy, and descriptive. Most founders end up with a coined or invented word, which is actually better from a trademark perspective. Whatever you choose, do your homework before you commit.
Step 2: Choosing Your Jurisdiction — Ontario or Federal?
Once you have a name, you need to decide where to incorporate. In Canada, this means choosing between a provincial incorporation (under the Ontario Business Corporations Act) or a federal incorporation (under the Canada Business Corporations Act). This is a simpler choice than what American founders face — they have 50 states to choose from, with Delaware being the famous favourite. In Canada, even with only two real options, corporate law leaves lawyers with a lot of room to be creative in how they structure things.
The key differences come down to a few practical factors. Federal incorporation gives you nationwide name protection, meaning no other federally incorporated company can use the same or a confusingly similar name anywhere in Canada. But federal corporations require that at least 25% of directors be resident Canadians. Ontario incorporation has no residency requirement for directors, which matters if your founding team includes people outside of Canada.
I have written a full comparison in our blog post on federal vs provincial incorporation, and our landing pages on federal incorporation and Ontario incorporation go into detail on each option. For most Ontario-based startups that plan to operate primarily in the province, an Ontario incorporation is simpler and cheaper. If you plan to operate across multiple provinces or want the name protection, federal may be the better route.
Step 3: Filing the Articles of Incorporation
The articles of incorporation are the foundational document of your corporation. They set out the corporation’s name, the address of the registered office, the number and classes of shares the corporation is authorized to issue, any restrictions on share transfers, and any other provisions the incorporators choose to include.
The share structure decisions you make in the articles are critical. You need to think about what classes of shares to create, what rights attach to each class (voting, dividends, distribution on dissolution), whether there are any transfer restrictions, and the maximum number of shares that can be issued. These decisions affect everything from co-founder equity splits to future fundraising rounds. Getting the share structure wrong at incorporation can create expensive problems later, so this is an area where working with a lawyer who understands startups pays for itself many times over.
For Ontario incorporations, the articles are filed with the Ontario government. The process is straightforward, and if everything is in order, the incorporation can be completed relatively quickly. You will receive a certificate of incorporation, which is essentially the birth certificate of your company.
If the process feels overwhelming or you want to make sure the share structure is set up correctly for your specific plans, book a free consultation and we will walk you through it.
Step 4: The First Organizational Resolutions
Filing the articles is not the end of the process — it is really just the beginning. One of the things I emphasize in The Law for Founders is that many founders do not understand basic corporate governance. The incorporation creates the legal entity, but the entity needs to be properly organized before it can operate.
After the articles are filed, the first meeting of directors (or, more commonly, the first resolutions of the sole director) will typically pass a series of organizational resolutions. These include enacting the corporation’s by-laws, which govern the internal management of the company. They include allotting shares and authorizing their issuance to the founders, which is how you formally become a shareholder of the company you just created. They include making banking arrangements, so the corporation can open a bank account and begin transacting. And they include appointing officers — typically a president, secretary, and treasurer, though in many startups one person wears all three hats.
These steps are not optional extras. They are legal requirements, and skipping them creates problems that surface at the worst possible times — when you are trying to open a bank account, when the CRA wants to see your corporate records, when an investor is doing due diligence, or when you are trying to sell the business.
Step 5: Setting Up the Minute Book
The minute book is the official record of your corporation. It contains the articles of incorporation, the by-laws, all resolutions passed by directors and shareholders, the share register (which tracks who owns shares and how many), and the register of directors and officers.
Founders routinely underestimate how important the minute book is. In The Law for Founders, I make the point that properly updated minute books and a clean record of who owns the shares of the company will save your business untold time and cost. You will need your minute book to open a business bank account. You will need it if the CRA audits your corporation. You will need it when investors conduct due diligence before writing a cheque. And you will absolutely need it when you sell the business — a messy or incomplete minute book can delay a deal, reduce your purchase price, or even kill the transaction entirely.
At our firm, we maintain minute books in digital format, which makes them easier to update, share, and store securely. Whether you go digital or physical, the key is keeping the records current. A minute book that was set up at incorporation and never updated is almost as bad as not having one at all.
Step 6: Issuing Shares to the Founders
Issuing shares is how you formally allocate ownership of the corporation. When you incorporate, the articles authorize the corporation to issue shares, but the shares are not actually issued until the directors pass a resolution to allot and issue them and the shareholders pay the subscription price.
For most founder-stage companies, shares are issued at a nominal value — often fractions of a cent per share. The number of shares and the price per share should be discussed with your lawyer and accountant, because these decisions have tax implications and affect how future equity transactions (like bringing on a co-founder, issuing stock options, or raising an investment round) will be structured.
If you have been operating the business as a sole proprietor before incorporating, you may be able to transfer your existing business assets into the new corporation on a tax-deferred basis using a Section 85 rollover. This is a technical process that requires coordination between your lawyer and accountant, but it can save you a significant amount in taxes. The Law for Founders covers the rollover process in the context of founders moving from sole proprietorship to corporation.
Step 7: CRA Registration and Business Number
Once the corporation is set up, you need to register with the Canada Revenue Agency to get a Business Number. Depending on your business, you may also need to register for a GST/HST account (required if you expect to earn more than $30,000 in revenue over four consecutive quarters), a payroll account (if you plan to pay employees or yourself a salary), and a corporate income tax account.
This is largely administrative, but it needs to happen early. You cannot process payroll, collect and remit HST, or file corporate tax returns without these accounts in place. Your accountant can help with the registration, or you can do it directly through the CRA’s online business registration portal.
Step 8: Opening a Corporate Bank Account
This step seems mundane, but it is critically important for a reason many founders do not think about: maintaining the separation between yourself and the corporation. In The Law for Founders, I discuss the concept of “piercing the corporate veil” and the alter ego doctrine. Courts can disregard the corporate structure and hold shareholders personally liable if the corporation is not treated as a genuinely separate entity.
One of the fastest ways to put your limited liability protection at risk is to mix personal and corporate finances. If you are running business expenses through your personal bank account, paying personal bills from corporate funds, or generally treating the corporation as your personal piggy bank, a court may decide that the corporation was never really separate from you at all. That defeats the entire purpose of incorporating.
Open a dedicated corporate bank account. Use the corporate name on all documents, contracts, and invoices. Keep your personal finances completely separate. This is basic hygiene, but it is surprising how many founders get it wrong.
Step 9: Get a Shareholder Agreement
If you have co-founders, or if you plan to bring on partners or investors in the future, you need a shareholder agreement. The articles of incorporation and company by-laws are not sufficient to protect the interests and expectations of each founding shareholder. They cover the bare minimum required by statute, but they do not address the practical realities of running a business with other people — things like what happens if a co-founder wants to leave, how decisions are made when founders disagree, how shares can be transferred, and what happens if someone dies, becomes disabled, or goes through a divorce.
I have written extensively about this topic in our blog post on whether you need a shareholder agreement, and our shareholder agreement services page explains the process in detail. The short version: if you have more than one shareholder, you need an agreement. Full stop.
Common Mistakes Founders Make
After years of helping founders incorporate and set up their companies, the same mistakes come up again and again. The first is procrastinating on the minute book. Founders get the articles filed and then move on to building their product, leaving the organizational resolutions, share issuances, and registers incomplete. This catches up with them later, usually at the most inconvenient time.
The second is choosing the wrong share structure. Founders who incorporate without legal advice often end up with a single class of common shares and no flexibility for future fundraising, tax planning, or bringing on investors with different rights. Fixing the share structure later requires amending the articles, which is doable but adds cost and complexity.
The third is failing to assign intellectual property to the corporation. If you have been developing software, a brand, or other IP before incorporating, that IP may still belong to you personally unless you formally assign it to the corporation. This is a critical step that many founders miss, and it creates serious problems during due diligence for fundraising or acquisition. For more on this, our startup lawyer page covers the IP assignment process.
The fourth is ignoring annual compliance. Ontario corporations are required to file annual returns and maintain current records. Directors have fiduciary duties and a duty of care to exercise reasonable diligence. Ignoring these obligations does not make them go away — it just creates a backlog of problems that become more expensive to fix over time.
The Bottom Line
Incorporating in Ontario is not complicated, but it involves more steps than most founders expect. The filing itself is the easy part. What matters is everything that comes before and after — choosing the right name, selecting the right jurisdiction, setting up the share structure properly, completing the organizational resolutions, maintaining the minute book, and keeping your personal and corporate affairs separate.
If you are thinking about incorporating, or if you have already incorporated and want to make sure everything is set up correctly, our incorporation services in Ontario page has more detail on how we help founders through this process. And for a comprehensive overview of the legal framework every founder should understand, download a free copy of The Law for Founders — it covers all of this and much more.
Ready to get started? Book a free consultation and we will help you incorporate properly from day one.