Starting a small business in Ontario can be an exciting venture. It’s essential to understand the legal aspects that come with it.
This knowledge will not only protect your business but also ensure its smooth operation. Here, we will delve into four crucial legal things you need to know when starting a small business in Ontario.
1. Business Registration and Licensing
Before you open your doors to customers, your business needs to be legally recognized. This process involves registering your business name and obtaining the necessary licenses and permits.
Registering your business name is a critical step in the legal establishment of your business.
Unless you’re operating under your legal name, you must register your business name with the Ontario government. This registration is valid for five years, after which you must renew it.
Depending on the nature of your business, you may need to obtain certain licenses and permits. These could range from municipal business licenses to specific permits related to health and safety, signage, and zoning.
It’s crucial to research and understand what licenses and permits your business may require to operate legally.
Another essential aspect of business registration is deciding on your business structure. This could be a sole proprietorship, partnership, or corporation.
Each structure has its legal implications, including liability, tax considerations, and management structure. It’s advisable to consult with a legal professional to understand which structure best suits your business needs.
2. Understanding Tax Obligations
As a small business owner in Ontario, you need to understand your tax obligations. This includes both federal and provincial taxes. Your Ontario corporate lawyer can help with this.
Federally, you are required to pay income tax on any money your business earns. This is done through the Canada Revenue Agency (CRA). You may also need to register for a Goods and Services Tax/Harmonized Sales Tax (GST/HST) number if your business’s annual revenue exceeds $30,000.
Provincially, you may be required to pay Employer Health Tax (EHT), Corporate Minimum Tax (CMT), and other industry-specific taxes. It’s crucial to understand your tax obligations to avoid any penalties and ensure your business remains in good standing with tax authorities.
Small Business in Ontario – Keep Accurate Records
Keeping accurate and detailed records is not only a good business practice but also a legal requirement. These records will be crucial when it comes to filing your taxes and can also be useful in tracking your business’s financial health.
Ensure you keep all receipts, invoices, and other financial documents for at least six years, as recommended by the CRA.
3. Employment Laws
If you plan to hire employees for your small business, you need to understand Ontario’s employment laws. These laws cover areas such as minimum wage, overtime pay, holidays, and leaves of absence.
The current minimum wage in Ontario is $14.25 per hour for most workers. However, students under 18 and workers serving alcohol may have different rates. It’s crucial to understand these laws to ensure you’re providing fair and legal compensation to your employees.
Ontario’s employment laws also cover leaves of absence. This includes pregnancy leave, parental leave, family medical leave, and personal emergency leave. As an employer, it’s your responsibility to understand and adhere to these laws.
Workplace Safety and Insurance
Most businesses in Ontario are required to have Workplace Safety and Insurance Board coverage for their employees. This insurance provides compensation to employees who get injured or become ill due to their work.
It’s crucial to understand your obligations under the Workplace Safety and Insurance Act to ensure the well-being of your employees.
4. Protecting Your Intellectual Property
Intellectual property can be a valuable asset for your small business. This includes trademarks, patents, copyrights, and trade secrets. Protecting your IP can give you a competitive edge and prevent others from using your unique ideas, products, or services without your permission.
You can protect your IP in Ontario through various means. For instance, you can register a trademark to protect your business name, logo, or tagline.
You can apply for a patent to protect a new invention or a copyright to protect your original artistic, literary, or musical work.
It’s important to note that IP laws can be complex, and the process of registering and protecting your IP can be lengthy and costly. Therefore, it’s advisable to consult with an IP lawyer to understand your options and ensure your IP is adequately protected.
Small Business in Ontario – NDAs
Another way to protect your IP is through non-disclosure agreements (NDAs). These are legal contracts that prevent employees, contractors, or other parties from sharing your confidential information.
NDAs can be crucial in protecting your trade secrets and other sensitive business information.
Understanding these four legal aspects can help you navigate the complexities of starting a small business in Ontario.
While this guide provides a good starting point, it’s always advisable to consult with a small biz law firm to ensure your business complies with all legal requirements.
Author: Evelyn Hartman, small business pro in Toronto.