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Ontario Sole Proprietorship Registration in 1 Hour

Sole Proprietorship in Ontario - Advantages of Sole Proprietorship in Ontario. Main

considerations of registering as a sole proprietorship in Ontario.

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Sole Proprietorships

The Sole Proprietorship is the most common form of business structure. The vast majority of
small businesses start out as sole proprietorships. These firms are owned by one person,
usually the individual who has day-to-day responsibilities for running the business. Sole
proprietors own all the assets of the business and the profits generated by it. They also
assume complete responsibility for any of its liabilities or debts. In the eyes of the law and the
public, you are one in the same with the business.

This is the simplest way to set up a business. A sole proprietorship is fully responsible for all
debts and obligations related to his or her business. A creditor with a claim against a sole
proprietor would normally have a right against all of his or her assets, whether business or
personal. This is known as unlimited liability.

This type of business comes under provincial jurisdiction. In Canada if a Sole Proprietorship
establishes a business in his/her own name without adding any other words, it is not necessary
to register the business. If the proprietor chooses to carry on a business under a name other
than his/her own, he/she must register with the province. This function is administered by the
Provincial Private Registries. Filing a Declaration of Trade Name to protect your business name
is strongly recommended.

Tax Considerations

If you are a sole proprietor, you pay personal income tax on all revenue generated by your
business. You also assume all the risk of the business. Any income or losses are claimed on the
owner’s personal tax return each year. Business deductions are permitted.

As a sole proprietor, your income tax and benefit return must include financial statements or
one or more of the following forms, as applicable:

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*Form T2124, Statement of Business Activities

*Form T2032, statement of Professional Activities
*Form T2042, Statement of Farming Activities
*Form T1163, Statement A-NISA Account Information and Statement of Farming Activities for
Individuals, and
*Form T1164, Statement B-NISA Account Information and Statement of Farming Activities for
Additional Farming Operations; or
*Form T2121, Statement of Fishing Activities

As a sole proprietor, you have to register for the goods and services tax/harmonized sales tax
(GST/HST) if your worldwide annual taxable revenues are more than $ 30.000.

Liability

Owners are personally liable for the debts of the business. This also means that should the
business fail, the owner’s personal assets are at risk.

Duration

The business ends with death or incapacity of owner.

How to Set Up

It’s easy to set up a sole proprietorship. Simply operate as an individual or if you wish to
operate an individual company under a business name, which does not include your family
name or first name, you must register your new business name.

Advantages

*Low start-up cost

*Greatest freedom from regulation: few formalities and low organizational costs
*Fewer reporting requirements to government agencies
*Tax advantage to owner
*Avoidance of corporate “double tax”
*Business lossess may be taken as a personal income tax deduction to offset income from
other sources
*Owner in direct control of decision making
*Minimal working capital required
*All profits taxed as income to owner at the owner's personal income tax rate
*Registration of a trade name is available to prevent confusion resulting from deceptively
similar business names

Disadvantages

*Unlimited liability
*Lack of continuity in business organization in absence of owner
*Difficulty in raising capital
*Loans based on credit worthines of owner; and
*Owner's assets subject to business liabilities

Email: customerservice@corporateregistries.ca - www.corporateregistries.ca– Phone: 1-888-357-8526