A Guide to Articles of Incorporation in Ontario Canada

Published by:
Keisha Johnson

Reviewed by:
Alistair Vigier
Last Modified: 2024-05-28
Are you trying to get help with articles of incorporation in Ontario?
Incorporating your business in Ontario is one of the first legal steps to take when starting a business. Incorporation allows you to create a separate legal entity for your business, protecting you and your assets from potential liabilities.
The Articles of Incorporation are one crucial document needed to be incorporated in Ontario, and this guide focuses on them.
The Articles of Incorporation is a legal document that outlines the essential details of your business, such as its name, purpose, structure, and initial share structure.
It is a required document to incorporate a business in Ontario and must be filed with the Ontario Ministry of Government and Consumer Services.
The Articles of Incorporation establish the legal existence of your business as a separate entity from yourself and any other owners.
Filing with the Ontario Government
The Ontario Articles of Incorporation must contain specific information. Your business name must be unique and not already used by another business.
You must include a statement outlining the purpose of your business. This statement should be broad enough to allow for flexibility in your business activities but specific enough to meet the requirements of the Ontario Business Corporations Act.
You must outline the initial share structure of your business, including the number of shares authorized, the classes of shares, and any special rights or restrictions associated with the shares.
It’s essential to include the address of your registered office and your business’s official address, where legal notices and other documents will be sent.
Ontario, Canada Business Formation Documents
The names and addresses of the initial directors of your business must also be listed, with at least 25% of the directors required to be Canadian residents. Lastly, the name and address of the incorporator, who is the person or entity responsible for filing the Articles of Incorporation with the Ontario government, must be included.
The Articles of Incorporation must be created per the Ontario Business Corporations Act requirements.
While it is possible to create the Articles of Incorporation on your own, it is recommended that you seek the assistance of a lawyer or legal professional to ensure that the document is properly drafted and meets all legal requirements.
The process of creating the Articles of Incorporation involves several steps. First, you need to select a unique and distinctive name for your business that meets the requirements of the OBCA.

Ontario Ministry of Government and Consumer Services
You must then decide on the general purpose of your business and ensure that it meets the requirements of the OBCA. Next, you must prepare the Articles of Incorporation, including all required information and legal language.
You must then file the completed Articles of Incorporation with the Ontario Ministry of Government and Consumer Services and pay the required filing fee. Once the Articles of Incorporation have been processed and approved, you will receive a Certificate of Incorporation, officially establishing your business as a separate legal entity.
Incorporating your business in Ontario offers several benefits, including limited liability and increased credibility with customers, suppliers, and investors. It also provides a formal structure for your business and can make it easier to attract investment and financing.
It is essential to ensure that the Articles of Incorporation are properly drafted and meet all legal requirements to avoid any legal issues later on.
Benefits of Incorporating Your Business
The Articles of Incorporation is vital when incorporating a business in Ontario. It outlines the essential details of your business and establishes its legal existence as a separate entity from yourself and any other owners.
The Articles of Incorporation must be created following the Ontario Business Corporations Act requirements and should be drafted by a legal professional.
Incorporating your business in Ontario offers several benefits. It can provide a formal structure for your business, but it is crucial to ensure that all legal requirements are met to avoid any legal issues in the future.
A corporation is a business organization that can be used in a wide range of businesses.
Incorporation is the dominant business association for both large and small businesses. A corporation is created by fulfilling the formal requirements of a federal or provincial state.
Incorporation Papers for Ontario, Canada
The result of incorporation is the creation of a separate, distinct legal entity from its owners, the shareholders. This means that the corporation’s liabilities are generally its own, not those of its shareholders.
The corporation can sue and be sued in its name. It can also enter into contracts as if it was its person.
This includes contracts with its shareholders. Further, it can hold property in its name. A corporation can employ shareholders and family members and deduct their salaries as business expenses.
A corporation also has a perpetual existence. This means that it has the potential to carry on business indefinitely unless it’s dissolved. The ownership interests in a corporation (shares) are also easily transferred, which may be done without affecting the corporation’s existence.
The corporation’s name must first be registered using the same form as that required for a sole proprietorship or partnership.

Ontario Not-For-Profit Corporations Act
The corporation’s name can be its incorporation number. For example, the company can be called 231123 LTD. Name approval is not required. Further, the number will be assigned at the time of incorporation.
Additional fees may also be required for lawyers and accountants. This will be to help with setting up the incorporation.
Incorporating a business has potential advantages. One is limited liability for shareholders. The members who form the corporation and become its shareholders are normally only liable for debts and obligations in the amount that they invested.
There is perpetual existence. A corporation is said to have potential immortality. Whereas a partnership is automatically dissolved in several situations.
For example, if a partnership consists of only two partners, one dies. A corporation continues to exist even if all of its shares change hands.
If you are looking for the Ontario Not-For-Profit Corporations Act, you can find it here.
Business Structure
A shareholder’s interest in a corporation (shares) may easily be made transferable. However, it can be difficult to transfer partnership interests.
It is a separate legal entity. Corporations can do anything a natural person of total legal capacity can do.
The corporate form may also make raising capital for the business easier. The terms of corporate securities, including shares and debt, can be tailored to meet the needs of investors.
Need help with doing incorporation in Ontario? Book a time below to speak to a top business lawyer.
How to incorporate a company
Suppose a business is incorporated, and earnings can be retained in the corporation for growth. In that case, shareholders can defer tax to the extent that the earnings are not distributed to them as a salary or dividend.
A corporation enjoys a lower tax rate on income up to a certain amount. A Canadian-controlled private corporation, or CCPC, pays a much lower rate of tax on the first $400,00 of action business than would be paid by an unincorporated business.
Active business income generally does not include investment income or rental income. However, this tax advantage is mainly a deferral of taxes until the profits are paid to the shareholder.
This benefit is typically only realized when income is not withdrawn from the corporation. It is kept in the corporation and is used to make capital and operating expenditures and to repay debt.
Read more articles about setting up a business:
Legal Incorporation Files for Ontario Businesses
It is also possible to incorporate under the federal Canada Business Corporations Act. You can also include in your province.
If all the profits are paid out to the shareholder as they are earned, leaving the corporation with little or no taxable income, then they will be taxed entirely as the shareholder’s income at personal income tax rates.
Double taxation is not significant in the case of a small corporation. Double taxation occurs when the government taxes income in the corporation and again when the corporation pays the earnings out of the corporation as either a salary or as dividends.
Do you need a lawyer to incorporate in Canada?
It is important to note that a corporation can experience less than optimal tax treatment for business losses. This is true if the business never earns a profit against which losses can be taken.
As a separate legal entity, the corporation’s losses are trapped at the corporate level and cannot be used to offset other shareholders’ income.
Accordingly, sometimes, incorporation is deferred until the sole proprietor or partners are reasonably certain that the business will be profitable.
The Benefits of Articles of Incorporation In Ontario
Income taxed at the top corporate rate and later paid out as dividends could result in more overall tax. This is true if the taxpayer is in the top tax bracket. Significant tax deferral can occur as long as amounts remain in the corporation.
Shareholders have rights and remedies. They can participate in the corporation’s management to the extent that they have become directors or officers.
They can also exercise control over the election of directors or as the corporation’s articles may otherwise provide.
It’s best to use a lawyer to set up your business unless you are just planning to do something small. If you plan to attract investors and grow, you need to do things right.
Step-by-Step Guide to Filing Ontario Articles of Incorporation
There are also potential disadvantages to incorporating a company. For example, corporations are closely regulated.
Corporations must file an annual report and report any changes to the location of their offices and directors. They are also required to maintain certain corporate records.
Corporations are expensive. They involve higher start-up costs related to professional fees for legal and accounting services.
You must keep all records. A corporation must keep extensive records. As a separate legal entity, it must prepare financial statements and file tax returns independently of the owners.
There are charter restrictions. The incorporation documents and by-laws must be carefully drafted to ensure that the corporation has the power to conduct the business as intended.
There is possible double taxation of profits.
You will need to contact a law firm to find out how much it costs for them to set up your company. Each law firm has different rates.
Corporate Formation Certificates in Ontario, Canada
Shareholders (and directors) may be legally responsible in certain circumstances. This may occur under the theory of “piercing the corporate veil.” This is a complicated area of business law.
The court will likely only hold shareholders liable for corporation obligations if negligence or fraud occurs.
A personal guarantee may undermine the limited liability advantage. For example, when a corporation borrows money or enters into a lease, its principal shareholders are frequently required to give a personal guarantee.
Terms you should know:
- numbered corporation
- small businesses raising capital
- articles of incorporation
- incorporate a business
- federal incorporation
Many people look for ways to incorporate in Ontario. Talk to a business lawyer today for help with articles of incorporation in Ontario.
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