Business incorporation for a startup- necessary?

[petemiler_12]

Hi all,
I’m planning to open an optics shop in Toronto and this is going to be the first venture in this field. I don’t have any idea regarding the registration and licence for the business. My friend had told me that it would be good to consult any business licence registration provider to get the registration without much difficulty. So I contacted an online business incorporation and registration provider in Ontario called Ontario Business Central and they said it would be good if I had incorporated the business as a sole proprietorship. Is that necessary for a startup business?

[Lab Insight]

Hi all,
I’m planning to open an optics shop in Toronto and this is going to be the first venture in this field. I don’t have any idea regarding the registration and licence for the business. My friend had told me that it would be good to consult any business licence registration provider to get the registration without much difficulty. So I contacted an online business incorporation and registration provider in Ontario called Ontario Business Central and they said it would be good if I had incorporated the business as a sole proprietorship. Is that necessary for a startup business?

You will require registration/licence for both the business and individual providing the services - they are different. The company that provided you the information is incorrect. You can register the business as either a sole proprietor, limited liability company (LLC), or incorporated (Inc.).

There are many differences between the 3 types in business registration ownership including different CRA taxation rates. My advice is to start small and inexpensive by registering as a sole proprietor; to the point where you reach $250,000 per year in net profit at which point I would recommend becoming incorporated.

You can still hire employees under each type of registration - the payroll deductions and submissions remain the same.

The costs and personal liability associated with each type of registration also varies. SP is $60.00 and can be done online very easily, LTD is under $1K, Inc. is between $1,000 and $1500 and requires a lawyer.

As for liability in the event you are ever sued for negligence, SP provides no shelter from personal liability or personal assets, LTD provides partial, and Inc. provides full. There are seldom any criminal/civil lawsuits in the ophthalmic industry resulting in convictions or payouts as long as you are providing the services legally as a registered professional and operating above board.

[tmorse]

Incorporation definitely not indicated for your optical store at start up stage. Any bank loans or credit applications will still require your personal guarantees in addition to your corporation signing.
So I agree with Lab Insight, start making sizeable profits before incorporating your business.