Before your business starts operating in Ontario, you need to register it. This means that you have to follow all the legal steps, such as choosing a name for your businesses, researching a name, choosing a business entity, and completing the article of incorporation. All of these steps are crucial in ensuring that your business is protected against disputes within the law.
However, startups in Ontario fall victim to faulty business registration because entrepreneurs may want to cut costs during the process. Also, the lack of adequate information on registering in Ontario can significantly contribute to faulty registrations, rendering them susceptible to legal fines.
The key to a successful startup starts with proper business registration. This article contains a checklist of some of the mistakes to avoid in the registration process.
1. Name Infringement
The first step in business registration Ontario is to find a name for your business. The right name can be the difference between success and failure, as customers remember a business by its name. Since your name is part of your branding campaign, you must get it right. As you want your name to be unique, you should avoid some mistakes.
The most common mistake is to use the same name as other businesses. This is an infringement of their naming rights, and it could lead to the other business taking legal action against your business. Such a scenario will result in you spending a lot of money fighting court battles and compensations, which may prevent your startup from picking up.
Moreover, name infringement may force you to start the whole business registration process. This means that you’ll have to rebrand all your products, which can be costly.
To avoid such cases, you can follow the following procedures:
- Make a list of all the names you may want to use when registering a business in Ontario. The name should be easy to spell and pronounce, as well as have a catchy first word.
- Check the availability of the domain name through a domain registry. Doing so will allow you to know if the name is available for a website under the same name.
- Check the Newly Upgraded Automated Name Search (NUANS) to see what corporation exists under the same name in Ontario.
- Complete a NUANS report and specify that you want to register your business in Ontario.
Once you’re sure that any other business doesn’t use your desired name, you can go ahead with the business registration.
2. Failure to trademark a business name
Even after finding a business name and conducting a NUANS search to ascertain that no other business is using the name, you still don’t own the trademark rights of the name. It’s easy to assume that the process is complete, but if the name isn’t protected, any other business can still use it and trademark it before you do, which means they’ll be holding the rights to the name. Therefore, it’s important to get trademark protection after completing the name search.
Suppose you want to conduct operations outside Ontario or Canada. In that case, you need to obtain trademark protection at the federal level, and in all those countries you want to operate in. The best way to avoid any trademark issues is by availing the service of a lawyer to find and trademark your business name. This might be costly upfront, but it’ll protect your business in the long run.
3. Lack of a proper business plan
A business isn’t a one-off thing but rather a process that’ll take years before it’s properly established. Even after years of operation, you’re still bound to commit some pitfalls that you must overcome so you can continue with your operations. Therefore, you need to have a plan on how you’re going to run your business.
A proper business plan should have the following:
- Problems or challenges that the business may encounter and all the possible solutions.
- Value proposition – This is the value that the business promises to deliver to prospects so they can choose their products instead of your competitors.
- An outline of how your business can produce goods and services better or more cost-effectively than other competitors (competitive advantage).
- Revenue streams that the business is targeting to exploit and the targeted returns from those streams.
- Key performance indicators to be used to measure the performance of the business.
- Legal disclaimers will ensure the business isn’t violating security laws or customer rights.
If you don’t have these in your business plan, you may fail to attract partners, funding, or investors, which will affect your startup’s success.
4. Lack of a proper structure
A business structure defines the legal basis that your business will operate under and the type of liability the business or the owner has. Most entrepreneurs fail to determine what entity their business should be, which derails the registration process or affects the business later on. It’s important to note the different structures and which suits your business the most.
Here are the different structures you can pick from:
- Sole proprietorship
A sole proprietorship is a business designed for single ownership. The Ontario government allows for registration for five years. It’s the simplest business structure as it has the lowest regulatory requirements. The biggest downside of this business structure is that business assets aren’t separated from personal assets. This means that the owner is liable for any financial dispute, tax obligations, or financial dispute by the business. Moreover, this type of entity doesn’t offer name protection to your business.
- General partnership
A general partnership is a business structure that has two or more owners. The partners share the costs of starting up and also the business management. The license of this business structure in Ontario is valid for five years, and it’s also easy to establish and cancel. However, this type of structure doesn’t offer business name protection, and partners are also liable to any financial, legal, or tax obligation.
When your business is considered a corporation, it means that your company is its own entity. So, owners or partners aren’t liable to any dispute or obligation facing the business. Moreover, the ownership is easily transferable, and the business can exist even after the owner retires. However, it has more regulatory requirements and can be expensive.
Registering your business in Ontario can be a complex process, but you still need to get it right. Any mistake could lead to the cancellation of your business registration or legal disputes. By avoiding the mistakes discussed in this article, you can successfully register your business.
Frank Kenny is a financial adviser based in Ontario with expertise in business registration and incorporation. He shares information and professional advice through blogs and other forums. During his free time, he enjoys bike riding and traveling.