With a diverse and thriving economy, Ontario provides ample opportunities for consultants to work with a wide range of clients in technology, finance, healthcare, and other sectors.
As a consultant in Ontario, you'll have the chance to make a significant impact on businesses and organizations in your area of expertise. Before you open a consulting business, however, you need to keep in mind certain regulatory requirements in the province.
This step-by-step guide will walk you through the key aspects of starting a consulting business in Ontario.
Step 1: Choose a Business Structure
The first step is to determine the business structure. Will it be a sole proprietorship, partnership, or corporation? Each one has its advantages and disadvantages, so carefully consider whether incorporating or self-employment would be best for your consulting business.
Step 2: Register Your Business Name
Ensure that your preferred business name is available by searching through databases like Canada's Business Registries for business names and Nuans for trademark and corporate names.
Note that you can actually use your legal name as a business name in Ontario for a sole proprietorship, with no need for registration. If you decide to go with another name, however, then you still need to register.
You can opt for online registration through the Ontario Business Registry. Once done, you’ll receive an Ontario Business Identification Number (BIN) from ServiceOntario.
Step 3: Get A Business Number from the CRA
After getting a BIN, you'll have to register for a Business Number (BN) with the Canada Revenue Agency (CRA) through Business Registration Online. This is very important; your BN will be used for CRA programs and when dealing with the government on a federal level.
At this point, you may also want to open a business bank account to help keep your personal and business finances separate and make bookkeeping a lot easier.
Step 4: Secure Permits and Licences in Ontario
To ensure compliance, you'll need to apply for permits and licenses specific to your industry and area of operation. The exact requirements will depend on the nature of your consulting services.
You can look for relevant permits and licences using BizPaL and the Ontario government’s official directory.
Step 5: Understand Taxation in Ontario
Fulfilling your tax obligations is a crucial part of running a consulting business. The Ontario government’s taxation guide provides an overview of municipal and provincial taxes for businesses. Additionally, if your annual revenue exceeds the $30,000 annual sales threshold, you are required to register for a Harmonized Sales Tax (HST) account.
To maximize your tax deductions, keep meticulous records of business-related expenses, such as office supplies, travel costs, professional development, and home office expenses. Doing so helps you reduce your taxable income and optimize your tax savings.
Step 6: Keep Track of Finances
One critical aspect of running a thriving consultancy is maintaining accurate financial records. This is a great time to familiarize yourself with accounting and reporting guidelines for consulting businesses.
Having a clear understanding of your business’ financial health allows you to make informed decisions about resource allocation, pricing strategies, and potential areas for cost optimization. Not to mention, keeping track of your expenses, income, and HST collected is essential to facilitate your tax filings, making your life a lot easier during tax season.
Now that you’re done with the essential steps, you’re ready to build and grow your consulting business!
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