Business Laws

For our final project we have to create a business over the summer. This post is about the legal aspects surrounding businesses in Ontario.

Business Names: In Ontario you have to register your business name with the province of Ontario unless you are operating a sole-propeitorship with your legal name. The fee is $60 if you register online and $80 if you register by mail. Your registration will be valid for five years. You can also do a name search to see if your name is already being used for a fee of $12.

Taxes:

Income Tax: Business have to pay income taxes to both the federal and provincial governments. Your taxes calculated by your gross income minus legitimate expenses like office rent, employe salaries, insurance premiums, leased equipment and so on.

Goods and Services Tax (GST): Most goods and services sold in Ontario apply to the GST tax which is 6%. If your annual revenue is less than $30000 than you have the option of whether or not to register for GST. If you make more than that you must apply for GST.

Your GST remting and reporting depends on the total taxable sales of your business. If they are $500000 or less than you have to remit quarterly and report annually. If they are more than that but less than $6 million then you have to report monthly and remit quarterly. If they are more than $6 million, you must both remit and report GST monthly.

Provincial Sales Tax or Retail Sales Tax (PST or RST): Most goods and services in Ontario as well as prepared foods more than $4 are applicable to this tax. The rate is 8%.

Payroll Deductions: If your business is hiring employees, you have to make federal and provincial payroll deductions. You have to set up an account with the Canada Revenue Agency (CRA) and federal payroll deductions as well as income tax from the amount paid to employees. You have to send those to the CRA. The federal payroll deductions are:

Employment Insurance (EI)
Canada Pension Plan (CPP)

The provincial deductions are:

Workplace Safety & Insurance Board Premiums (WSIB)
Employer Health Tax(EHT)

Records: The Ontario law requires that you keep organized books and records of your business and for income tax records you must keep them for at least six years after the taxation year that those records refer to.

Licenses: Certain businesses require that you obtain licenses from the federal, provincial or municipal government to operate. You should check to see whether or not your business needs a license at a SBEC centre and as well as your municipal government because municipal govermnets have the aurthority to issue licenses within their jurisdiction.