Business Name Registration Ontario: 6 Reasons To Legalize Your Startup
Whenever an entrepreneur, or pretty much anyone, establishes a startup, one of their main concerns is business registration. Considering the hassle that comes with the process, it can be baffling why many business owners view it as a vital step. After all, not only will you have to pay for the registration, you also have to prepare the necessary paperwork.
If you have these thoughts as well, you might want to continue reading, as this article goes over six reasons why you should legalize your startup, especially in Ontario.
1. Protect the business name
One of the main reasons for legalizing a startup, or more precisely, incorporating a business, is that incorporation allows the owner to protect their business name. You can register the business as a Business Name Registration but this does not provide name protection in your provincial business registry. Anyone can build their own startup and register it under the same name as yours. As you might expect, this may lead to the loss of most, if not all, of your customers.
With a Business Name Registration, you don’t have the grounds to sue when you have only registered the business allowing others to steal your intellectual property since the business name is technically not protected by anyone. However, once you legalize your startup by incorporating, you gain the ability to sue anyone who steals your business name for their own profit. This also applies to other intellectual properties, such as:
- Product name
- Audio track
With that said, if your business is situated in Ontario, you might want to look into searching the business name to avoid conflict with an existing business whether you are registering or incorporated. With incorporation, it is mandatory, with registration it is not. A preliminary search can be done to determine if there are similar business names to your proposed business name. , so you don’t accidentally use someone else’s business name.
2. It is a legal requirement
While some places are a bit lax regarding their rules and regulations surrounding businesses, Ontario is on the stricter side. To clarify, any startup or establishment in Ontario must register its business name within 60 days of opening. However, there’s an exception to this rule, and that’s when you use your name for your startup.
For example, if your legal name is David Johnson, you can name your startup after yourself. This gives your brand a personalized appeal. Plus, it’s pretty unique, so gaining traction might be easier.
Note that this would only apply if the startup name consists solely of your name. If you add any other word, such as ‘garage’ (David’s Garage), you’ll be required to legalize the startup.
3. Get the necessary permits
Getting your startup into the local business registry gives you the right to own the business name and the business itself legally. Other than this, there are also requirements to operate a business within the boundaries of the localities. These may include licenses and permits, which you can get from your municipal office. So, what does this have to do with legalizing your startup?
For one, before the municipal office issues the permits you need to register your startup, they may require you, or more precisely, your business, to be in the local business registry. In short, apart from being a legal requirement in Ontario, legalizing your startup also allows you to obtain the necessary credentials you need to operate in the premises of Ontario.
5. You can create a separate bank account
It’s common for business owners to create a bank account for their business separate from their personal account. This allows them to manage business finances more easily.
However, as you might imagine, creating a business bank account is much harder as opposed to when you’re creating an account for personal purposes. To start with, you need to provide proof that you’re indeed an owner or at least a business executive. A business license would be vital in this procedure.
Permitscan also increase your chances of qualifying for your application. If you’re lucky, you may even be eligible for different types of bank accounts, such as:
- Checking account
- Savings account
- Merchant account
- Credit card account
6. Easily qualify for loans
If you continue to operate your startup, you will likely come across a scenario wherein you need to take out a loan. Again, this would require a lot of time and effort on your part, as you’ll have to prepare the necessary paperwork to qualify for the loan. And as you may have guessed, banks and other institutions would require you to prove that you own a business.
Here are a few examples of legal and financial documents they may need for your application:
- Balance sheet
- Income statement
- Business licenses
- Business bank statements
- Articles of incorporation or Business Name Registration
- Financial projections
If there’s one commonality among these documents, it’s that you can obtain them more easily once you legalize your startup. Hence, one may argue that qualifying for loans and other financing sources becomes a lot easier once you register or legalize the business. Plus, investors are more likely to invest in your startup if they see it in the local business registry.
7. Gain access to the benefits that come with the business type
Before you can legalize your startup, you must first go through several steps. First, you should look at the business registry in your locality. Second, you must think of a unique name for your business. Lastly, you must decide on your startup’s business type.
Each business type has several advantages, and you can only gain access to these benefits once you legalize the startup. On that note, here’s a closer look at each business type and its respective benefits:
- Sole proprietorship: As the name suggests, this is when you’re the sole owner of the startup. The government protocols with this type are lax, and there are minimal paperwork requirements. Moreover, you can incorporate your business losses into your personal tax return. This way, you can benefit from lower taxes by classifying and legalizing your startup under this category.
- Partnership: A partnership involves two or more individuals who share the startup’s responsibilities. By registering the business under this category, you can set up the terms among your partners. Other than that, it’s very much similar to a sole proprietorship.
- Incorporation: As a corporation, you are considered a separate entity from your business and therefore are at arms length for the startup’s debts or any potential legal issues. Although a corporation can require more financial commitment and work upfront, the payoff is enormous, especially with all the tax advantages.
While you may think of business registration as a hassle, the procedure comes with several benefits. Plus, if you’re situated in Ontario, it is mandatory to register or incorporate your business. The only exception is if your business name is your own personal first and last name. You can rest assured knowing that legalizing a startup has become a lot more manageable , especially now that you have access to the internet and third-party providers who can register or incorporate your business completely online. That being said, there is really no reason to pass up on this opportunity, considering it only takes a few hours to legalize a startup.