Mohammad Hossain, CPA, CGA
Name of the Company
Name of the CompanyYou can choose a company name with just numbers. This is called a numbered company. An example is: 123456 Ontario Inc. This is just a legal name. If you want a separate trade name then you have to register this separately. Creation of a numbered company is faster and little less costly. A lot of companies do business with trade names but behind the scene are owned by numbered companies. A common example is Tim Hortons franchise – each franchise can be owned by a separate company and may be a numbered company.
If you want to create your own corporate identity then you may prefer a named company. In this case you will need name protection which is done by NUANS and pay a fee for such name protection.
Whether it is a numbered or a named company you have to choose a legal ending to your company like Inc., Incorporated, Corporation, Corp.
Ontario Corporation or Federal Corporation
It’s always a common question by the new to-be owner whether it should be a provincial (Ontario) corporation or a Federal corporation. Legally both have the same rights. If you create an Ontario corporation, you are ready to do your business in Ontario. If you want to do business in another province (for example, Manitoba) then you have to register your business in Manitoba; this process is called extra-provincial registration. If you create a federal corporation and want to do business in two provinces (say, Ontario and Manitoba) then you have to follow extra-provincial registration for both the provinces. If you are very much sure that your business will never go beyond the boundary of your province (here, Ontario) then an Ontario Corporation will work without any further jurisdictional registration.
In both cases annual filing is needed. In case of federal annual filing a fee is charged.
Fiscal Year and Reporting Periods
I find it very important to fix your reporting periods in the first year of your incorporation. Let’s see with an example how this can end up as very useful. Let’s consider the following three situations.
Situation A
Michelle opened a corporation on May 14, 2021. She runs a payroll system and pays HST on an annual basis. She also receives dividends from the business. Following are her various reporting periods.
| Reporting Period | Filing Deadline | |
| Personal tax return | January 1, 2021 to December 31, 2021 | By April 30, 2022 |
| T4 reporting for payroll | January 1, 2021 to December 31, 2021 | By February 28, 2022 |
| HST Return | May 14, 2021 to December 31, 2021 for the first year and then for subsequent years – January 1 to December 31 | By March 31 of next year |
| Corporate Tax Return | Michelle decided the year end to be April 30, 2022. | Within six month from the year-end date. In this case, October 31, 2022. |
| Dividend | Michelle decided the dividend reporting period to be aligned with the corporate return, i.e. May 14, 2021 to April 30, 2022 | Can be either by February 28, 2022 or February 28, 2023 depending on the year the dividend is paid |
Situation B
Rakib opened a corporation on May 14, 2021. He runs a payroll system and pays HST on an annual basis. He also receives dividends from the business. Following are his various reporting periods.
| Reporting Period | Filing Deadline | |
| Personal tax return | January 1, 2021 to December 31, 2021 | By April 30, 2022 |
| T4 reporting for payroll | January 1, 2021 to December 31, 2021 | By February 28, 2022 |
| HST Return | May 14, 2021 to December 31, 2021 for the first year and then for subsequent years – January 1 to December 31 | By March 31 of next year |
| Corporate Tax Return | Rakib decided the year end to be December 31. So, the first year will be a short year and the subsequent year will be January 1 to December 31 | By June 30 of the next calendar year |
| Dividend | Rakib decided the dividend reporting period to be aligned with the corporate year-end, i.e. January 1 to December 31. | By February 28, 2022 |
If you observe these two scenarios, you’ll see that Rakib aligned all his financial periods to the same ending date, on December 31. This will help him to complete all his filing by February 28, 2022 with the help from his accountant.
On the other hand, Michelle’s reporting can not be finished in a single go because her various deadlines are spread on various dates. This can be a huge operational headache for both Michelle and her accountant. There would be a possibility of missed deadlines and penalties thereafter. Tax planning would be much better for Rakib because his accountant will compile all the numbers for all the filing at a time.
Create Accounts with Regulatory Bodies
This is your responsibility to create applicable accounts with the regulatory bodies at the time when this is applicable. Following are the possible accounts you might need to open.
| Types of Account | Reason to Open | Regulatory Agency | |
| Income tax account | Mandatory for a corporation | RC | CRA |
| HST registration | If your annual sales exceeds $30,000 | RT | CRA |
| Payroll account | If you pay yourself/employee salaries and wages | RP | CRA |
| Dividend reporting | If you pay yourself dividend | RZ | CRA |
| Employer Health Tax (EHT | If your remuneration payment exceeds $1,000,000 | Minister of Finance | |
| Health, safety and Insurance | As soon as you hire an employee | WSIB | |
| Record of Employment account | After you hire an employee | Service Canada |
Bookkeeping
Initially, you might be interested in doing your own bookkeeping to save some money. If you want to take this direction, then it is strongly recommended that you take some bookkeeping lessons from the internet. Try to avoid messing up your bookkeeping.
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