Incorporating a business in Ontario, explained
Ontario businesses can incorporate provincially or federally, which changes filings, costs, and how you're taxed.
Incorporating creates a separate legal entity for your business. In Ontario you can incorporate provincially (under Ontario law) or federally (under the CBCA), and the choice affects registration, name protection, and where you can operate under your name.
What changes once you incorporate
Your corporation files its own T2 corporate tax return, can pay you in salary or dividends, and keeps its finances separate from your personal ones. That separation is powerful, but it also means real bookkeeping and a yearly corporate filing.
Bookkeeping from day one
Keeping corporate books current from incorporation avoids a painful catch-up later and makes your first T2 straightforward.
Federal or Ontario? What the choice actually changes
You can incorporate under the Ontario Business Corporations Act or federally under the Canada Business Corporations Act. Both give you a corporation; they differ in cost, name protection, and ongoing filings:
| Ontario (OBCA) | Federal (CBCA) | |
|---|---|---|
| Government filing fee | $300 online through the Ontario Business Registry | $200 online through Corporations Canada |
| Name protection | Within Ontario | Across Canada |
| Extra registration | None needed in Ontario | Also register in Ontario (extra-provincial filing) |
| Ongoing filings | Annual return | Federal annual return, plus provincial obligations |
| Typical fit | A business operating in Ontario | A business operating in multiple provinces or protecting a national name |
Fees are the published amounts as of August 2026 and exclude a NUANS name search and any legal or service-provider fees. Confirm current fees before filing.
What incorporating actually obliges you to do
The filing is the easy part. From the moment the corporation exists it is a separate taxpayer that must file a T2 every year — including years with no activity and no profit — keep a minute book and share records, and file annual returns with its jurisdiction. Money you take out is not simply yours: it has to be salary, a dividend, or a repayment, and cash drawn without a plan lands in a shareholder loan account with a repayment deadline attached.
That is why the honest question is not how to incorporate but whether to. Incorporation earns its keep when the business earns more than you need to live on, so profits can be retained at the small business rate; if you draw everything out, it often adds cost and paperwork without much tax saving. Our guide on incorporating versus staying a sole proprietor works through the trade-off.
This is general information, not tax advice for your situation. Get started and a Canadian accountant will give you the answer for your business.
Common questions
Should I incorporate provincially or federally?
It depends on your name, where you'll operate, and your plans. Both are common for Ontario businesses; your accountant can walk you through the trade-offs.
Do I need to file a T2 after incorporating?
Yes. Every incorporated business files a T2 each year, even one with no income.
How much does it cost to incorporate in Ontario?
The Ontario government filing fee is $300 to file articles of incorporation online through the Ontario Business Registry; incorporating federally through Corporations Canada is $200 online, though a federal corporation also needs an Ontario registration. Add a NUANS name search if you want a named rather than numbered corporation, plus any legal or service-provider fees. Confirm current amounts before filing.
Should I incorporate federally or provincially?
Provincial incorporation generally suits a business operating in Ontario, while federal incorporation offers name protection across Canada and suits businesses operating in multiple provinces — at the cost of an additional provincial registration and a second set of annual filings. For most Ontario small businesses the practical difference is smaller than the internet suggests.
Do I have to file a T2 if my corporation made no money?
Yes. A corporation must file a T2 for every tax year it exists, including nil years, and late-filing penalties apply even when no tax is owing. This is the obligation that quietly accrues against dormant corporations nobody got around to dissolving.