Simple Steps for Starting a Business in Ontario

Updated October 2026

Starting your own business can be an exciting opportunity.

Whether you are opening a retail store, starting a contracting business, providing professional services or operating a small business from home, there are important decisions to make before welcoming your first customer.

Many entrepreneurs focus on finding customers, purchasing equipment and getting their business established.

However, registering a business name is only one part of the process.

You may also need licences, permits, tax accounts and appropriate insurance coverage.

At L.D. Dermody Insurance Brokers, we encourage new business owners to consider these requirements early, rather than discovering a problem after operations have begun.

Here are some practical steps to consider when starting a business in Ontario.

1. Develop a Business Plan

Before registering your business, take some time to develop a business plan.

It does not have to be complicated, but it should help you understand how the business will operate and what resources you will need.

Consider questions such as:

What products or services will you provide?
Who are your potential customers?
Where will the business operate?
Will you work alone or hire employees?
What equipment, inventory or supplies will you need?
How much money will you need to get started?
What ongoing expenses should you expect?
How will you attract customers?
What risks could interrupt your operations?

A business plan can also help when applying for financing or discussing your plans with an accountant, lender or insurance broker.

2. Choose the Right Business Structure

One of your first important decisions is how the business will be legally organized.

Common business structures in Ontario include sole proprietorships, partnerships and corporations.

Sole Proprietorship

A sole proprietorship is a business owned by one individual.

It is often relatively simple to establish and may be suitable for someone starting a small operation.

However, a sole proprietorship does not generally create a separate legal identity between the owner and the business.

This means the owner can be personally responsible for business debts and liabilities.

Partnership

A partnership involves two or more people carrying on a business together.

Partners should carefully consider how responsibilities, profits, expenses and disagreements will be handled.

A written partnership agreement is strongly recommended.

Depending on the type of partnership, partners may have personal liability for business obligations.

Corporation

A corporation is a separate legal entity from its shareholders.

Incorporation can offer certain legal and financial advantages, including limited liability in many circumstances.

However, incorporation does not eliminate every possibility of personal liability, and corporations generally have additional filing, accounting and administrative obligations.

The appropriate structure depends on your business activities, financial circumstances and long-term plans.

An accountant or lawyer can help you determine which arrangement is suitable.

3. Register Your Business

Once you have chosen a business structure, determine what registration is required.

Ontario uses the Ontario Business Registry for many business registrations, incorporations and updates.

For example, sole proprietors generally need to register a business name if they operate under a name other than their own legal name.

Partnerships and corporations have different registration or incorporation requirements.

Registering a business name does not necessarily give you exclusive rights to that name, and it is not the same as trademark protection.

Before selecting a name, check whether it is already being used and consider whether a trademark search or legal advice is appropriate.

You can learn more through the Ontario government's Start a Business guide and Ontario Business Registry.

Keep your registration information current and remember that certain registrations must be renewed.

4. Check Which Licences and Permits You Need

Registering a business does not automatically authorize you to carry out every type of business activity.

Depending on what you do and where you operate, you may need municipal, provincial or federal licences and permits.

For example, requirements may apply to:

Restaurants and food services.
Building and renovation contractors.
Certain professional services.
Transportation businesses.
Child care operations.
Retail businesses.
Businesses operating from residential properties.

Municipal zoning rules may also restrict where certain businesses can operate.

A useful starting point is BizPaL, a government-supported service that helps identify potential permits and licences based on the type and location of a business.

Confirm the applicable requirements with the appropriate authorities before beginning operations.

5. Understand Your Tax Obligations

Business owners need to understand their tax and reporting responsibilities.

Depending on the business structure and activities, these may include:

Income tax.
Corporate income tax.
GST/HST.
Payroll deductions.
Other applicable taxes and reporting obligations.

Do You Need to Register for HST?

Many businesses must register for GST/HST once they exceed the applicable small-supplier threshold.

For many businesses, the general threshold is $30,000 in worldwide taxable revenues over the relevant period, although special rules and exceptions apply.

Some businesses may choose to register voluntarily before reaching the threshold.

The rules can be more complicated for businesses providing exempt services or operating in multiple jurisdictions.

Consult an accountant or the Canada Revenue Agency to understand your obligations.

For information, visit the Canada Revenue Agency's business tax resources.

Good bookkeeping from the beginning can make tax filing and financial management much easier.

6. Arrange Appropriate Business Insurance

Insurance should be considered before the business begins operating.

Many new business owners assume they can arrange insurance after they have established themselves.

However, an accident, fire, theft or liability claim can occur on the first day of business.

The insurance you need depends on what your business does.

Commercial General Liability Insurance

Commercial general liability insurance, often called CGL insurance, is one of the most common coverages for small businesses.

It may provide protection against certain claims involving bodily injury or property damage arising from business operations.

For example, a customer might slip and fall at your business premises, or a contractor might accidentally damage a customer's property.

Coverage depends on the circumstances, policy wording and exclusions.

Some customers, landlords and contractors require businesses to carry a minimum amount of liability insurance before entering into an agreement.

Commercial Property Insurance

If your business owns equipment, inventory, tools, furniture or other property, consider how those items would be replaced following an insured loss.

Commercial property insurance may provide coverage for certain losses caused by fire, theft or other insured events.

Coverage should reflect the value and nature of your property.

Business Interruption Insurance

A fire or other major insured loss could prevent your business from operating.

Business interruption insurance may help cover certain lost income and continuing expenses when operations are interrupted by an insured event that meets the policy's requirements.

It does not cover every reason a business might close or lose revenue.

Professional Liability Insurance

Businesses that provide advice, designs or professional services may need professional liability insurance, sometimes called errors and omissions insurance.

Commercial general liability insurance does not necessarily cover financial losses arising from alleged professional mistakes.

For example, an accountant, consultant, designer or other professional service provider may face claims that differ from ordinary bodily injury or property damage claims.

Other Specialized Coverage

Depending on the business, additional insurance may be appropriate for:

Tools and equipment used away from the premises.
Contractors' operations.
Product liability.
Commercial crime and employee dishonesty.
Cyber incidents.
Equipment breakdown.
Commercial vehicles.
Specialized professional exposures.

Not every business needs every type of insurance.

The goal is to identify the exposures associated with your particular operations.

For more information, see our article What Insurance Do Ontario Small Businesses Actually Need?

7. Be Careful When Operating a Business From Home

Starting a business from home can reduce overhead expenses.

However, it also creates important insurance considerations.

A standard homeowners or tenant insurance policy may contain restrictions or exclusions relating to business activities.

For example, the policy may not adequately cover:

Business inventory.
Commercial equipment.
Customers visiting your home.
Business-related liability.
Employees working at the property.
Certain business activities.

Some insurers permit limited home-based businesses under specific conditions or endorsements.

Others may require separate commercial insurance or may not accept the business activity.

Always notify your home insurance broker before operating a business from your residence.

Even a small operation with no employees may affect your insurance arrangements.

8. Review Your Automobile Insurance if You Use a Vehicle for Business

If you use a personal vehicle for business purposes, your automobile insurer needs to understand how it is being used.

For example, you may use your vehicle to:

Visit customers.
Transport tools or equipment.
Deliver products.
Travel between job sites.
Carry passengers for compensation.
Perform other business activities.

Not all business use is treated the same way.

Some uses may be acceptable under a personal automobile policy when properly disclosed and rated.

Others may require commercial automobile insurance or specialized arrangements.

If you purchase a vehicle in the business's name, that can introduce additional considerations.

Before using a vehicle for business, discuss its ownership, drivers and intended use with your broker.

9. Understand Your Responsibilities When Hiring Employees

Hiring employees introduces additional obligations.

These may involve employment standards, payroll deductions, workplace health and safety, and workplace injury insurance.

Workplace Safety and Insurance Board (WSIB)

Many Ontario businesses are required to register with the Workplace Safety and Insurance Board.

The requirements depend on the industry and business activities.

Certain businesses may not be required to register, while special rules apply to construction businesses and some independent operators.

For many businesses required to register, the WSIB generally requires registration within 10 calendar days of hiring the first employee.

However, construction and other circumstances may have different requirements.

Do not assume that operating a small business or having only one employee makes you exempt.

You can review your obligations through the WSIB website.

What About Business Liability Insurance?

WSIB coverage and commercial general liability insurance serve different purposes.

WSIB is concerned with workplace injury and illness coverage under Ontario's workplace insurance system.

Commercial liability insurance addresses certain claims against the business, subject to policy terms.

Having one does not automatically eliminate the need for the other.

10. Protect Your Business Against Cybercrime

Cybersecurity is no longer a concern only for large corporations.

Small businesses also rely on email, online banking, electronic payments and digital customer records.

Common cyber risks include:

Phishing emails.
Fraudulent payment instructions.
Business email compromise.
Ransomware.
Unauthorized access to customer information.
Account takeovers.
Theft of business funds.

Practical safeguards include using multifactor authentication, maintaining secure backups, installing software updates and training employees to recognize suspicious requests.

Businesses should also have procedures for independently verifying changes to payment instructions.

Cyber insurance may provide certain coverages and response services following an insured cyber incident.

However, policies vary, and coverage is not a substitute for good security practices.

For more information, see our updated article Cybercrime: How to Protect Yourself, Your Family and Your Business.

11. Review Contracts Before Signing Them

Many businesses enter into contracts with customers, landlords, suppliers or other contractors.

These agreements may contain insurance requirements.

For example, a commercial lease might require the tenant to carry liability insurance.

A contractor agreement may require specified liability limits or that another party be added as an additional insured.

Some contracts also include indemnification clauses that could affect the business's legal responsibilities.

Do not assume that your insurance automatically meets every contractual requirement.

Before signing an agreement, review the insurance provisions with your broker and obtain legal advice where appropriate.

What Is a Certificate of Insurance?

A certificate of insurance is a document that summarizes certain insurance information.

It may be requested by a customer, landlord or contractor.

However, a certificate does not replace the insurance policy or automatically expand the coverage provided.

For more information, see our article Why It's Critical to Vet Contractors and Request a Certificate of Insurance.

12. Consider the Risks of Working With Subcontractors

Some businesses use subcontractors instead of hiring employees.

This can create additional insurance and legal considerations.

For example, if a subcontractor damages a customer's property or causes an injury, questions may arise about responsibility and available insurance.

Before hiring subcontractors, consider:

Whether they carry appropriate liability insurance.
Whether their coverage applies to the work being performed.
Whether they have any required licences.
Whether WSIB coverage or clearance is required.
Whether a written agreement is appropriate.
Whether your own insurer needs to know about subcontracted operations.

A subcontractor's insurance does not automatically eliminate your business's potential liability.

For contractors in particular, it is important to discuss the nature and extent of subcontracted work with your broker.

13. Keep Accurate Business Records

Good recordkeeping can help a business operate more efficiently.

Depending on the type of business, useful records may include:

Sales and revenue information.
Payroll records.
Business expenses.
Equipment and inventory lists.
Customer contracts.
Supplier agreements.
Licences and permits.
Insurance policies.
Employee training records.
Maintenance records.

These documents can also be important when arranging insurance or reporting a claim.

For example, an insurer may request revenue, payroll or subcontracting information when determining premiums or reviewing coverage.

A property claim may require proof of ownership or value for damaged equipment and inventory.

Keeping records current can help avoid delays and misunderstandings.

14. Review Your Insurance as Your Business Grows

The insurance needs of a business can change significantly over time.

A business that starts with one owner working from home may eventually have employees, vehicles, larger contracts and a commercial location.

Changes that should be discussed with your broker may include:

Hiring employees.
Increasing revenue or payroll.
Purchasing expensive equipment.
Moving to a new location.
Expanding into different services.
Working on larger projects.
Using subcontractors.
Selling products online.
Importing or manufacturing products.
Providing services outside Ontario.
Acquiring additional vehicles.
Entering into new contractual arrangements.

Some changes can affect insurance eligibility, premiums or coverage.

Do not wait until renewal to disclose a significant change in operations.

For more information, see our article When Things Change, Let Your Insurance Broker Know.

15. Where Can Ontario Entrepreneurs Get Help?

Starting a business involves decisions that may require assistance from several professionals.

An accountant can help with tax planning, bookkeeping and financial reporting.

A lawyer can provide guidance on incorporation, contracts and legal responsibilities.

An insurance broker can help identify insurable risks and explain available coverage options.

Ontario also offers business resources, including:

Ontario's Start a Business Guide:ontario.ca/page/business/start

Ontario Business Registry:ontario.ca/page/ontario-business-registry

BizPaL — Business Permits and Licences:bizpal.ca

Canada Revenue Agency:canada.ca

Workplace Safety and Insurance Board:wsib.ca

Ontario's Small Business Enterprise Centres may also provide information, training and advisory services to entrepreneurs.

16. A Checklist Before Opening Your Business

Before beginning operations, consider the following:

Have you developed a basic business plan?
Have you chosen an appropriate ownership structure?
Have you completed any required business registration?
Have you checked municipal, provincial and federal licensing requirements?
Do you understand your tax obligations?
Have you arranged appropriate business insurance?
Have you notified your home insurer if operating from home?
Have you disclosed any business use of your vehicles?
Have you reviewed WSIB and employment obligations, if applicable?
Have you considered cybersecurity and protection of customer information?
Have you reviewed contracts and insurance requirements?
Do you have a system for maintaining business records?

Not every item will apply to every business.

However, considering these questions early can help prevent problems as your business develops.

Start Your Business With the Right Protection

Starting a business requires planning, commitment and a willingness to take calculated risks.

While some risks are part of operating any business, others can be managed through good planning, proper procedures and appropriate insurance.

The insurance needs of a small retail store are different from those of a contractor, consultant or home-based business.

That is why there is no single insurance policy that is right for every new business.

At L.D. Dermody Insurance Brokers, we work with Ontario business owners to review their operations and explore insurance solutions available through the companies we represent.

If you are starting a new business in Ontario, contact L.D. Dermody Insurance Brokers before you begin operations. We would be pleased to help you review your business insurance needs and understand the coverage options available.

This article provides general information for Ontario entrepreneurs as of October 2026. Business registration, tax, licensing, employment and insurance requirements depend on the circumstances and may change. Insurance coverage, eligibility, limits, deductibles and exclusions vary by insurer and policy. Consult appropriate legal, accounting and regulatory professionals for advice specific to your business.