How to Set Up an Entity in Canada (Ontario Corporation)

Incorporating in Canada—specifically establishing an Ontario-based corporation—offers foreign and domestic investors a clear, stable, and well-regulated legal structure with strong investor protections, easier access to Canadian markets, and credibility with local clients and suppliers. Ontario, being Canada’s most populous and economically vibrant province, is often a preferred choice for companies looking to establish a foothold in Canada.

The process of establishing a corporation in Ontario is moderately straightforward: many steps can now be done online, but there are still administrative, legal, and tax complexities that require careful attention. The main challenges are navigating the dual (federal and provincial) tax regime, meeting documentation and registration requirements, and ensuring ongoing compliance. The benefits include limited liability, flexibility in ownership structure, and the ability to transition seamlessly to hiring local employees.

Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or financial advice. Always consult official sources before acting.

What does “opening an entity” mean in Canada (Ontario)?

Opening an entity in Ontario means registering a provincially incorporated corporation under the Ontario Business Corporations Act (OBCA) or federally with extra-provincial registration in Ontario. Once registered, the corporation becomes a distinct legal person, capable of entering into contracts, hiring employees, owning property, and operating under Canadian law.

Entity overview in Canada (Ontario)

Below is a quick comparison and overview of key parameters for incorporating in Ontario:

Step-by-step guide: How to open an entity in Canada (Ontario Corporation)

Step 1: Choose the right structure

In Ontario, your main entity choices include:

• Ontario provincial corporation under the OBCA: ideal for businesses focused primarily in Ontario.
• Federal corporation: offers name protection across Canada, but you must register as an extra-provincial corporation in Ontario to legally operate there.
• Branch / extra-provincial (foreign) company: If you already have a foreign entity, you can register it in Ontario (without creating a new Ontario corporation) via the extra-provincial license process.

Each option varies in name protection, regulatory burden, and administrative complexity. For many foreign investors, starting with an Ontario incorporation is straightforward and localized.

Step 2: Verify business name availability

To choose a corporate name, you must check and reserve it via the Ontario Business Registry. The name must end with a legal element (e.g., "Limited, Ltd., Incorporated, Inc., Corporation, Corp." or the French equivalents) and not be identical or deceptively similar to existing names. Alternatively, a numbered name (e.g., “1234567 Ontario Inc.”) may be used immediately, with a trade name used externally.

Step 3: Prepare incorporation documents

You will need key foundational documents, including:

• Articles of Incorporation: Specifying name, share structure, classes of shares, restrictions, etc.
• Form 1, Application for Incorporation of a Company (Corporations Act, Ontario): downloadable from Ontario’s Central Forms Repository
• Initial director consent and statutory declarations: Confirming directors agree to act, their addresses, etc.
• Notice of the registered office address: The corporate address in Ontario.
• Shareholders’ agreement (optional but advisable): An internal agreement among shareholders.

Step 4: Register with the Ontario Business Registry

Submit your application via the OBR portal. If approved, you will receive a Certificate of Incorporation, a corporate number, and confirmation that your entity is legally in existence.

If you choose federal incorporation, the registration is done via Corporations Canada (online), and you then register extra-provincially in Ontario.

Step 5: Register for tax and social security

After incorporation, you must register with the Canada Revenue Agency (CRA) to obtain a Business Number (BN) and open accounts for corporation income tax (T2), GST/HST, payroll deductions, and import/export if needed. Payroll registration includes the Canada Pension Plan (CPP) and Employment Insurance (EI) schemes, and withholding income tax for employees. If your corporation operates across multiple provinces, you may need extra-provincial registrations.

Step 6: Open a corporate bank account

You must open a Canadian corporate bank account to manage revenues, payroll, and expenses. Banks will require know-your-customer (KYC) documents: certificate of incorporation, articles, director and shareholder details, proof of address, and possibly personal identification of beneficial owners. Some banks may require a local Canadian presence or in-person verification. Opening can take days to a few weeks, depending on the bank and your paperwork.

Step 7: Set up payroll and employment compliance

To legally hire employees in Ontario, you must:

• Enroll as an employer with the CRA payroll program and remit CPP, EI, and income tax withholdings
• Ensure employment contracts comply with the Ontario Employment Standards Act, including vacation, notice, statutory holidays, and termination rules
• Contribute to CPP (employer and employee shares) and EI premiums
• If applicable, register and contribute to provincial workers’ compensation via the Workplace Safety and Insurance Board (WSIB)
• Maintain records, file T4 slips for employees annually, and comply with payroll remittance deadlines per CRA rules

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Post-registration obligations

Once your Ontario corporation is operational, you must remain compliant by:

• Tax and financial reporting: File a corporate income tax return (T2) annually with CRA and any provincial components. Also file Goods and Services Tax / Harmonized Sales Tax (GST/HST) as applicable. Use Canada’s federal and provincial tax structure.
• Corporate registers: Maintain and update internal records of directors, shareholders, and beneficial owners, and file changes via the Ontario Business Registry within the required timeframe.
• Compliance tracking: Monitor deadlines for tax remittances, filings, and annual returns via a compliance calendar or third-party service.
• Licenses and renewals: Ensure any business licenses, municipal permits, or sector-specific registrations are renewed annually or as required.
• Recordkeeping: Keep accounting, payroll, HR, and transaction records for at least six years (Canada’s general statute of limitations) unless otherwise required.
• Employment law compliance: Stay current with Ontario labor, benefit, and data protection laws — review contracts, payroll reporting, and benefit contributions regularly.

Taxes and financial considerations

Here is a snapshot of the key tax and financial rules:

• Corporate income tax: A Canadian-controlled private corporation (CCPC) may benefit from the small business deduction, yielding a combined rate of 12.2% (9% federal + 3.2% Ontario) on eligible income (up to CAD 500,000). Beyond that threshold, the general rate is 26.5% (15% federal + 11.5% Ontario) that applies.
• VAT / HST: Ontario levies a 13% HST, combining federal GST and provincial sales tax. Businesses with over $30,000 in taxable sales in any 12-month period must register and collect HST.
• Payroll / social contributions: Employers must withhold income tax from employees and remit Canada Pension Plan (CPP) and Employment Insurance (EI) contributions (employer share).
• Accounting standards: Canadian corporations generally follow Canadian GAAP (Part I of the CPA Canada Handbook) or International Financial Reporting Standards (IFRS) for public/certain private companies.
• Withholding taxes: For non-resident shareholders, Canada imposes withholding taxes on dividends (commonly 25%, reduced by treaty), interest, and royalties, unless reduced by tax treaties.

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Expand internationally with Deel

Whether you’re hiring through an EOR or establishing your own local entity, Deel’s all-in-one platform gives you everything you need to expand into Canada—quickly, compliantly, and with confidence. From market entry to ongoing operations, Deel helps you hire, onboard, and manage teams seamlessly from day one.

With Deel, you can:

• Test new regions using Deel’s local entities through our Employer of Record service—hire employees compliantly, delegate payroll and taxes, and access localized employment contracts.
• Open entities with Deel Entity Setup, where our team manages everything—from incorporation and tax registration to coordination with local experts.
• Centralize your compliance and records with Deel Entity Management, including automated filings, calendar reminders, and visibility across all entities.
• Integrate with Deel Payroll and Deel HR for compliant payments, benefits, and workforce oversight—all in one platform.

For companies transitioning from the EOR model to owned entities, Deel ensures a smooth handover and consistent compliance every step of the way. Enter new markets, onboard talent, and manage your global workforce—all through one unified platform.

FAQs

How long does it take to open an entity in Canada (Ontario)?
Typically, the incorporation in Ontario can be approved on the same day or within a few business days, provided documentation is complete. Find out how long setup takes with our Entity Setup Calculator.

What is the minimum capital required?
There is no statutory minimum share capital requirement in Ontario.

Can foreign companies own 100 % of an entity in Canada?
Yes—foreign individuals or companies may own all shares of an Ontario corporation.

Do I need a local director or representative?
No—Ontario does not impose a mandatory Canadian-resident director requirement for most corporations (unless specific regulated industries impose additional restrictions).

How much does it cost to register an entity?
The Ontario incorporation fee is $300 (CAD). Additional costs may include name search, legal, or service-provider fees. Find out the setup cost with our Entity Setup Calculator.

Can I hire employees before the entity is fully registered?
Typically, no. However, Deel’s Employer of Record (EOR) lets you hire and pay talent immediately while your entity setup is in progress.

Can Deel help me open an entity in Canada?
Yes. Deel Entity Setup manages the end-to-end process — from registration to payroll compliance—in over 100 countries. Deel’s local experts handle documentation, filings, and legal requirements on your behalf.

Does Deel offer ongoing compliance and payroll support?
Yes. Deel offers both managed services and self-service tools to help you stay compliant.
If you’re using Deel Entity Management, Maintenance, EOR, or Payroll, our team handles payroll, benefits, filings, and compliance obligations on your behalf.

For teams managing their own entities, Deel Compliance Hub makes staying compliant simple by providing real-time regulatory updates, risk alerts, and workforce insights across 150+ countries. Proactively manage compliance with our Compliance Monitor, Workforce Insights, and an AI-powered Worker Classifier, staying ahead of changing employment laws.

Can I switch from Deel EOR to my own entity later?
Yes. Deel supports seamless transitions when you’re ready.