Deciding whether to Incorporate in Ontario? Here are some things you may not know.

To incorporate or not to incorporate in Ontario, that is the question. It’s an important one indeed, and what you do is likely to have a significant impact on your business and even your personal life. As far as the benefits of incorporation go, running a simple internet search brings up a tantalizing array of advantages such as the ability to raise capital, access to government grants, protecting your personal assets with limited liability, tax benefits, perpetual existence and the ability to bring on multiple owners.

However, the advantages of incorporation are not always absolute, and here are a couple of things you may not know. Let’s jump into an explanation.

The Truth about Liability

When you incorporate in Ontario or elsewhere, you generally limit your personal liability in cases such as a lawsuit against the corporation. You have created a separate legal entity which is capable of owning property and entering into contracts in its own name. You are generally not responsible for the debts and liabilities of your company.

However, definite exceptions exist. For example, if your company borrows money from a bank, the financial institution usually requires that you personally guarantee repayment of the loan. Similarly, if your company wants to lease commercial space, the landlord may ask that you personally guarantee payment of the rent. You can also be held responsible for unpaid taxes as a result of being a director of a corporation. It’s important to be aware that the limited liability protection of a corporation is not absolute.

If you decide not to incorporate and instead wish to operate in general partnership with others, you will typically be personally responsible for the debts of the partnership whether you created them or not. This means that if your partner borrows money, buys equipment on credit or rents office space for the partnership, you may be personally on the hook for these debts.

If you operate as a sole proprietor or in partnership, you are carrying on business in your personal capacity and, unlike a corporation, you are generally responsible for your business debts.

So, incorporating does remove a tremendous amount of liability but is not always 100 percent.

Ability to Raise Capital

Capital helps your business grow and turn its ideas into reality. Of course, finding money isn’t always easy. For instance, when you’re starting up, you might discover that your friends and relatives are the only ones investing, if they invest at all. Similarly, the only “loan” you might qualify for may be in the form of a personal credit card.

By operating through a corporation, you open up the possibility of issuing shares to people – selling an ownership stake in the company to others. You can also get into things like convertible debt and other types of securities (as long as the proper legal procedures are followed). The capital raising options are far less when you are not carrying on business through a company.

Many Different Businesses

If you’re someone who has lots of business ideas running at once, that’s fantastic. Creative juices are a great thing. Of course, so are strong organizational skills. Without them, all of these different business ideas can become entangled and enmeshed. If one business goes sour, the debts and black marks that business racked up could doom the other businesses unless each is its own distinct legal entity. Similarly, if you want to sell one business or raise money for another, it can be tricky and cumbersome to untangle the business from the overlapping ones.

Operating different businesses in different companies is a way to limit liability and keep bad deals from dragging down good ones.

When to Incorporate

Moving from a sole proprietorship or partnership to a corporate structure down the road likely involves costs over and above setting up the new company. Assets may need to be transferred and liabilities assumed. This type of reorganization will require your accountant’s input and the assistance of a lawyer. You’ll likely avoid these transitional costs if you incorporate now while your business is younger and less complicated.

Every situation is different, and it’s worthwhile to review your decision with a lawyer. Contact us today at Ordower Law with any questions or concerns you have about when, how or why to incorporate in Ontario.

Are You Compliant? What Your Business Needs to Know

Meeting business compliance requirements in Ontario can seem overwhelming. In addition to requirements related to your specific business and operations, there are ongoing business compliance requirements related to your corporation to keep it in good standing.

Compliance issues range from preparing annual resolutions, ensuring the government has the most up-to-date information related to your corporation, filing your corporate and other tax returns, employee remittances and making sure you have the necessary permits and licenses to operate your business.

That’s a lot to think about, so we’re going to try and give you some ideas and resources to help manage this. Understanding your obligations and where to go for information will make things a little bit easier.

Where to Find Compliance Information

There is so much compliance information that a short-and-sweet guide cannot cover it all. We’ve compiled a list of useful links. They’ll help you gather much more of what you need to know.

Canada Business Ontario: This page provides a start-up guide for businesses, covering topics such as hiring employees and provides a searchable database of licenses and permits that may apply to your specific business, including for example: tobacco regulations, accessibility, product labelling, e-business and much more. In a separate section on this page, you will also find links to tax information as well as copyright, patent and trademark information.

Business Corporations Act (Ontario): If want to get it straight from the “horse’s mouth”, check out the Ontario corporate statute here. After 5 minutes with this, you’ll probably want to give us a call ?

MaRS entrepreneur toolkit: This page provides free resources to help entrepreneurs launch and grow their business. You should also check out MaRS information on startup accelerators and incubators which programs provide mentorship, funding, networking, training and/or office space for startups.

Common Compliance Missteps

Businesses can easily run afoul of compliance requirements and often do. Here’s a summary of some common compliance issues.

Corporate Compliance

When it comes to ongoing corporate compliance, corporations often find themselves scrambling to update their minute books prior to an audit or in connection with bank financing. Maintaining your minute book by holding annual meetings or passing resolutions instead of those meetings, properly approving the payment of dividends or bonuses and updating the Ministry of Government Services about changes to the directors, officers and registered office of your corporation will help keep your company in good standing. Remember your minute book tells the “corporate story” of your company.

Taxation

Hearing the word tax can put anyone in a bad mood, but understanding your tax requirements and the different taxes that apply in your scenario, can make the notion of taxes less painful. Whether you’re paying corporate income taxes following your fiscal year end, remitting payroll deductions or HST, when it comes to taxes, knowing is really half the battle.

  • Corporate Income Taxes. You need to prepare your corporate tax return and file your corporate taxes each year. Make sure you’re working with an accountant who can help you maximize your deductions and ensure that you’re taking advantage of all the available tax benefits. Most notably is the “small business deduction” which effectively brings your corporate tax rate down to 15% or so on the first $500K of income (there are some qualifications here, so again, you probably want to speak with an accountant).
  • HST. If you are an HST registrant, you have to collect and remit HST. There may be some exceptions if you’re selling to customers outside of Ontario. The information on this page should help.
  • Payroll taxes. If you’re paying employees (which could also include yourself as an employee of your company), you have to pay and remit payroll deductions each month. CRA provides a number of resources to help you do your payroll remittances properly.

Employee Classification

So, you’re running your business, it’s growing and you need some help. Once you start hiring people for work, a determination is made about whether the individual is classified as an independent contractor or an employee. The question is not necessarily your choice. There are a number of factors that need to be taken into account prior to you characterizing someone as an independent contractor vs. an employee such as whether they work full time, have control over hours and days of work, work for other people or exclusively for one person and whether they need to supply their own tools and equipment.

Compliance gives your business a lot to think about. Even with all the resources out there, sometimes it helps to have someone on your team to make sure you’re doing it right. Contact our team with any questions, or for help with business compliance.

Business Startup – The First Year: What’s in a Brand: A Primer on How to Successfully Create and Promote Your Brand

Part 1: Creating a Brand

Thanks to the advances of the digital age, becoming a global brand is no longer the domain of big, multinational corporations with formidable starting capital. Today, with the help of Facebook, Twitter, Instagram and other popular social media platforms, and a bit of search engine optimization (SEO) know-how, even small brands can quickly go from obscurity to international fame. On the other hand, popularity created and based solely on social media buzz can be a two-edged sword. The attention span of Internet users is short, and Web 2.0 fads fade quickly. So, if you’re trying to create a brand with lasting appeal and an allure that will endure decades rather than months or years, you need to look up to companies that have managed to achieve this extraordinary feat.

There are many strategies that can help small and developing businesses gain notice and thrive in the market. Effective branding is certainly one of the most important things a company can do to increase its chances for a long-term success. That’s why we decided to dedicate a two-part article exclusively to the subject of brands. We will share our own insights as well as stories of small companies that have managed to successfully create a strong brand for themselves. We’ll begin by investigating why branding is so important and analyze what strategies can help entrepreneurs to create a brand from scratch. In the next segment, we’ll provide some practical suggestions on developing brand awareness.

The Anatomy of a Brand

If you want to create a company with a lasting appeal – no matter the size of your business – remember that your brand must be something bigger and more meaningful than any one product or service you’re going to offer. Take Red Bull, for example. Even though the company sells a single product – an energy drink – there are few other businesses associated with such a diverse range of activities and values. Through a mixture of sponsorship and patronage, Red Bull has become widely associated with the most daring athletic feats ever performed. Adventurousness and audacity lie at the core of the brand’s identity even though it sells almost exclusively canned soft drinks. The lesson? Regardless of the type of a product you sell or a service you offer, you have a full control over what your brand will stand for.

While each company may take a different approach to discovering and creating its identity, all brands share some important common building blocks such as a story, the central idea, values, vision and personality.

Story

The story of how your company came into existence can be an important marketing tool (more about that later on) that will allow you to gain or reinforce your customers’ trust. The more relatable or inspiring the story, the better. Dropbox was conceived because its founder would frequently forget to carry a USB to his college. Tesla’s co-founder Elon Musk would often start conversations at college parties asking: “Do you think about electric cars?” Yvon Chouinard named his clothing company “Patagonia” to commemorate a climbing trip to Argentina. Every company’s story is unique so don’t underestimate the branding power of the story behind your business.

Idea

Chumbak is an Indian clothing and lifestyle brand with a moderate presence in the brick and mortar stores in that country, a bustling Internet store, and a very wide, diverse offer of products spanning more than 100 categories – from apparel and home, to accessories. Yet, when the company started in 2010, it was driven by a single, simple idea encapsulated in the following sentence: “Let’s give the world something cool to take back from their travels to India.” The lesson to be learned here is that you should think of your brand in terms of an idea or an innovation rather than simply a product. For example:

  • What is your big idea?
  • What makes your product different?
  • Why is it something that consumers will want or need?

Answering these questions will help you find and develop your brand’s identity.

Values

What are the consumer trends in Canada? Some current research showed that newly arrived immigrants were driving behavior, consumers were increasingly shopping online, and there is an expected continued slow growth in spending.

Part of values is creating a brand that meets current consumer demands, desires and trends, and continuing to stay on top of the data and adapt to your business to meet consumer needs. A great example of this is the following; where a business targeting millennials understood that ethics, charity, community and global awareness are an important values of their intended customer base. They took that information and made it an integral part of their business. Here’s how.

Nappa Dori is a small Indian company that produces bags and accessories made of leather. In the “About Us” section of the company’s website, potential customers can read: “At Nappa Dori we contribute a portion of our profits to charity as we believe it’s essential to give back to the community.” The company brand was presented as socially conscious and had a much greater chance of capturing the minds and hearts of the millennials they targeted.

Vision

Your brand’s story focuses on the past. The central idea is what you’re constantly trying to implement and improve in the present moment. Your company’s vision, however, defines where you want your brand to be in 5 years from now. A brand’s vision determines what a business should contribute to the market in the long run. While a company without it may function, only businesses with a vision of future growth clearly defined will manage to thrive and prosper.

Personality

Generator is Europe’s fastest growing hostel brand. Take a minute and go to this brand’s website. Does it look as you expected it would? If you have any kind of hostel experience, it’s likely that you have been positively surprised by the design of the website, the tone of its content, and the visuals presented. Generator is trying to market itself as an accommodation option offering the luxury of a hotel along with the social experience of a backpacker’s hostel. In essence, it’s like the community tables at a chic, farm-to-table restaurant. You’re investing in both a fine-dining meal and a social experience.

This unusual combination is the crucial aspect of the brand’s personality. It makes it standout from both overpriced hotels and cheaper yet less luxurious accommodation options. This is also a leitmotif that governs the company’s marketing strategy. That’s why, for example, the website’s design uses almost exclusively black and white – a palette typically associated with elegance and luxury – yet the photographs present people in their 20s socializing in a hostel’s lobby. Depending on the market your business will operate in, your values as well as the products or services you offer, you may use similar techniques to give your brand its own, unique personality.

Stay tuned for Part 2, in which we’ll explain what brand awareness is, why you should care about it, and how to create it…

Top 10 Reasons to Incorporate in Ontario

The prospect of incorporating a business in Ontario may seem exciting or overwhelming, perhaps both, but there’s a reason you’re thinking about incorporation, right? For example, it gives your business several layers of protection that sole proprietorships don’t get. Here’s a look at that advantage and others.

1. Limited Liability Protection/Asset Protection

After you incorporate in Ontario, your corporation is a person at law. Like an ordinary person, it can open bank accounts, enter into contracts and own property.  If you contract in the name of the corporation, you are generally not personally liable, although there are a few exceptions. For instance, if a lender or landlord requires a personal guarantee for a loan or a lease, then you’ll be indirectly exposing your personal assets to risk.

The situation is much riskier if you are a sole proprietor. All contracts are effectively in your name personally (even if you register a separate business name and contract in that name) and any lawsuit puts all of your assets, business and personal, at risk.

2. Credibility

The fact that your corporation’s name ends in Corp., Inc., or Ltd., signifies professionalism. It shows you’ve gone through incorporation and are serious about the work you do.  A corporation may give your business more shine in the eyes of vendors and other companies you work with.

3. Perpetual Existence

If you have a booming business as a sole proprietor but die tomorrow, your business dies right along with you. On the other hand, a corporation can have perpetual existence if you don’t close or dissolve it, or wind it up upon the death of a shareholder. Of course, if you intend for your business to continue after you die, it’s important to do some planning while your alive – like discussing your intentions with family members or key employees, entering into a will or even a shareholders’ agreement (if there is more than one shareholder). Planning for the transition is important to ensure continuity of the business when a shareholder dies.

4. Tax Benefits

You can control the money you take out of a corporation and control the amount of personal income you’ll have each year. You’ll also be able to take advantage of certain tax benefits that are only available to Canadian Controlled Private Companies and their shareholders such as the small-business deduction and lifetime capital gain exemption. These are potentially important benefits for your business and you should discuss how these may apply with an accountant.

Even if your corporation’s purpose is to hold assets (as a real estate holding company, for example) rather than to run a business, it may be beneficial to hold the asset through a company rather than personally. Also, income splitting may be an option, although new rules in 2018 complicate things.

5. Raising Capital

If you need to raise money, operating through a corporation gives you the added option of issuing shares to investors and not simply borrowing from a bank or private lender. There may also be some specific government grants that are available to small business corporations.

6. Avoid Transitional Expenses Later

Say that you build a business as a sole proprietor and incorporate after the business gains value. That move will likely be costly, as it involves a rollover of assets to deal with potential tax consequences. Your accountant would also have to do a fair market valuation of the assets being transferred and there’s a bunch of paperwork involved. It’s easier and cheaper to incorporate your business right from the beginning.

7. Saleability

If you are looking to exit your business at some point, you’ll have more options when selling a corporation. You can sell the assets of the company or the shares. Buyers usually want to buy assets (as they get to depreciate them again at higher values) and sellers typically want to sell shares (as the lifetime capital gains exemption may be available). It’s not really possible to sell a sole proprietorship itself, although you can sell the assets you used (equipment, for example). Buyers examine factors such as profitability, net worth and market position when looking at your corporation.

8. Easy Process

It doesn’t have to be a headache to incorporate in Ontario! Yes, administrative work and filings are required, but you can find a law firm who can handle that for about the same price it would cost to do the work yourself.

9. Growth

A corporation is capable of having many shareholders, not just you. This allows others to get involved, take an ownership interest and become invested in the future success of the business. It’s just a better way to combine resources and share the spoils. With a sole proprietorship, it’s just you. If you want your business to grow, it helps to have multiple perspectives and ideas and different people with a vested interest. Remember that sometimes “two, three, four or even five heads are better than one.” Corporations are designed to have multiple owners and by incorporating in Ontario you may be better positioned to handle future challenges.

10. Your Dream

Last but not least, entrepreneurs dream of building a business and owning their own company. In a certain way, incorporating is a benchmark of success, even if your business is new and hasn’t done much yet. You’re the president of your own company—and that means something.

What is Included in the Articles of Incorporation

When you want to form a corporation in Ontario, you will need to prepare and file articles of incorporation. The articles of incorporation is the document that brings your corporation into existence, and sets out certain features of the corporation, for example, any restriction on the business that may be carried on, the classes of shares that can be issued and any share transfer restrictions. As such, proper preparation of your articles of incorporation is vital to your business.

Choose a name

Before you even begin drafting, you must choose a name for your corporation. You want a distinctive name, one that avoids any confusion with other similar names that are already registered, whether as business names, corporation names or trademarks. You also want to choose a name that people will remember. Prior to filing your articles of incorporation, you (or your lawyer) will run a NUANS search to review any similar names previously registered.

Registered Office and Number of Directors

Your articles of incorporation will identify a registered office address in Ontario. This will serve as your official address for any legal or governmental purpose. Note that this does not have to be your place of business that you promote to the public. With that in mind, a lot of people use their home address when starting up.

In addition, you will indicate the number of directors for your corporation. In Ontario, you are required to have a minimum of one director and at least 25% of the directors must be resident Canadian. In most cases, you will want to indicate a minimum and maximum range. This gives you room to grow or contract. Given that your business may change over time, allowing for a minimum and maximum number of directors offers more flexibility than having a fixed number of directors.

Restrictions on Business

Section 5 in your articles of incorporation requires you to identify any restrictions on the business. In most cases, the articles will provide that there are no restrictions on the business that the corporation can carry on. Again, a growing, evolving corporation should give itself room to develop new ideas and directions. If, on the other hand, you are creating a professional corporation, you will need to restrict the business to the profession you are practicing (i.e. doctors have to restrict their business to the practice of medicine).

Class of Shares

Section 6 of the articles of incorporation sets out the classes of shares that your corporation is authorized to issue. You will include Common shares and may sometimes include Special (or Preferred) shares.

  • Common shares are either voting or non-voting equity shares. The holder has a right to a proportional share of equity in the corporation, but if they are non-voting shares, he or she cannot vote as a shareholder.
  • Special shares are typically non-equity shares and are sometimes used for tax planning purposes. They are also generally redeemable and retractable – which means the company can require that they be sold back, or you can require that the company buys them back.

You may want to start simple with only the class of shares that you need. Alternatively, you can build in extra classes you think you may need in the future, even if you’re not issuing that class right away. In either case, your articles of incorporation must properly set you up for the right approach. Remember that you can always amend or change your articles to add new share classes down the road.

Restrictions, Privileges, and Conditions Attaching to Each Class of Shares

Section 7 outlines the attributes that each class of shares will have. For example, it will set out if the shares:

  • are voting or non-voting;
  • provide for fixed or discretionary dividends;
  • are redeemable or retractable;
  • entitle the holder to any assets of the corporation on dissolution, liquidation, or winding down.

If your corporation is only going to have one class of shares, this section can simply read “N/A,” because the Ontario Business Corporations Act provides for the basic rights that will apply if there’s only one class.

Issue, Transfer, or Ownership of Shares

If you are a private company, Section 8 of your articles should include language which restricts the issue, transfer and ownership of shares.

Other Provisions

Section 9 provides space to include other terms that you want included in your corporation’s charter documents. This section may include provisions for borrowing money and the number of shareholders that the corporation can have. In most cases, this will not be necessary.

Some online tools purport to help you file effective articles of incorporation in Ontario. Unfortunately, the do-it-yourself option forces you to rely on knowledge you do not have, or use boilerplate language that may not meet your needs. At Ordower Law, our team provides legal expertise you can rely on to not only develop legally acceptable articles of incorporation, but to draft them to meet your specific needs, both for the present and future of your company.

Understanding Contracts: Independent Contractor vs. Employee

The line between independent contractors and employees can be murky. The courts and the Canada Revenue Agency look at multiple factors and tests to determine whether someone is an independent contractor or an employee.

One important thing to keep in mind: Just because you’re being characterized as an independent contractor, that doesn’t mean that at law you are. Sometimes employer’s characterize workers as independent contractors to try and reduce their remittance obligations (i.e. CPP, EI and Income Tax withholdings), but not understanding the law will not excuse an employer’s obligations.

Factors that CRA and Courts Look At When Making Determinations

In determining whether someone is in fact an independent contractor or employee, CRA and the courts will consider the following factors:

  • What is the nature of the relationship? For example, is there a contract for service for a limited period?
  • What is the degree of control? Can the individual work for someone else too and set their own hours?
  • Does the worker own their tools, or do they belong to the employer?
  • What is the opportunity for profit or risk of loss?

To expand on the last question, what happens if a job takes longer than planned or costs more than originally budgeted? For example, an independent contractor may give an employer one big price quote for the work to be done. The quote takes into consideration an hourly rate plus other costs and expenses. When independent contractors get this price wrong, they are generally on the hook to suffer that loss.

As the CRA website explains: “Self-employed individuals normally have the chance of profit or risk of loss, because they have the ability to pursue and accept contracts as they see fit. They can negotiate the price (or unilaterally set their prices) for their services and have the right to offer those services to more than one payer. Self-employed individuals will normally incur expenses to carry out the terms and conditions of their contracts, and to manage those expenses to maximize net earnings. Self-employed individuals can increase their proceeds and/or decrease their expenses in an effort to increase profit.”

Compare that with employees. They’re paid hourly or with a salary. It doesn’t matter if they do a fantastic job or not, or if the employer misjudged how long a project would take—employees normally get paid in a stable way. Employers also generally pay for their employees to take courses or to go to conferences. They wouldn’t do that for independent contractors.

The penalties for an employer who has misclassified an employee as an independent contractor can be severe. The employer may owe retroactive pay, vacation pay, overtime pay and so on, as well as unpaid tax to the government. It’s important for employers to get on the right side of the independent contractor vs employee question.

Benefits of Being an Employee vs Independent Contractor

If you’re an employee, you enjoy advantages that include comfort and stability, being paid at least a minimum wage, and entitlement to employment insurance and employer benefits such as benefits and vacation pay. There is also less administrative work than if you’re an independent contractor since employers handle CPP, IE and income tax deductions from your pay.

Benefits of Being Independent Contractor vs Employee

If you’re an independent contractor, there are some pros such as flexibility and the ability to write off more expenses than an employee. You’re free to work for whom you choose and when you choose (subject to any contractual commitments you’ve made). You can also hire other parties to help you with the work or to do it all. Intellectual property and copyright rights can also come into play. In the absence of a contract taking certain steps, independent contractors retain rights to work they created—something many employees don’t do.

Letting the Individual Choose

Some companies are giving workers a choice of whether they’d prefer to be an independent contractor vs employee. In fact, some companies are paying you more if you choose to be an independent contractor. No matter whether you’re an employee or an independent contractor, make sure you understand the contract you’re being asked to sign. A lawyer can help with that.

Business Startup – The First Year: Why Choosing a Name is Important and How to Do It

Some people dread it. Some obsess about it. Some simply want to be through with it. If you’ve ever done it yourself, you’d probably agree that the process of choosing a name for your company or brand tends to stir extreme emotions. But is a name really that important? After all, your clients and investors will surely appreciate your business for its products and services rather than its name. Right?

It is true that a cool moniker won’t help your business if what you have to offer doesn’t meet expectations. However, underestimating the importance of choosing a name for your company can sabotage the chances of its success. Let’s consider two examples of how choosing a name can influence the future of your company:

  • A Good Name Can Captivate Investors – First, researchers have shown that a company’s name can positively or negatively affect the amount of funding it gets. In two studies – one which analyzed 131 crowd-funded projects and the other that looked into data from 1681 IPOs – companies with names that were easier to pronounce gathered more money from investors at both the early and the late stage of funding. In addition, unique names were shown to be more attractive to early-stage investors because they “create a perception of high novelty.” So, in the entrepreneurial context of startups and new businesses, the answer to the centuries-old question “What’s in a name?” seems pretty clear: money and funding.
  • A Bad Name Can Alienate Your Customers – Now, even if a name proves popular with the investors at the early stages of a company’s growth, it can still get you in trouble with your target customer base later on. How so? Let’s use an example from the recent months. Monday.com is a company offering simple, visual project management tools and workplace collaboration services. This Israel-based business was named one of the most promising startups of 2017 and has recently raised $50 million in equity funding due to strong and consistent growth. Chances are, however, that the name monday.com doesn’t sound familiar to you yet because the company changed its name just a couple of months ago. Since its conception in 2014 until November 2017, the startup was known as dapulse. So why did the company’s management decide to go through the trouble of rebranding the startup? Surprisingly, one of the main reasons was that people would constantly make fun of the company’s name on Twitter! The lesson other entrepreneurs can learn from the dapulse naming mishap is that even if you’re offering a valuable product or service, you may end up losing clients if they can’t identify with your company’s name – a chilling lesson indeed.

From the two examples described above we can draw another important conclusion – while it is important that you like the name you choose for your company, whether a name is “good” or “bad” isn’t merely a matter of taste or personal preference. Clearly, some names are better than others. But what exactly makes a good name? Below, we offer 6 ideas that may help you come up with a great name for your fledgling business.

Find Your Identity First

Everyone knows the experience of going shopping without really knowing what you want to buy. Most of the time, you spend twice as much money as your budget allows on stuff that you probably don’t need. Choosing a name for your company can be similar. If you start the process without really knowing what it is exactly that you want the name to convey, chances are you’ll spend more time on it and won’t be satisfied with the ideas you’ll come up with. Of course, the name you end up choosing doesn’t have to encapsulate all that you want your company to stand for. However, if you start by identifying the core values, mission, and personality of your business, it will be easier both to brainstorm ideas and choose the right one in the end.

Settle for Simplicity

Try to think about some of the most successful companies and brands of the last decade. Which came to your mind most readily? You might have thought of Tesla, Uber, Airbnb, or Amazon. What do all of these companies’ names have in common? Even at first glance, they look short, easy to spell, and easy to remember. Of course, a huge part of the reason why these particular companies come to mind so easily is the success they achieved and the publicity they gained for it. But in the world of tweets, keywords, and Google searches, short names that are easy to say, hear, and spell can give your company a huge marketing advantage. And if you feel that simple means ordinary or boring, remember about the saying: “Simplicity is the ultimate sophistication.”

Unleash Your Creativity

Even though you want the name to be simple, you should avoid going to the other extreme and choosing one that sounds too generic. The advantages of selecting a unique name are many. First, unique names stand out. To customers, a brand that sounds original sends a strong message – you simply aren’t just like every other company out there. In addition, a new and unusual name won’t get buried in Google searches among all the generic keywords used by your competitors. And last but not least – registering an Internet domain for your website will be much easier if your company’s name is unique. On the other hand, if you choose a generic name, you’ll likely find that most (if not all) of the possible website addresses you can come up with have been taken since Myspace was the thing.

Inspire Positive Emotions

Think of the difference between the expressions “strong-willed” and “stubborn.” Their meanings are similar but the emotions they evoke couldn’t be more different. “Strong-willed” seems positive and commendable; “stubborn,” on the other hand, feels immature and unreasonable. This example shows that words convey much more than just their dictionary meaning. Rather, by the virtue of connotations and associations, they can cause certain emotional responses. If the name you choose for you company evokes positive emotions, it will be easier for your customers to identify with your brand. On the other hand, if the name can be associated with negative feelings or controversial attitudes, you may end up alienating people and losing clients. Of course, how you feel about any given name may be much different from how others will view it. Therefore, the question you should be asking really is: “How will others perceive this name?”

Don’t Overthink It

The process of finding a name will be different for every business. It may be your tendency to say, that was too easy! if you find your name quickly. Don’t overthink, second guess, or have expectations on how long the process should take. It will vary for each unique situation. Further, if you have an idea, ask some people. Choose a trusted group of friends and family to run your name ideas past. Remember, it will be subjective; everyone has a different opinion. But in general, you should be able to get a sense of what people like (or don’t like!).

Don’t Forget About the Legal Aspect

Words such as “Limited,” “Incorporated,” “Corporation,” or their contractions Ltd., Inc. or Corp, may be an important part of your company’s name, conveying to your customers and investors crucial information about the structure of your business. That’s why you can’t pick one of them based simply on your preference. Rather, the use of such words must truthfully reflect the legal identity of your company. For example, the titles Ltd., Inc. or Corp are reserved only for corporations. So if your business is registered as a sole proprietorship or partnership, you won’t be able to use any of these titles in the official name of your company.

After reading this, you may start to think that choosing a name for your company will require even more effort than you’d previously thought! However, remember challenging or not, selecting a good name will ultimately prove to be very rewarding – both for you personally and for your business. A good name can make it easier for you to get funding, attract customers, and market your brand. A bad name, on the other hand, can just as easily jeopardize the success of your company. So, take your time (if you need to), think about your company’s identity, and start brainstorming the ideas. In the end, whatever time and effort it may take, it will all be worth it once you come up with the name you truly love and can stand for.

How to Start a Business in Ontario

Wondering how to start a business in Ontario? You’re far from alone. Each business has a unique backstory, but many follow this general pattern: The business started by taking on small jobs or selling small quantities of goods or services and gradually ramped up to execute large projects. This is a great way to get going, as it allows you to test an idea before you invest a lot of money and effort. Another method of testing before investing is to buy an existing business, if you can get a good deal.

Of course, even the smallest businesses require planning to boost their chances of success. Here’s a guide on how to start a business in Ontario, whether you plan to go big or small. Many of these steps overlap.

Do Research to Come Up with a Plan

You’ve probably heard of business plans – these documents can be relatively simple or hugely complex. You likely don’t need anything complicated at this stage, but consider the issues touched on in this article for your business plan; things such as how your business would solve a problem, market itself, make money and differentiate itself from competitors. Costs to think about may include those for banking, inventory, rent, professional fees and marketing.

Decide What Business Structure Makes Sense for You

In Ontario, there are a number of ways to structure your business. The most common business structures are sole proprietorships, partnerships or corporations. Each has pros and cons. For instance, operating through a corporation generally gives you limited liability protection and asset protection. It may also allow you to take advantage of government grants that may not be available to sole proprietors. On the other hand, corporations can be more costly to start. There are initial incorporation costs (see our incorporation packages) and ongoing costs related to filing your corporate taxes, etc.

If you simply want to see if an idea such as selling homemade jewelry pans out, then doing a sole proprietorship for a few months may make sense. If you decide on a sole proprietorship to start, revisit your options after a while to see if the advantages of incorporation will better fit your needs as your business grows.

Choose the Business Name

What’s in a name? Could be everything! Remember these basics: simplicity, creativity, positive emotions and legality. Before purchasing domains and preparing all your marketing material, make sure the name is available for use. We can help you conduct the necessary NUANS search to verify whether your name is available.

Register the Business

In many situations, the next step after choosing your business name is to register the name or incorporate. Either way Ordower Law can help. If you’re a sole proprietor and only doing business under your personal name, you can skip this step.

Speak to an Accountant

An accountant can help you with the financial and tax aspects of starting a business in Ontario. Accountants can help by explaining your potential tax breaks and benefits and obligations, whether you need to collect and remit HST or payroll taxes and how to handle business finances.

Open a Bank Account

Even if your business is a sole proprietorship, open a separate bank account for it. This makes life a heck of a lot easier when it comes to tracking business income, debts, expenses and so on because your personal finances if mixed in can confuse the picture.

Depending on your business structure, you’ll need to show different types of documentation to open your account. For example, corporations need to show their Certificate and Articles of Incorporation in order to open a corporate bank account. You will also be asked to show personal identification, among other things. If you register a sole proprietorship, the bank will need to see your Master Business License, which is only good for 5 years and will then need to be renewed.

Get Your Tax Accounts

If you’re acting as a sole proprietor, call the Canada Revenue Agency to get your business number. You receive the business number automatically when you incorporate. You will usually receive it to your registered address 7-10 days after incorporating. From there, you can determine whether you need an HST number or payroll number. Again, an accountant can help with these questions.

Check about Permits and Licenses

Your business may need some permits or licenses. For example, full-service restaurants must pass public health inspections and must have permits to sell alcohol.

Find a Location If Applicable

Here are some things to think about location-wise if you’re opening a customer-facing business. Renting office space, retail space or industrial space could be one of your largest expenses when starting a business.

If you are planning on renting commercial space to operate your business, understanding what your lease says, managing your risks and limiting your liability should be a priority. Ordower Law can guide you through the process of entering into a commercial lease.

Thinking about how to start a business in Ontario isn’t an exercise for the faint of heart, but it could turn out to be the best thing you ever did.

Trademark Basics? Should I Register a Trademark Now or Later?

As a business person, it’s challenging to decide what issues are of critical importance now and which can be tackled later.

Intellectual property or IP protection is precisely one of those issues. You may rightly feel that your ideas, designs or products are the lifeblood of your business and that you need to protect them from copycats and unfair competitors. You may be worried that failing to provide legal protection to your brand and products right from the very beginning may have disastrous consequences for your company. But there’s the rub…

Small businesses simply don’t have the same financial and legal resources big companies do. As a new entrepreneur, you know this all too well. You may also know that IP protection can be very costly. So, you’re faced with yet another tough choice.

Should you focus your attention and resources on developing your business first and tackle any IP-related legal issues later on, or should you invest in legal protection for your brand or products right from the start?

Admittedly, this is tough question with no straightforward answer. That’s why in this article, we will offer an overview of factors you may need to take into consideration when deciding whether your business needs some form of IP protection. In doing so, we will look at one of the most popular legal tools to offer such protection – registered trademarks. First, we will briefly discuss what trademarks are and how you can obtain one. Then, we will discuss some of the important considerations you need to make when deciding whether to register a trademark or not.

What Is a Trademark?

A trademark is probably most readily associated with a company’s name or logo but in reality, its scope can be much broader. In most general terms, any feature of a person’s or a company’s business operations that distinguishes them from others can be considered a trademark. Therefore, a trademark can include a word or combination of words, letters, sounds, and designs that makes one company, brand or product stand out from others. Current trademark law in Canada recognizes three basic kinds of trademarks:

  • An ordinary mark – as mentioned, this kind of trademark can be made up of letters, words, sounds or designs.
  • A certification mark – rather than distinguishing a certain company or product, it serves to show that services or goods are in compliance with a certain pre-defined standard. The “Fair Trade” logo and certification is one well-known example of this kind of trademark.
  • A distinguishing guise – refers to a style of presentation of a product or service and can include its shape or packaging design. The triangular shape of Toblerone chocolates is an example of a distinguishing guise trademark.

What Protection Does a Registered Trademark Offer?

By registering a trademark, you obtain exclusive rights to its use. Currently, in Canada, such rights are given for 15 years with the possibility of renewing the trademark after this period.

With a registered trademark, you are able to enforce your intellectual property rights and start legal proceedings for trademark violations. A registered trademark is valid all across the country. In addition, a trademark previously registered in Canada can be used as proof that you were the first one to use a certain name, logo, design, etc., which may help you claim priority over other companies or individuals internationally.

What You Need to Consider Before Registering a Trademark

A trademark registration may provide your business with important legal protections and a competitive edge. However, before deciding whether your small business or new startup needs a trademark right away, consider the following important factors:

Scope of Your Business

First, consider the scope of your business operations. Do you operate locally, on a national level, or internationally? Do you plan on expanding? When do you project the expansion is likely to take place? You should keep in mind that even if you have ambitious plans for expansion, a trademark registered in Canada doesn’t automatically protect your brand abroad.

Also, if you want to operate on a national level one day, you should also make sure that your trademark is truly unique. You can do that by performing a search in the Canadian Intellectual Property Office (CIPO) trademark database here. If it turns out that someone previously registered a very similar trademark, your trademark application will likely be rejected.

On the other hand, if you only plan to operate locally at first, you may decide that the rights and protections that common law offers to unregistered trademarks are sufficient for the time being. Under common law, if you use a trademark for a certain period of time, you automatically obtain ownership rights to it. However, you should remember that such rights are limited geographically to the area where the trademark has been used – that is, to your local market. In addition, if someone sues your company for using the trademark, you will have to prove the ownership – or that you were the first entity to use the trademark – in court.

Registration Costs

A trademark registration can be costly especially from the perspective of a new business with a tight budget. Basic registration costs amount to $250 if you apply for a trademark online and $300 if you file the application with the trademarks office. This fee is non-refundable even if it CIPO denies your application. However, if your trademark is approved, you will have to pay an additional $200 for a registration certificate. Bear in mind that all these costs are only the required government fees. If you’d like to use the services of a professional trademark agent, who specializes in trademarks and trademark registrations, additional fees will apply. All inclusive, the initial search and filing process can cost around $1,200 including the disbursements.

If you take into consideration the expenses related to registering a trademark, you should be able to see that it can be viewed as a cost-benefit decision of sorts. Yes, a trademark offers important legal protections. But does your business have the necessary funds to afford these protections at the moment? In addition, are the protections critical for your business right now or would you rather spend the funds on other important business needs? Thinking about these questions, as well as on other important considerations mentioned in this article, will help you carefully weigh the benefits of a trademark registration against its costs and potential drawbacks. This, in turn, will allow you to make a decision that will ultimately benefit your company the most.

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