You have a business idea, a first customer or two, and a nagging question: do you need to make it "official," and if so, how? The good news is that to register a business in Ottawa you don't need a lawyer on retainer or a month of paperwork — but the structure you choose now (sole proprietorship or corporation) shapes your taxes, your liability, and your admin for years. This guide walks you through the practical steps and the trade-offs, in plain English.
First, do you even need to register?
Not every side hustle needs paperwork on day one. In Ontario, if you operate a sole proprietorship under your own exact legal name — say, "Jane Tremblay" with no added words — you are not legally required to register a business name at all. The moment you trade under anything else, like "Tremblay Consulting" or "The Glebe Bakehouse," you must register that name under the province's Business Names Act.
Separate from name registration, the Canada Revenue Agency (CRA) cares about your income the moment you start earning it. You report self-employment income on your personal return whether or not you have registered a name. And once your taxable sales cross the small-supplier threshold of $30,000 over four consecutive calendar quarters, you must register for and charge HST. Registration and taxes are two different obligations — don't assume that skipping one lets you skip the other.
The two main structures
When you register a business in Ottawa, the first real decision is legal structure. For most owners it comes down to a sole proprietorship (which includes general partnerships when two or more people share it) versus a corporation. Each has a genuinely different profile.
Sole proprietorship
This is you and your business as a single legal entity. It is inexpensive and simple: register your business name through the Ontario Business Registry (currently $60 online, valid for five years and renewable), get a business number, and you're trading. Profits are taxed as your personal income at your marginal rate. The catch is unlimited personal liability — if the business is sued or owes money, your personal assets are exposed.
Corporation
A corporation is a separate legal person that you own through shares. It costs more to set up (Ontario incorporation is currently $300 online through the Ontario Business Registry; federal incorporation through Corporations Canada is currently $200 online) and more to maintain, with its own annual corporate tax return and formal records. In exchange you get limited liability, potential tax deferral on income you leave in the company, and access to planning tools like income splitting and the Lifetime Capital Gains Exemption.
Incorporating too early buys structure you don't need yet; incorporating too late can cost you liability protection and tax planning you did need. Timing is the real decision.
How the tax picture differs
This is where a quick example helps. Suppose your business nets $80,000. As a sole proprietor, that full amount is taxed as your personal income this year, at your marginal rate — there is no deferral, and note that for 2026 the lowest federal personal rate has been reduced to 14%. If you incorporate and only draw $55,000 to live on, the remaining $25,000 stays in the corporation taxed at the low small-business rate, leaving more capital inside the company to reinvest or smooth out a lean year.
Corporations also open the door to selling qualifying shares later and claiming the Lifetime Capital Gains Exemption, which rose to $1.25 million in 2024 for qualified small business corporation shares. And to clear up a common worry: the proposed increase to the capital gains inclusion rate was cancelled by the federal government in 2025, so the inclusion rate remains one-half (50%). None of this means "incorporate now" — if you spend everything you earn, the deferral advantage largely disappears and you're paying for structure you aren't using.
The registration steps, in order
Whichever structure you choose, the mechanics are similar and mostly online:
- Pick and check your name. Make sure it isn't already in use and, for a corporation, obtain a NUANS name search report (unless you opt for a numbered company).
- Register or incorporate. Use the Ontario Business Registry for a provincial name registration or Ontario incorporation, or Corporations Canada for a federal corporation.
- Get your business number (BN). The CRA issues this free of charge; it's the anchor for all your other accounts. Incorporating often generates the BN automatically.
- Open the CRA program accounts you need. Common ones are an HST/GST account (RT), payroll (RP) if you'll have employees, and a corporate income tax account (RC) for corporations.
- Set up the basics. A dedicated business bank account, bookkeeping, and any municipal licences your specific activity requires in the City of Ottawa.
Costs and ongoing obligations
The registration fee is the small part. What matters more is the recurring commitment. A sole proprietor keeps books, files a T2125 with their personal return, and remits HST if registered. A corporation does all of that plus files a separate T2 corporate return every year, maintains a minute book, and files annual returns to keep its status in good standing. Remember too that an Ontario business name registration lasts five years — if you don't renew it, it lapses, and you can lose the right to that name.
So which should you choose?
There's no universal answer, but some patterns hold. A sole proprietorship often makes sense when you're testing an idea, your profits are modest, your liability risk is low, and you want minimal cost and admin. Incorporation tends to earn its keep once profits comfortably exceed what you need to live on, when you face real liability (contracts, employees, physical premises, professional risk), when clients require it, or when you're building something you may sell one day. Many Ottawa owners start as a sole proprietor and incorporate later — and because a properly structured rollover can move your business into a corporation on a tax-deferred basis, starting simple rarely closes doors.
Key takeaways
- You only need to register a business name in Ontario if you trade under anything other than your exact legal name — but you always report the income.
- Sole proprietorship: cheap and simple, but unlimited personal liability and no tax deferral.
- Corporation: limited liability and tax-planning options, at higher setup and yearly cost.
- Your business number from the CRA is free and anchors your HST, payroll, and corporate tax accounts.
- Register for HST once taxable sales cross $30,000 over four consecutive quarters.
- An Ontario business name registration lasts five years — diarise the renewal so it doesn't lapse.
The structure that's right for you depends on your numbers, your risk, and where you're headed — and it's a lot cheaper to get it right at the start than to unwind it later. If you'd like a straight answer for your own situation before you register a business in Ottawa, book a consultation or learn more about our business advisory services. We'll help you choose, set it up properly, and keep it compliant.
This article is general information, not tax, legal, or financial advice. Rules and figures are current as of 2026 and can change. Please confirm your own situation with Lewis Partners.