This guide will not be a fluffy, feel-good piece of motivational content like 95% of the other 'how to start a business' articles you'll find online.

Our aim is to provide you with practical, tactical tips and tricks to take your business from nothing to thriving, step-by-step.

In this guide, we'll cover:

• Whether you’re the right person to start a business
• How to plan and research your company
• Picking a business structure and registering it
• Taxes, finances, and legal requirements
• Building a long-term strategy

1. Who should start a business?

Let's go over who this guide is for. You're well positioned to start a business in Ontario if any of the following are true:

• You have a monetizable skill or competency you can reliably replicate. Examples include trades like woodworking or plumbing, digital marketing skills like search engine optimization (SEO), or coaching in fitness or personal development.
• You have a business idea you want to validate and launch. This could be a unique product, service, or online platform that solves a problem or addresses a need in the market.
• You already have a product you want to get into customers' hands. This could be anything from a physical product like handmade jewelry, to a digital product like an e-book or software.

Crucially, you'll have some form of liquid capital — i.e., cash — you can use to get this plane off the ground. By the way — if you're a homeowner trying to start a business, Lotly might be able to help. We work with more than 50 lenders nationwide to get you the best terms on home equity loans and lines of credit, loans that let you tap into the value of your home for cash. Book a free consultation today to get started.

Since you're looking at starting a business specifically in Ontario, we're guessing there's some form of retail or in-person aspect to your idea. Moving forward, we'll focus on these kinds of businesses. 

Let’s get into how to start a small business in Ontario, Canada:

2. Planning your business

We’ll cover

• Market research guidelines
• Building an Ideal Customer Profile
• Business plan preparation

How to do market research for your business (tips & examples)

Market research is a crucial step in starting any business. It helps you gain a deep understanding of your target market, competitors, and industry trends. You wouldn't write an essay without research prep — why would a business be less work?

Here are some steps to guide you in conducting useful market research for your business:

1. Identify Your Target Market

• Define your ideal customer and their characteristics, such as age, gender, income level, location, and interests.
• Use online resources like census data or reports from Statistics Canada to gather information on your target market.
• (We’ll develop this in more detail soon).

Example: If you plan to start a bakery in Toronto, your target market might be women aged 25-45 with an annual household income of $50,000-$80,000 who enjoy gourmet desserts.

2. Analyze your competitors

• Identify your direct and indirect competitors. Direct competitors offer products or services similar to yours, while indirect competitors could fulfill the same needs as your business.
• Study their products or services, pricing strategies, target market, marketing tactics, and customer reviews.

Example: In the bakery business mentioned above, your direct competitors might be other gourmet bakeries in Toronto, while your indirect competitors could be large chain supermarkets that also sell desserts.

3. Understand industry trends

• Stay updated with industry news and trends through trade publications, online forums, or attending industry events.
• Consider factors such as consumer behavior, technological changes, or regulations that could impact the demand for your product/service.

Example: In the bakery business, the demand for gluten-free or vegan options is a growing trend due to consumer health and lifestyle choices.

4. Conduct surveys or interviews

• Create a survey or interview your target market to gather valuable insights on their needs, preferences, and opinions about your product/service.
• Use online tools like SurveyMonkey or Google Forms to create surveys and offer an incentive (e.g., discount code) for participation to increase response rates.

Example: Your bakery might survey potential customers about their dietary restrictions or preferred types of desserts.

5. Leverage social media

• Social media platforms can be a powerful tool for conducting market research by observing conversations and trends related to your industry, product/service, or competitors.
• Engage with your followers and ask for feedback or suggestions to improve your product/service.

Example: Your bakery can observe the social media pages of other bakeries and see what types of products are gaining popularity, as well as engage with customers to gather their thoughts on different dessert options.

Pro Tip: Leaving comments (helpful, funny, engaging, but NOT promotional) on these pages can be a clever way to develop brand awareness with target customers.

6. Analyze website analytics

• If you have a site already, like a blog, you're sitting on a goldmine of data. Use website analytics tools like Google Analytics to track visitor behavior on your website and identify areas for improvement.
• Look at metrics such as bounce rate, time spent on site, and pages visited to understand customer interests and behaviors.

Example: Your bakery's website might see a high bounce rate on the page advertising your gluten-free options, indicating a need for improvement in that area.  Additionally, maybe customers spend more time on pages featuring your specialty cakes, indicating a potential opportunity to expand that product line.

Crafting an ideal customer profile

Using all your data, create an ideal customer profile (ICP) to help you better understand your target audience. This will include demographics, interests, behaviors, and pain points.

1. Demographics

• Age
• Gender
• Income level
• Education level

Example: After doing some more research, your bakery might have an ideal customer profile of a 35-year-old female with a higher education degree and a middle to upper-income level.

2. Interests and behaviors

• Hobbies/interests
• Social media platforms used
• Buying habits (online vs. in-store)

Example: Your bakery's ideal customers might be interested in health and wellness, follow food bloggers on Instagram, and prefer ordering online rather than shopping in-store.

3. Pain points

• Common struggles or challenges
• Frustrations with current options

Example: Your bakery's ideal customers might struggle with finding gluten-free desserts that taste good and have limited options in their local area, leading to frustration and dissatisfaction.

Once you understand your ideal customer profile, you can tailor your marketing strategies and product offerings to better meet their needs and preferences. This will help attract more of your target audience to your bakery and increase customer satisfaction.

For example, given the ICP we've constructed, your bakery can specialize in:

• Offering a wide range of gluten-free and healthier dessert options
• Collaborating with popular food bloggers on social media to reach potential customers
• Improving your online ordering system for a more seamless shopping experience

You should regularly review and update your ICP, which can help you stay current with changing consumer trends and preferences.

Preparing a business plan

Now that you've got a clear picture of your ideal customer, you can use this information while you write a business plan. This includes setting goals and objectives, identifying potential risks and challenges, and outlining strategies for growth and success.

Some critical components of a business plan that your ideal customer profile can influence include:

• Marketing strategy: Determine the best channels to reach and engage your target audience.
• Product development: Use insights from your ICP to create new products or improve existing ones that cater to their needs and preferences.
• Financial projections: Understand the buying power of your ideal customers and forecast potential revenue based on their purchasing habits.

A well-defined ICP can also help you make informed decisions about pricing, promotions, location, and other business operations. Your target audience should always be at the forefront of your mind when making these important business decisions.

A popular framework is the business model canvas. Here's a quick overview:

• Key partners: Who are the key suppliers, vendors, or collaborators that you need to work with to deliver your product/service?
• Key activities: What are the main actions and tasks necessary for running your business effectively?
• Key resources: What are the essential assets, both tangible and intangible, that are required to operate your business?
• Value proposition: What sets your business apart from competitors? How does it solve a problem or fulfill a need for your ideal customers?
• Customer relationships: How do you build and maintain strong relationships with your target audience? Will it be through excellent customer service, personalized experiences, or other strategies?
• Channels: Which channels will you use to reach and engage with your customers? This can include social media, email marketing, or in-person interactions.
• Customer segments: Who are your ideal customers? What characteristics do they share?
• Cost structure: What are the main costs of running your business, such as production costs, employee salaries, or marketing expenses?
• Revenue streams: How will your business generate revenue? Will it be through product sales, subscription fees, or advertising?

By filling out this canvas, you can better understand your business model and how it aligns with your ICP. It also allows you to identify any potential gaps or areas for improvement.

3. Choosing your business structure

We’ll cover:

• Types of business structures
• Pros and cons of each structure

When starting a business in Ontario, one of the most important decisions you'll make is selecting the proper business structure. The structure you choose will impact everything from liability to taxes and even how much control you have over your business. 

Here's a breakdown of the most common business structures, their pros and cons, and what to consider when deciding.

1. Sole proprietorship

A sole proprietorship is the simplest and most common business structure, especially for small businesses. It’s easy to set up—there’s minimal paperwork, and you don't need to file any legal documents to start. As a sole proprietor, you have complete control over the business.

Pros:

• Simplicity: Minimal costs and paperwork involved in setting up. If you're operating the business under your own name (as many contractors or freelancers do), you don't need to register a business name.
• Control: You make all the decisions and get all the profits.
• Tax efficiency (in some cases): Business income and losses are reported on your personal tax return, which could allow you to offset business losses against other income.

Cons:

• Unlimited liability: Your personal assets (home, savings, etc.) are at risk if your business is sued or incurs debt.
• Limited growth potential: Raising capital is often harder because the business can't issue shares.
• Lack of continuity: The business ends if you retire, pass away, or decide to shut it down.

Best for: Small, low-risk businesses with minimal liability concerns and lower revenue.

2. Partnership

A partnership is similar to a sole proprietorship but involves two or more individuals sharing ownership. There are general partnerships and limited liability partnerships (LLP). In a general partnership, each partner shares the profits, losses, and liability, while in an LLP, partners are protected from the actions of the other partners.

Pros:

• Shared resources: Easier to pool capital, expertise, and resources.
• Tax benefits: Partners report their share of the business income or loss on their personal tax returns.
• Simplicity: Like sole proprietorships, partnerships are relatively easy to form.

Cons:

• Unlimited liability: In general partnerships, all partners are liable for the business’s debts, and one partner’s actions can impact everyone.
• Potential for conflict: Partner disagreements can slow down or damage the business.
• Limited control in LLPs: In an LLP, limited partners have no managerial control over the business​.

Best for: Businesses with multiple owners who want to share management duties but are comfortable with the potential risks. These are common in law firms and other professional practices.

3. Corporation

A corporation is a more complex structure where the business is a separate legal entity from its owners. This means the corporation can own property, incur debt, sue, and be sued independently of its shareholders. Corporations offer limited liability protection, meaning shareholders are not personally responsible for the business’s debts.

Pros:

• Limited liability: Shareholders are only liable for the amount they invested in the corporation.
• Perpetual existence: The corporation continues to exist even if the shareholders or directors change.
• Tax advantages: Corporations benefit from lower tax rates on retained earnings and income splitting among shareholders.

Cons:

• Higher costs: Setting up and maintaining a corporation is more expensive due to legal and accounting fees.
• Complex regulations: Corporations must follow strict formalities, including filing annual reports and holding shareholder meetings.
• Double taxation: Corporate profits may be taxed at both the corporate level and again as personal income when distributed as dividends​.

Best for: Businesses with significant liability exposure, plans for substantial growth, or those looking to raise capital by issuing shares.

Choosing the right structure

• Sole Proprietorship: Best for low-risk businesses with minimal liability and straightforward tax requirements.
• Partnership: Ideal for businesses with two or more owners, especially when pooling resources is a priority.
• Corporation: Best for businesses with higher liability risks, larger capital needs, or plans to scale significantly.

Consider your industry, projected revenue, liability exposure, and long-term goals when choosing your business structure. Consulting with a lawyer or accountant is usually a good idea to make sure you choose the right structure for your specific situation. Now let's get into registration:

4. Registering your business

Here's what we'll cover:

• Step-by-step guide to registering in Ontario
• Required licenses and permits

The business registration process in Ontario

Registering your business in Ontario involves a few key steps that ensure compliance with local regulations and formal recognition of your venture:

1. Choose a Business Name: Your business name must be unique and not conflict with any existing registered business — so you can’t call your bakery McDonalds, unfortunately. Conduct a name search to confirm its availability.
2. Register with the Ontario Business Registry: You can register your business name and structure online or through a service provider. Each will have its own details and filing requirements, which you can see here. This process gives you a 9-digit Ontario Business Identification Number (BIN). Note that this is NOT the same as your Business Number (step 3). Fees vary:some text
   1. Sole proprietorship (not under your own name): $60
   2. Ontario LLP: $60
   3. Corporation: $300
3. Obtain a Business Number (BN): If you plan to hire employees, collect sales tax, or import/export goods, you must register for a Business Number with the Canada Revenue Agency (CRA).

Now, let's get into the hairy stuff — taxes.

5. Handling taxes, licenses, and financials

Here's what we'll cover:

• GST/HST registration requirements
• Funding and financial assistance resources

GST/HST registration requirements

You'll need to register with the government if these two criteria apply to you:

• You've made over $30,000 per fiscal quarter for the last four quarters.
• You sell a taxable good or service.

Luckily, the government makes it easy to do this online.

Funding and financial assistance

There are countless opportunities to source funds for starting your business, from angel investors to venture capital, but here are just a few picks:

Canada-Ontario Job Grant (COJG)

• Description: An effort from the Government of Canada that Provides funding for employee training, helping businesses improve workforce skills.
• Amount: Up to $10,000 per employee
• Requirements: Must be an Ontario business looking to train less than 25 new or existing employees​.

Starter Company Plus

• Description: Grants and mentorship for new entrepreneurs and small businesses in the early stages of growth. Also includes training and one-on-one support.
• Amount: Up to $5,000
• Requirements: Must be growing or starting a small business in Ontario​, over 18, an Ontario resident, and Canadian citizen or PR.

FedDev Ontario Business Scale-Up and Productivity Program

• Description: Provides interest-free loans to businesses scaling operations or commercializing innovative products. Helps improve productivity and expand into new markets.
• Amount: Up to $10 million (35% of project costs)
• Requirements: Must be incorporated in Ontario, have at least 5 employees, and 3 years of operations. They focus on funding projects that promote green development or technology.

Canada Small Business Financing Program (CSBFP)

• Description: The CSBFP helps new and established small businesses secure loans by providing lenders a government guarantee of 85%. This reduces the risk for lenders, making it easier for companies to access financing for real property, equipment, leasehold improvements, and working capital.
• Amount: Up to $1,000,000 in term loans; $150,000 of that can be used for working capital and intangible assets.
• Requirements: Businesses must have gross annual revenues of $10 million or less. Applications are processed through participating financial institutions like banks and credit unions.​

A business loan in this space may require strong credit scores. If you're working on improving yours but need access to cash, you still have a few options. As a homeowner, you can tap into the equity in your home — i.e., however much of your mortgage you've paid off — to get a secured loan at a low rate. Get a free consultation from Lotly if you need some help finding the best option for you.

If you are not a homeowner, there are ther business loan options. LoansCanada offers various business loan solutions to help you grow your business based on your situation. Fill out an online application for LoansCanada business loan here to see available options.

Legal and regulatory compliance

Unfortunately, the legal requirements for your business are incredibly domain-specific.

Fortunately, BizPal is a free online tool you can use to find the specific licenses and permits you need for your business.

Just in case though, here are three best practices regardless of industry:

• Insurance: It's always a good idea to have insurance for your business, even if it's optional in your industry. This can protect you from financial losses due to property damage, lawsuits, or other unforeseen circumstances.
• Stay updated with regulations: Stay informed about any regulatory changes affecting your industry or business. This will help you avoid any potential penalties or fines for non-compliance.
• Get legal advice: Consider consulting a lawyer to ensure your business fully complies with all laws and regulations. This will help prevent any legal issues down the line.

Finally, let's look at the horizon — how do you keep your business in shape for the long haul?

6. Building your brand and growing

Here's what we'll cover:

• Tips for building a brand presence
• Hiring employees and scaling the business

How to build a lasting brand presence

1. Develop a strong brand identity: Brand is NOT just your logo and colours. It's what you stand for, the overall image and message you want to convey to your customers. Ensure your brand identity is clear, consistent, and aligned with your business goals.
2. Use social media: Social media platforms are powerful tools for reaching and engaging with potential customers. Create a social media strategy that targets your key audience and showcases your brand's unique personality.
3. Collaborate with influencers: Partnering with influential individuals or businesses can help increase brand awareness and credibility. Choose influencers whose values align with your brand and have a strong following in your target market.
4. Offer exceptional customer service: Happy customers are the best marketers. Providing excellent customer service can help build a positive reputation for your brand and encourage word-of-mouth recommendations.
5. Invest in quality content: Content marketing is essential for building brand awareness and establishing thought leadership. Producing high-quality, relevant content can help attract and retain customers.
6. Stay consistent across all touchpoints: Whether it's your website, social media profiles, or in-store experience, consistency is key to building a solid brand presence. Make sure all touchpoints reflect your brand identity and values.
7. Engage with your community: Building a community around your brand can help foster loyalty and advocacy. Engage with your audience through events, contests, or online discussions to cultivate a sense of belonging.
8. Track and analyze your brand's performance: Monitor metrics like brand awareness, customer sentiment, and website traffic to understand how your branding efforts impact your business. Use this data to make informed decisions and continuously improve your brand strategy.
9. Evolve with time: As your business grows and the market changes, so should your branding strategy. Continuously evaluate and adapt to ensure your brand stays relevant and resonates with your target audience.
10. Stay true to your values: Above all, stay true to what your brand stands for. Your values should guide every aspect of your branding efforts and help differentiate you from competitors in a meaningful way.

Hiring strategies and employment regulations in Ontario

Hiring strategies

1. Employee referral programs: Encouraging current employees to refer potential candidates can be an effective strategy. This often leads to high-quality hires since employees typically recommend candidates they believe would be a good fit for the company. Incentivizing this process with bonuses or other rewards can improve engagement and retention.
2. Using temporary staffing agencies: Temporary staffing agencies can be a flexible hiring strategy, especially for seasonal work or projects with fluctuating workloads. This allows you to scale your workforce up or down quickly without long-term commitments. It’s a good strategy for businesses that need agility in hiring and labor costs.
3. Use social media to find talent: You certainly shouldn't ignore job boards like Indeed and LinkedIn, but social media platforms like Facebook, Instagram, and Twitter/X also offer opportunities to find candidates. You can use targeted ads or post job listings on company pages to reach a wider pool of potential hires.
4. University and college recruitment: Partnering with universities and colleges is an effective way to recruit fresh graduates with up-to-date knowledge and skills. This can also help create brand awareness among younger demographics.
5. Internship programs: Offering internships can benefit both the company and the intern. It's also easy on the budget — several organizations provide grant money for you to hire interns and students specifically.

Key employment considerations in Ontario

1. Employment Standards Act (ESA) Compliance: Employers in Ontario must adhere to the Employment Standards Act (ESA), which governs minimum wage, overtime, work hours, and vacation time. The ESA ensures fundamental rights for all employees, and non-compliance can result in significant penalties. Employers must stay updated on any changes to these standards​.
2. Health and safety regulations: Ontario’s Occupational Health and Safety Act (OHSA) mandates that employers provide a safe working environment. This includes proper training, equipment, and procedures to prevent accidents or injuries. Regular safety audits and employee safety training are crucial for staying compliant and protecting workers.
3. Human rights and anti-discrimination laws: The Ontario Human Rights Code prohibits discrimination in employment on the grounds of race, gender, age, religion, and more. Employers must ensure that hiring practices and workplace policies are non-discriminatory and inclusive, providing equal opportunities for all employees.

Launch the business of your dreams today

Let's recap our six steps:

1. Who should start a business? You’re well-positioned to start a business if you have monetizable skills or a product (idea or otherwise). 
2. Planning your business: Conduct thorough market research to identify your target audience, analyze competitors, and stay informed about industry trends. Build a bulletproof ICP and business plan.
3. Choosing your business structure: Choices range between sole proprietorship, partnership, or corporation, each with varying levels of liability, tax obligations, and growth potential. Choose based on your business’s size, risk, and long-term goals.
4. Registering your business: Register through ServiceOntario, choose a business name, and obtain a Business Number (BN) from the CRA. The process varies by structure, with different fees and documentation.
5. Handling taxes and licenses: If your business earns over $30,000 per quarter for a year, register for HST. Additionally, research and apply for industry-specific permits and licenses using tools like BizPaL.
6. Funding and financial assistance: Ontario offers several funding options, such as the Canada-Ontario Job Grant for employee training and Starter Company Plus for new businesses. Loans like FedDev Ontario and BDC’s ICE Fund can help scale operations.

Taking your business idea to the next level can be scary, but it doesn't have to be. And sure, we said we're not going to make this a fluffy motivational piece, but some inspiration is in order: 

Remember that every successful business had to start somewhere, whether it was in a garage, with just one employee, or as a side hustle while working another job. The important thing is to have confidence in your idea and take the necessary steps to turn it into a reality.

And if one of those steps is getting startup funding, we'd love to help. Lotly works with 50+ lenders across Canada to help you turn your home equity into cash, customized to your financial situation. Book a free consultation with us today to see if it's the right fit.

Frequently Asked Questions (FAQs)

Do I need to register my business in Ontario?

Yes, it is recommended that you register your business through ServiceOntario and obtain a Business Number (BN) from the CRA. However, if you've made under $30,000 per quarter for the last year and run your business under your name, you don't need to worry about this for now.

Are there any taxes or licenses I need to be aware of as a business owner in Ontario?

If your business earns over $30,000 per quarter for a year, you must register for HST. Additionally, research and apply for industry-specific permits and licenses using tools like BizPaL.

Is there financial assistance available for new businesses in Ontario?

Yes, Ontario offers several funding options, such as the Canada-Ontario Job Grant for employee training and Starter Company Plus for new entrepreneurs. Additionally, various grants and loans are available through organizations like Futurpreneur Canada and the Business Development Bank of Canada.

What is the biggest challenge for new businesses in Ontario?

One of the biggest challenges for new businesses in Ontario is competition. With a diverse economy and high population, there can be a lot of competition in certain industries. It's important to have a unique selling proposition and stand out from competitors in order to succeed.

How to start a business in Ontario with no money:

There are a few ways to approach a $0 startup capital business:

• Sell digital products: If you have a skill or knowledge that can be turned into a digital product, such as an e-book or online course, you can start your business with minimal costs.
• Offer services: Use your skills to offer services such as virtual assistance, graphic design, or social media management. These types of businesses require minimal startup costs.
• Use free resources: Take advantage of free resources and tools available for entrepreneurs such as government programs, networking events, and online learning platforms. Additionally, consider joining a co-working space instead of renting office space.

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