If you want to establish a partnership or a sole proprietorship business in Ontario, you’ll need to get a master business license to operate it. This form of registration is simple but essential in giving businesses the legal status they need to operate.
A master business license serves as a business permit and contains various details about a business. These include the business name, the address, the type of business, and the business registration number. Also, the license provides a brief description of the activities that the business is allowed to undertake.
In Ontario, a master business license is a business name registration document for partnerships and sole proprietorships. Companies that get a master business license also get a unique identification number.
Before applying for a master business license, there are several things you should know about getting it. Here are five of them:
1. A Master Business License Isn’t For Every Business
Not all businesses that adopt partnership or sole proprietorship need a master business license. Only those that wish to operate using names that differ from the full names of the owners or partners require a master business license. If your business name is the same as your name or the names of the partners, you’re not required to register your business, and, therefore, don’t need a master business license.
The other situation that exempts you from getting a master business license is when you choose to incorporate your business as opposed to having it registered as a sole proprietorship. In such a scenario, a master business license isn’t required. However, if you decide to incorporate your business and want it to run under a name different from its corporate name, like a trading name, you have to get a master business license. Check out Osome Hong Kong consult with professionals and save time.
2. Master Business Licenses Have A Validity Period
Once you get a master business license, your business is considered a registered entity with a legal right to operate. Using this license, you’ll be able to open a bank account for the business, and even market your services or products to promote your business under the business name. However, you can only do this for a given period.
Master business licenses have a registration validity period of five years. Once this period lapses, you’ll be required to reapply for a master business license to continue running your business.
3. Master Business Licenses Don’t Offer Liability Protection
Although master business licenses give businesses a legal status, they have limitations in protecting owners from liabilities and competition. For instance, if you choose to get a master business license for your business in Ontario, you won’t enjoy name protection the way incorporated entities do. This means competing unincorporated companies can operate under a name that’s identical to yours. If this happens, you’ll not be able to take legal action against them.
Furthermore, a master business license offers no protection against liabilities or corporate tax. This explains why some entrepreneurs opt to incorporate their entities, even if they are sole proprietors. Incorporation makes their businesses a separate legal entity, meaning liabilities incurred by such businesses can’t be transferred to them automatically. While getting a master business license is a great place to start, incorporating a company is the best option if your business exposes you to personal liability risks.
4. There Are Multiple Ways Of Applying For Master Business License
There are different ways to complete a master business license application. If you’re in Ontario, you can file your application in person. If not, you have the option to register your business via mail or online. Online registration is fast and straightforward, and can be done via Ontario’s service portal or through a third-party service provider. Registration by mail takes a long time. Once ready, the license is mailed to you.
5. Requirements For Master Business License Registration
Registration of a master business license is open to adults aged 18 years and above in Ontario. Unlike incorporation, you can register for this license even if you’re not a Canadian citizen or a permanent resident in Canada.
The cost of a maser business license varies depending on the mode of registration. If you file an online registration, you’ll be required to pay CA$60. Applying for registration via mail or in-person costs CA$80. It’s advisable to conduct a name search before filing a business registration application. To run a name search, you’ll need to pay between CA$8 and CA$26. The cost largely depends on the details you include in the search. A name search lets you know whether another business owner has already registered the name or trademark you want to use on your business.
6. Master Business Licenses Can Be Cancelled
It’s possible to amend a master business license once it’s been acquired. To change the name of your business, you’ll have to cancel the previous permit and register afresh. You can cancel your business license either online or by mail. To do this online, you’ll need to use the Change of Business Information tool available on the Service Ontario website.
If you close your registered business, you’d be required to cancel any business license that’s associated with it. It would be best to inform the Canada Revenue Agency about the cancellation to avoid triggering an audit on your business following the abrupt closure.
Registering a business is a simple but essential step for new business owners in Ontario. Whether you establish a sole proprietorship or a partnership business structure, getting a master business license gives you the confidence that it has the legal status it requires to operate.
Even though the process of getting a master business license isn’t complicated, not all businesses require it to operate. If you plan to use your name as your business name, you’ll not have to register it. However, if you want to register a business in a different name or trademark, you must register a master business license.
The downside of a master business license is that it doesn’t protect owners from liabilities incurred by the business. If your business is at a high risk of incurring liabilities that you wish to be protected from, the best thing to do is to incorporate a company.