Real Estate Law
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How to Form a Corporation for Real Estate in Ontario: A Step-by-Step Guide

Written by
The Tabuchi Law Team
Published on
September 20, 2022

Why do you need a corporation for real estate in Ontario?

There are a number of benefits to incorporating your real estate business in Ontario, including:

  • Limited liability protection: One of the most important benefits of incorporating is that it provides limited liability protection to its shareholders. This means that if the corporation is sued or goes bankrupt, the shareholders' personal assets are protected.
  • Tax benefits: Corporations are taxed differently than individuals. For example, corporations can split income between different shareholders, which can reduce the overall tax burden.
  • The ability to raise capital: Corporations can sell shares to raise capital, which can be used to grow the business or invest in new properties.

Examples of the benefits of incorporating a real estate business in Ontario:

  • A real estate investor who owns multiple rental properties may incorporate their business to limit their liability and take advantage of tax benefits.
  • A real estate developer who is building a new condominium complex may incorporate their business to raise capital from investors.
  • A real estate agent may incorporate their business to take advantage of tax benefits and the ability to split income with a spouse or partner.

Requirements for incorporating a real estate business in Ontario

To incorporate a real estate business in Ontario, you must meet the following requirements:

  • You must be at least 18 years old.
  • You must be a resident of Canada.
  • You must have a valid Canadian address.
  • You must choose a unique name for your corporation.
  • You must prepare the articles of incorporation.
  • You must file the articles of incorporation with the Ontario government.

Step-by-step guide to incorporating a real estate business in Ontario

  1. Choose a name for your corporation. The name of your corporation must be unique and cannot be the same as the name of another corporation registered in Ontario. You can search for available corporation names on the Ontario government website.
  2. Prepare the articles of incorporation. The articles of incorporation are a legal document that outlines the basic information about your corporation, such as its name, address, and purpose. You can prepare the articles of incorporation yourself or hire a lawyer to do it for you.
  3. File the articles of incorporation with the Ontario government. You can file the articles of incorporation online or by mail. There is a filing fee associated with incorporating a corporation in Ontario.
  4. Obtain a business number from the Canada Revenue Agency (CRA). A business number is a unique nine-digit number that is used to identify your business to the CRA. You can apply for a business number online or by phone.
  5. Open a bank account for your corporation. You will need to open a separate bank account for your corporation so that you can keep your personal and business finances separate.
  6. Obtain the necessary licenses and permits. Depending on the type of real estate business you are operating, you may need to obtain certain licenses and permits

Once you have completed the steps above, your corporation will be officially incorporated. However, there are a few additional things you need to do to get your business up and running:

  • Register your corporation for GST/HST. If your corporation's annual revenue is expected to exceed $30,000, you must register it for GST/HST. You can register for GST/HST online or by phone.
  • Purchase commercial liability insurance. Commercial liability insurance will protect your business from financial losses in the event of a lawsuit.
  • Create a business plan. A business plan is a document that outlines your business goals, strategies, and financial projections. It is important to have a business plan in place before you launch your business.

Tips for incorporating a real estate business in Ontario

  • Consider hiring a lawyer. Incorporating a business can be a complex process, so it is a good idea to hire a lawyer to help you, especially if you are not familiar with the law.
  • Choose a unique name for your corporation. It is important to choose a unique name for your corporation so that it can be easily identified and distinguished from other businesses.
  • Keep your personal and business finances separate. When you incorporate a business, it is important to keep your personal and business finances separate. This will help to protect your personal assets in the event that your business is sued or goes bankrupt.
  • Get professional advice. If you have any questions about incorporating a real estate business in Ontario, be sure to get professional advice from a lawyer or accountant.

Conclusion

Incorporating a real estate business in Ontario can offer a number of advantages, including limited liability protection, tax benefits, and the ability to raise capital. If you are considering starting a real estate business in Ontario, it is important to understand the requirements and benefits of incorporation.

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