What is a T5007 Statement and what are my responsibilities regarding it?
A T5007 Statement is given by WSIB to workers who received compensation benefits in the current tax year. Those workers are required to include it on their income tax returns. WSIB will tell you how much you will be reimbursed for, and you must include this repayment amount on your employee’s T4 slip in Box 77 so that the numbers match up.
What happens if I fail to comply with my obligations?
WSIB may fine you $250 each for late reporting, incomplete reporting, not reporting on a pre-approved version of the form, and failing to provide a copy of the form to the worker. Additionally, failing to comply is a provincial offence and you may be prosecuted. If convicted, you could be fined up to $25,000 and be sentenced to up to 6 months in jail.
Are there any additional obligations for critical injuries or fatalities?
If a person, whether a worker or not, has been critically injured or killed at the workplace, you must immediately notify the Ministry of Labour’s Health & Safety Contact Centre via telephone or other direct means. Additionally, within 48 hours, you must write to the Ministry of Labour about any information regarding the circumstances of the occurrence.
Can I suggest that workers should avoid reporting incidents?
No. It is against the law to discourage a worker from reporting a workplace injury or illness. If you do, you could face a financial penalty as well as prosecution.
Who is responsible for transportation costs if a worker needs to be transported to a medical facility?
Employers must pay transportation costs (e.g. ambulance fee, for someone to accompany the injured worker, etc.).
What are occupational diseases and could I be liable for them?
Occupational diseases are health problems caused by exposure to a workplace health hazard. These workplace health hazards can cause an occupational disease:
- Dust, gases, or fumes,
- Toxic substances (poisons),
- Infectious germs or viruses,
- Extreme hot or cold temperatures, and
- Extremely high or low air pressure.
Occupational diseases are treated the same as workplace injuries and the same obligations apply.
What qualifies as first aid?
First aid includes, but is not limited to:
- Cleaning minor cuts, scrapes, or scratches,
- Treating a minor burn,
- Applying bandages and/or dressings,
- Applying a cold compress, cold pack, or ice bag,
- Applying a splint, or
- Changing a bandage or a dressing after a follow-up observation visit.
Do I need to report when a worker requires first aid?
No, first aid is not considered health care treatment, even when it is given by a health care professional (since it does not require professional skills). However, the law requires that you keep a record of all first aid details.
How do I file a report to WSIB?
You can use the “Employer’s Report of Injury/Disease Form 7 available on the WSIB website (www.wsib.on.ca). If the online form is not accessible to you, you may also call and speak to a representative at 1-800-387-0750 or 416-344-1000. You may also create your own reporting form (either physical or electronic), but it must be approved by WSIB before using it for an incident report.
What is modified work?
Modified work is any change in a regular job while a worker recovers from an injury or illness, such as being assigned different duties. Even in cases where the injured worker agrees to do modified work at regular pay, you must report the injury or illness to the WSIB, if the modified work continues beyond 7 days.
When do I need to report incidents to WSIB?
You must report the incident to the WSIB within 3 days if your worker:
- Loses time from work,
- Earns less than a regular day’s pay, or
- Gets health care treatment from a health professional (beyond first aid).
Additionally, you must report an incident even if the worker does not receive health care treatment but the worker requires modified work due to the incident for more than 7 calendar days. In this case, you are obligated to report the incident on the 8th day if modified work is still required.
What do I do when an injury occurs?
You have a duty to investigate and document the incident. Keep a detailed record of what happened and the steps you took to correct the problem. Then, you may have to report the incident to WSIB.
Does my business need to register with WSIB if it only employs part-time employees?
Yes, unless it is one of the industries that do not require WSIB coverage. There is no distinction between full- and part-time employees.
When does it become mandatory for my business to register with WSIB?
Within 10 days of hiring the first full- or part-time worker.
Does my business need to register with WSIB?
Most businesses in Ontario that employ workers are required to register with WSIB. WSIB coverage is mandatory for businesses that work or carry on business in construction. Businesses that are exempt from registering (but may still choose to do so) include:
- Banks, trusts and insurance companies,
- Computer software developers,
- Private health care practices (such as those of doctors and chiropractors),
- Trade unions,
- Private day cares,
- Travel agencies,
- Clubs (such as health clubs),
- Barbers, hair salons, and shoe-shine stands,
- Taxidermists, and
- Funeral directing and embalming.
What is WSIB?
The Workplace Safety and Insurance Board is an independent agency of the Ministry of Labour in Ontario responsible for providing workers’ compensation to Ontario workers and no-fault insurance for Ontario’s employers.
What are considered hazardous materials?
Hazardous materials can either be physical hazards or health hazards under WHMIS and include:
- Flammable liquids, gases, solids, aerosols,
- Oxidizing liquids, gases, solids,
- Gases under pressure,
- Self-reactive substances and mixtures,
- Acute toxicity,
- Skin corrosion/irritation,
- Serious eye damage/irritation
For a full list of hazard classes, please refer to https://www.ccohs.ca/oshanswers/chemicals/whmis_ghs/hazard_classes.html.
What is an SDS?
Safety Data Sheets are summary documents that provide information about the hazards of a product and advice about safety precautions. They are more detailed than labels and are usually prepared by manufacturers or suppliers of the hazardous product. However, employers may be required to prepare SDSs for hazardous products that are produced and used exclusively in their workplace.
What obligations do I have regarding hazardous materials in the workplace?
According to Workplace Hazardous Materials Information System (WHMIS), an employer must ensure information on hazardous products be delivered in three ways:
- Labels on the containers of hazardous products,
- Safety Data Sheets (SDSs) in addition to the label with detailed hazard and precautionary information, and
- Worker education programs.
Employers must notify a Director of the Ministry of Labour if they cannot obtain a label or SDS after reasonable efforts.
Employers must also ensure that hazardous materials are not handled, used or stored at the workplace if the three requirements are not met.
What are my obligations regarding workplace harassment and/or violence?
- Prepare policies dealing with the issues and review them at least once a year,
- Set up programs for dealing with the issues (procedures for reporting incidents, getting assistance, etc.),
- Provide information to employees about the policies and programs,
- Assess the risks of workplace violence/harassment that could arise.
What is considered workplace violence?
Workplace violence is defined as using or attempting to use physical force that causes or could cause physical injury to a worker. Also, workplace violence can be a statement or behaviour that a worker reasonably thinks is a threat to use physical force that could cause injury. Because it is difficult to know exactly what each individual worker is going through and how they might perceive certain behaviour, avoiding any comments or actions relating to physical force is the best way to minimize conflict regarding workplace violence.
What is considered workplace harassment?
Workplace harassment is defined as upsetting comments or actions that the person making them knows or should know are unwelcome. This does not include comments or actions that an employee may find upsetting but are required as a normal part of the job/work. For example, an employee may not like being told that they need to arrive at a certain time for their shift, but just because such a comment upsets them does not mean it is workplace harassment.
What rights do my workers have?
Workers have three main rights under the OHSA:
- The right to know about workplace hazards and what to do about them,
- The right to participate in solving workplace health and safety problems, and
- The right to refuse work they believe is unsafe.
What are my responsibilities as an employer under the OHSA?
Employers have the greatest responsibility regarding workplace conditions and safety. As an employer, you must:
- Make sure workers know about hazards and dangers by providing information, instruction, and supervision on how to work safely,
- Make sure supervisors know what is required to protect workers’ health and safety on the job,
- Create workplace health and safety policies and procedures,
- Make sure everyone follows the law and the workplace health and safety policies and procedures,
- Make sure workers wear and use the right protective equipment,
- Do everything reasonable in the circumstances to protect workers from being hurt or getting a work-related illness/occupational disease.
Who enforces the OHSA?
Ministry of Labour.
What regulates workplace conditions and safety in Ontario?
Occupational Health and Safety Act (OHSA).
What is a “poisoned environment”?
The Code prohibits creation of a poisoned environment. A poisoned environment is a form of discrimination and can arise from even a single incident. It may be created by the comments or actions of any person, regardless of his or her status. The comments or conduct do not have to be directed at a particular individual.
Tribunals have held that the atmosphere, including the emotional and psychological circumstances, of a workplace is a condition of employment just as much as hours of work or rate of pay.
Do employers have a responsibility to address discrimination?
Yes, all employers are responsible for dealing effectively, quickly and fairly with situations involving claims of harassment or discrimination.
At a minimum, employers must respond to internal discrimination complaints by:
- Having a complaint mechanism in place
- Having a corporate awareness of what constitutes discrimination
- Taking the matter seriously once an internal complaint is received
- Acting promptly
- Provide the complainant with a healthy work environment
- Communicating to the complainant its actions in response to the complaint
The best course of action is for an employer to create an environment where discrimination and harassment are discouraged, and where employees are able to raise concerns promptly when they arise rather than silently enduring or ignoring troubling situations.
It can be expected that successfully introducing human rights policies and procedures may result in an increased number of complaints in the short term, as employees become aware of their rights and their ability to come forward.
How does the Code affect advancement opportunities?
The Code provides that every employee should be treated equally in terms of advancing within the organization. This means that decisions made about acting assignments, secondments, or promotions should be made based on objective evidence related to job performance and abilities, and not on subjective assessments that are based on stereotypes or unfounded assumptions related to a ground protected by the Code.
The best practice is for acting assignment to be awarded through a formal process that includes circulating information about acting opportunities to all eligible staff, using a clearly set out selection process that is based on objective criteria such as a written test, a formal interview and written performance appraisals.
How does the Code influence workplace training?
Workplaces benefit from having a workforce where all employees are motivated to learn, enhance their skills, and make greater contributions to the organization’s success. The costs of not providing equal access to training or other learning opportunities can be significant. In addition to potential liability under the Code, affected employees fall farther behind over time and may be less able to advance compared to colleagues who have had training opportunities.
The Code provides that every employee should be treated equally for internal and external training opportunities in the organization. This means that all decisions made related to training opportunities should be made using a non-discretionary process.
Discrimination may occur where employees are informed about training opportunities in an informal way, such as word of mouth, or being selected based on the discretion of supervisors. All employees should have equal access to information about training opportunities. This information should be sent out widely through formal means including by e-mail, memos, and/or postings on bulletin boards. The employer should use fair, objective, and clearly stated guidelines for deciding who should get training.
How does the Code influence vacation entitlements?
Code-related time off should not affect decisions about vacation entitlement. If an employer considers or is influenced by an employee’s disability in making decisions relating to vacation, this may be discriminatory.
An employee on a Code-related leave of absence is still entitled to accrue vacation time. The entitlement to vacation pay depends on the terms of the employees contract or the collective agreement in place. If vacation pay and time are linked to service, the employee continues to accumulate both during a leave. On the other hand, if pay is based on earnings and a person is receiving benefits under Employment Insurance of the Workplace Safety and Insurance Act only during the leave, it is not discriminatory for the employee to accrue only vacation time but not vacation pay. If the employer normally provides a top-up for employees receiving benefits during a Code-related leave, these employees would be entitled to receive vacation pay based on those earnings.
How can I ensure employee pay and bonuses comply with the Code?
Employee compensation may take on different forms, such as pay and bonuses, contributions to benefit premiums, or accruing vacation credits. Where employers, as a matter of course, pay a certain form of compensation to other employees who are away from work, employees absent due to disability are also entitled to such compensation.
Pay and bonuses should be given without regard to Code grounds such as race or sex. It is discriminatory to pay women, racialized persons, or other people protected by Code grounds less than other employees, when doing equivalent work.
In some cases, discrimination may be identified in differences in pay between occupational groupings or between individuals in the same position.
How to assign tasks and duties in line with the Code?
To ensure tasks and duties have been assigned fairly and consistently, be mindful of employees’ accommodation needs when assigning work.
The following types of situations may lead to discrimination claims:
- A racialized employee states that he is assigned the dreaded night shift more often than others and is often asked to clean the washrooms, although this is not normally part of the job.
- An employee is on part-time work as a medically documented accommodation. Although her doctor says she is only allowed to work 20 hours per week, she is routinely assigned tasks that would fill a full-time week. If she does not finish the work, she is disciplined.
How can I ensure hours of work comply with the Code?
Decisions about schedules, hours of work, and break times can lead to complaints of discrimination by employees protected under the Code. In some cases, these can be traced back to a lack of inclusive design and in other cases, a failure to accommodate. For example, an inclusively designed shift policy would take into account that some employees will not, as a result of a Code ground, be able to work a night or rotating shift.
There are many situations where employers would be expected to accommodate based on Code needs relating to schedules, hours of work, and break times. For example, an employer might be expected to allow an employee to change from a night shift or a rotating shift to a day shift as one of a range of accommodations. Failing to accommodate may amount to discrimination. For example, if an employee is scheduled for Friday evening shifts despite his religious observances and related accommodation request to work an alternate shift, this is discrimination on the basis of creed.
An employee should not be forced to accept part-time hours as an accommodation without having assessed other alternatives. Where an employee’s hours are significantly reduced after he or she has made an accommodation request, this may be viewed as a reprisal or failure to meet the duty to accommodate.
Flexible scheduling is part of inclusive design that can address needs relating to multiple Code grounds. This may include:
- Flexibility on break times
- Alternative start and end times on the days when the person cannot work for their entire period
- Use of lunch in exchange for early departure or staggered work hours.
When considering accommodation requests, keep in mind that the Code has primacy over legislated requirements, unless the law specifically says that it is to apply regardless of the Code.
How can I ensure a code of conduct complies with the Code?
Where an employer chooses to institute a policy requiring new and existing employees to follow a code of conduct, including a dress code, or to sign an agreement not to perform certain types of behaviours, steps must be taken to make sure that the expectations do not contravene the Code.
Code of Conduct: A code of conduct should not rely on stereotypes connected to Code grounds. Nor should it apply relatively more often to any group protected by the Code than it would to anyone else. Accommodation that is required by an employee should also be provided to the point of undue hardship.
Example: An employer has a code of conduct prohibiting swearing in the workplace. As a result of his mental disability, an employee cannot comply with the rules and requests accommodation when he is threatened with discipline. Despite this, the employer suspends him. In the context of the employee’s disability-related needs, the discipline would be viewed as discriminatory.
Dress Codes: Employers can have a dress code or rules about dress that meet the business needs of the organization, as long as they comply with the Code.
Design such rules to be inclusive of all employees, including men and women, people with disabilities, and anyone who needs accommodation for religious reasons. Make sure that any requirements are made in good faith and are genuinely required to do the job.
While it is acceptable for men and women to have different uniforms, employers must make sure that any uniform policy does not undermine the dignity and right to full participation in the workplace of employees of either sex. An employer should be prepared to prove that any sex-linked difference in the dress code are bona fide occupational requirements.
How can I demonstrate “undue hardship”?
The evidence needed to prove undue hardship must be objective, real, direct, and, in the case of cost, quantifiable. The employer must provide facts, figures, and scientific data or opinion to support a claim that the proposed accommodation causes undue hardship. A mere statement without supporting evidence, that the cost or risk is “too high” based on impressions or stereotypes will not be enough.
Factors that are excluded from consideration and cannot be used to justify undue hardship include business inconvenience, employee morale, and customer preference. Collective agreements cannot act as a bar to accommodation requests.
Only existing circumstances can be taken into account when considering undue hardship. Speculative risks and conditions that may arise in the future are not considered. For example, when a person with a disability has a condition that may deteriorate over time, the unpredictability and extent of future disability cannot be used as a basis for assessing present accommodation needs.
The fact that an employer has accommodated the needs of other employees or has accommodated the needs of the same employee in the past does not relieve it of its obligation to meet present and future accommodation needs. On the other hand, there may be circumstances where the total accommodation needs of many employees may amount to undue hardship.
What is “undue hardship”?
Undue hardship is a defence under the Code. The employer has to prove that this defence applies, otherwise a finding of discrimination may be made.
It is not up to the person requesting accommodation to prove that the accommodation can be accomplished without undue hardship.
The Code sets out only three items that may be considered in assessing whether an accommodation would cause undue hardship. These include:
- Outside sources of funding, if any
- Health and safety requirements, if any.
There is no doubt that an employer will likely have to spend some effort to accommodate its employees’ needs. However, some degree of hardship is to be expected – hence the test in the Code is “undue” hardship, not mild or reasonable hardship. An employer should only conclude that an accommodation request will amount to undue hardship after careful and rigorous consideration of all elements of an accommodation request and the employers’ ability to meet it.
What duties do I have as an employer under the “duty to accommodate”?
As an employer, you may have the following duties according to the “duty to accommodate.” These include:
- Taking an active role in making sure that alternative approaches and possible accommodation solutions are investigated, and research various forms of possible accommodation and alternative solutions as part of the duty to accommodate.
- Accept the employee’s request for accommodation in good faith, unless there are legitimate reasons for acting otherwise.
- Keep a record of accommodation requests and actions taken.
- Limit requests for information to those reasonably related to the nature of the limitation or restriction, to be able to respond to the accommodation request.
- Grant accommodation requests in a timely way, to the point of undue hardship.
- Where accommodation would cause undue hardship, explain this clearly to the employee and be prepared to show why this is the case.
What information is an employer entitled to under the duty to accommodate?
Requests for accommodation may involve disclosing private or highly sensitive information. Persons requesting accommodation should be asked only for information needed to set the groundwork and respond appropriately to the accommodation request.
In some cases, the need for accommodation is obvious and there is no need for special documentation. For example, persons who use wheelchairs will have difficulty entering buildings that have steps.
Employers can ask for more information about an accommodation request in the following cases:
- Where the accommodation request does not clearly show a need related to a Code ground.
- Where more information on the employee’s limitations or restrictions is needed to find an appropriate accommodation.
- Where there is an objective reason to question whether the request for accommodation is legitimate.
What is the “duty to accommodate”?
The Code requires an effort, short of undue hardship, to accommodate the needs of persons who are protected by the Code. It would be unfair to exclude someone from the workplace or activities in the workplace because their Code protected needs are different from the majority.
The principle of accommodation applies to all grounds of the Code, but accommodation issues in employment most often relate to the needs of: employees with disabilities, older workers, employees with religious needs, pregnant women, and employees with caregiving responsibilities.
Accommodation may take one of two forms. It may involve meeting the needs of someone based on the needs of the group he or she belongs to or, it may involve meeting the needs of a person on an individual basis. The most appropriate accommodation will be the one that most promotes inclusion and full participation, and effectively addresses any systemic issues.
Accommodation must be identified and implemented short of undue hardship.
Do my employees need human rights training?
It is expected that all employees will receive human rights training so that they can know and understand their obligations in the workplace. While an employer has no control over whether or not employees choose to bring forward a human rights claim, if employees have no human rights training, this can exacerbate a claim.
If a human rights issue arises, having pre-determine internal policies and procedures will help everyone involved by providing a structured and transparent process for resolving the concerns in a timely way.
For more information on developing human rights policies and procedures, see the Human Right’s Commission’s guidelines:
How to create a workplace that complies with the Human Rights Code?
According to the OHRC’s Human Rights at Work, in Ontario, about three-quarters of human rights complaints come from the workplace. The best defence against these complaints is for employers to be fully informed and aware of the responsibilities and protections the Code includes. Employers should create a strategy to prevent and address human rights issues in the workplace. This strategy should include the following parts:
- A plan for preventing, reviewing, and removing barriers in the workplace
- Anti-harassment and anti-discrimination policies
- An internal complaints procedure
- An accommodation policy and procedure
- An education and training program.
For more information, see the OHRC’s policy statement http://www.ohrc.on.ca/sites/default/files/attachments/Guidelines_on_developing_human_rights_policies_and_procedures.pdf.
How do human rights concerns play a role in employment?
The right to “equal treatment with respect to employment” protects persons in all aspects of employment, including applying for a job, recruitment, training, transfers, promotions, terms of apprenticeship, dismissals, layoffs, and terminations. It also covers rates of pay, codes of conduct, overtime, hours of work, holidays, benefits, shift work, and discipline.
How are human rights concerns overseen?
In 1961, the Ontario Human Rights Commission (OHRC) was established as an arm’s length agency of government to prevent discrimination and to promote and advance human rights in Ontario. The OHRC is one pillar of Ontario’s human rights system, alongside the Human Rights Tribunal of Ontario (HRTO) and the Human Rights Legal Support Centre (HRLSC).
Since 2008, all new complaints of discrimination are filed as applications with the Human Rights Tribunal of Ontario. However, the OHRC has the right to be informed of applications before the HRTO, and receives copies of all applications and responses.
The Human Rights Tribunal is of significance to employers since it is chiefly responsible for resolving claims of discrimination and harassment brought under the Human Rights Code. It first offers parties the opportunity to settle the dispute through mediation. If the parties do not agree to mediation, or if mediation does not resolve the application, the HRTO holds a hearing.
How are human rights protected in Ontario?
In Ontario, the Human Rights Code is a provincial law that gives everybody equal rights and opportunities without discrimination in specific social areas such as jobs, housing, services, facilities, and contracts or agreements. The Code’s goal is to prevent discrimination and harassment because of race, sex, disability, and age, to name a few of the 17 grounds it protects. All Ontario laws must agree with the Code.
Where can I get more information about managing employees with disabilities?
For more information visit the Ontario Human Rights Commission website at:
- Or; contact the Ontario Ministry of Labour at 1-800-531-5551.
What are some things I am required to do if my employee has a disability?
- Accept requests for accommodation in good faith
- Request only information that is required to make the accommodation
- Obtain expert advice where necessary
- Take an active role in ensuring that possible solutions are examined
- Maintain the confidentiality of persons with disabilities
- Deal with accommodation requests in a timely way
- Bear the cost of any required medical information or documentation
- Be aware of employees who are sick and not being treated well
Do I have responsibilities if any of my employees have a disability?
Employers have a shared responsibility in cooperating with their employees to help make necessary accommodations for those with disabilities.
Under the Human Rights Code, employers have a duty to accommodate the needs of people with physical disabilities to ensure they have equal opportunities, equal access and can enjoy equal benefits.
Am I responsible for the health and safety of my employees?
Yes. As an employer your job is to instruct your workers to protect their health and safety.
Who should I contact if I want more information?
Contact the Ontario Ministry of Labour at 1-800-531-5551.
What should the program have?
The program should have a plan of action.
- Who will investigate?
- How will they investigate?
- What steps will you take?
Do I have any responsibility to prevent sexual harassment?
Yes. By law all employers must have a workplace harassment program.
What is workplace sexual harassment?
Harassment of a worker because of gender, sexual orientation or expression.
Do I have to pay for the uniform?
No. You can have the employees pay or deduct from their salary if you wish.
Can I have a dress-code for my employees?
Yes, but it cannot violate the Ontario Human Rights Code.
To ensure compliance with the Code, your dress code policy should:
- Allow for a range of options
- Not require any staff to wear sexualized, revealing or gender-stereotypical clothing
- Offer sizes that fit a wide range of body types
- Include a process for handling dress-code accommodation requests
- Be communicated with and freely available to all staff.
How much do I pay for vacation time?
4% of their total salary for the 12 months.
Do my employees get vacation time?
After 12 months of work, an employee has 2 weeks of paid vacation time.
Do my employees get time off for public holidays?
Yes. There are 9 holidays in Ontario.
- January 1st – New Year’s Day
- Good Friday
- Family Day (Third Monday in February)
- July 1st – Victoria Day
- Dominion Day
- Labour Day
- Thanksgiving Day
- Christmas Day
- December 26 – Boxing Day
How often should my employees get breaks?
Every 5 hours they must have a 30-minute break.
Can I keep tips made by employees?
No. Unless you collect from all and give back equally to all.
What is the minimum wage that I must pay my employees?
|Minimum wage from January 1, 2018 to December 31, 2018||Minimum Wage from January 1, 2019 to October 1, 2019|
|Adult Minimum Wage (18+)||$14.00 per hour||$15.00 per hour|
|Student Minimum Wage (under 18)||$13.15 per hour||$14.10 per hour|
|Server Minimum Wage||$12.20 per hour||$13.05 per hour|
What if I want my employers to work overtime?
- Must make a written agreement.
- Must apply for permission from the Ministry of Labour by filling out application.
- Visit this website for the form: https://www.hoursofwork.labour.gov.on.ca/how/start.do?locale=en_CA
- If you have questions call the Employment Standards Information Centre at 416-326-7160, toll-free at 1-800-531-5551.
How many hours can my employees work before it is considered overtime?
An employee can work up to 44 hours a week without it being considered overtime. For every hour they work over 44 hours a week, you must pay your employee at least 1½ times their regular rate of pay (“time and a half”).
How do I open a payroll account number for my employee?
Contact the Canadian Revenue Agency (CRA) at 1-800-959-5525.
How do I check a Social Insurance Number (SIN)?
- Call Service Canada at 1-800-206-7218
- Select and dial *3*
- Have your CRA business number to confirm identity
What does the government require if I hire an employee?
- An employee record with their name, address, date of hire and hours.
- A valid Social Insurance Number (SIN).
- A payroll account number for employee.
What do I do if I want to hire an employee?
- Have an accurate job description for the position.
- Advertise the job
- Background check
- Select person
- Start a file for employee
How will I know if I need permits to purchase and sell items in my business?
You will have to visit the city’s website and browse through their permits to see if any applies to you. https://www.toronto.ca/services-payments/permits-licenses-bylaws/
Example: Shaziah wants to sell imported Brazilian and Peruvian hair in Toronto. She also has great ideas about starting a full service salon where ladies can deal with all of their beauty concerns at once. She visits the City’s website in order to find out what types of permits she will require.
What rights and obligations do I have in a business partnership?
Limited liability partnerships are now much more common than partnerships. These business structures have elements of partnerships and corporations. Generally, each partner is not responsible for another’s misconduct or negligence.
Please see the Ontario Partnership Act for further details. https://www.ontario.ca/laws/statute/90p05
Example: Kayla and Martin have been business partners for years. It is the usual practice of their relationship that Kayla handles the finances while Martin covers the business work. Lately, bill collectors have been calling and Martin’s business cards have been declined at the stores. Martin is worried about his business but has no access to the finances.
Comment: Martin has a right to obtain knowledge concerning the finances of the business. It is in his best interest to educate himself about partnerships and find a way to communicate his concerns to Kayla. It is also possible for Martin to seek the advice of a lawyer without informing Kayla, in order to determine the best course of action to take in order to preserve the business relationship.
What are the benefits and disadvantage of using contractors and subcontractors
- Capacity to complete large jobs in a short period of time
- Specialized skill set
- Do not have to pay insurance premiums to contractors
- Contractors and subcontractors are not loyal to your business
- You might end up paying out large sums of money all at once
- By relying on contractors and subcontractors your company doesn’t develop the required skill set
Who is a contractor and who is a subcontractor?
A contractor is a person who works for themselves, seeks out contractual work, and carries it out. Subcontractors are a form of contractor who have a particular set of skills. Their agreement is with the contractors not the customers.
Example: Ravi owns a bar that requires security services on the weekends. He has a contract with Bouncers by Night to provide a set number of bouncers on the weekends. However, the bouncers who work are not employees of Bouncers by Night, they are subcontractors.
Can I pick and choose whomever to provide my business services to at my establishment?
It depends. There are times when you are entitled to refuse service to people who are being disrespectful. However, you cannot discriminate against people generally just because you do not wish to serve them. Please see the Ontario Human Rights Commission website for more information about discrimination.
Example: Kamali believes that dogs are outdoor pets and should not be brought inside a business. However, before opening up his Caribbean restaurant he sought instructions from a lawyer concerning his obligations has a store owner. Kamali serves people with guard dogs, even though he thinks that they are outside pets because he understands that it would be against the law to do otherwise.
Can I break a contractual agreement if the other party is not holding up their end of the bargain?
It depends. Factors like a cooling off period, misrepresentation, and late delivery of goods can be adequate grounds to break the contract.
Example: Ahmed owns a mechanic shop where he works on fine cars. A particular distributor is routinely late in supplying parts. At times this distributor has been over 40 days late when delivering goods.
Comment: Ahmed is encouraged to see his rights under the Consumer Protection Act. Under this act he possibly has grounds for breaking his contract with the suppliers because they have been more than 30 days late in supplying parts. https://www.ontario.ca/page/your-rights-under-consumer-protection-act
Am I obligated to pay my business debts?
It depends on the type of business and the type of debt. Usually, sole proprietors and partners are liable for the losses of their business. Corporations are different. However, be mindful when asked to sign as a guarantor for your business, you will be liable for the business debts.
Example: Isabel opened up a cup cake shop with high hopes and big dreams of success. She invested a lot of money in her business appearance and didn’t manage her finances well. After just six months in business she had to close her doors. She is worried about the $50,000.00 loan from the bank that she poured into her business.
Comment: Isabel will be held liable for her business debt because she agreed to be a guarantor for the loan.
What can I do if a client breaches their contract with me?
It depends on the various factors. The amount owed to you is important because if it is less than $25,000.00 you can pursue a claim in Small Claims Court. In Small Claims Court, you can act on your own behalf to recover your debt. If the amount is more than $25,000.00 you will need to hire a lawyer to represent you. Litigation can be very costly so if there is a way to resolve conflicts outside of court, that might be a better option.
Example: Cindi operates a nail salon in her community. She routinely finds that when some customers don’t want to pay, they verbally abuse her employees, and walk out. She has researched her options, and finds it nearly impossible to sue customers without their names or addresses. Hence, Cindi has instituted a policy that clients have to pay for their services first.
What is a contract and what does it look like?
A contract in a business sense is an agreement between at least two parties who agree to exchange goods or services.
Example: Taylor’s church has agreed to allow her to sell her all natural fruit juices after services. Taylor is allowed to keep all of the proceeds from her juice sales. The church is offering the space out of the goodness of their hearts.
Comment: This is a gratuitous promise and not a contract. The church is not receiving a benefit from Taylor’s juice sales. Taylor is unable to enforce this agreement in a court.
What is wrongful/unjust dismissal?
Wrongful/unjust dismissal are two large all-encompassing terms that describe the dismissal/termination by the employer as breaching a statute, a rule of law, or the contract in dismissing an employee.
That breach may be of not giving a reasonable notice for termination, providing a severance that is too low, forcing the employee to resign by changing the conditions of work defined or implied in the oral or written contract, violating the employee’s human rights when dismissing him/her, etc.
Please consult the relevant sections depending on what is alleged by the employee.
Note on the investigative power under the Canada Labour Code
- The Canada Labour Code states that the dismissed employee may request the employer to state the reason for the dismissal in writing within 15 days of the request, subject to a fine if not provided.
- If the reason is not valid, or if the investigator working for the government of Canada believes appropriate, the investigator may recommend that the employee is to be reinstated within the company if a complaint is filed sufficiently fast following the unjust dismissal. Whether that would be appropriate would be left to the parties or would be adjudicated.
- During an investigation, you are required to cooperate with the investigator and provide the information requested. The investigations may be for a number of reasons including, but not limited to workplace safety, unjust dismissal, etc. The Code also provides power to the investigator to enter your premise at any reasonable time, but we are unsure of how this rule is consistent with the Canadian Charter on protections against abusive searches. We recommend that you refuse entry, unless they provide a search warrant, they cite this investigative power under 249 (3) of the Canada Labour Code, or they force their way through.
Note on the investigative power under the Employment Standards Act
- You may be under investigation by an employment standard officer following a tip-in that you have not abided by the Employment Standards Act. That may or not be for wrongful dismissal. You have to cooperate with the investigation, which includes providing time-sheets, or other documents and information, but this does not mean that you should allow the employment standards officer access to your premises or your servers without a search warrant.
- In general, when you are under investigation by an employment standards officer, you cannot be subject of a civil case for the same reasons, but there are certain exceptions.
- The employment standard officer can make an order against you, and you have to comply, unless of course you request a review of that order by the board within 30 days of the order in writing. Even if you request a review, you may have to deposit certain sums or execute certain provisional orders notwithstanding the review requested.
Is it possible to terminate an employee for just cause or fault?
In very rare circumstances, it is possible to terminate the employee for cause or fault of the employee. The severance package and the payment in lieu of notice are not required to be paid if an employee is terminated for just cause or fault of the employee. Criminal acts in the workplace such as stealing would be some reasons. Very serious disobedience, very serious breach of confidences, very serious breach of loyalty and very serious harassment are also examples of cases for summary dismissal.
We recommend that you nevertheless provide termination pay and a severance package because there is a chance that this will lead to a wrongful dismissal lawsuit, and there is a chance that the court will disagree with you.
If you choose to go down this route, make sure you apply the principles of progressive discipline, especially if the employee is not in a serious breach of his/her contract with you. For example, if an employee is seriously late for no valid reasons (human rights or others), or performs very badly, you may want to give a warning. Then, after two-three warnings, you may want to suspend the employee. After a few suspensions, there may be a longer suspension, and it goes on for a while before you can fire the employee for just cause or fault of the employee…
(Note that “cause” is interpreted differently in the Canada Labour Code. This note is only relevant to you if you directly research in the act.)
How to calculate the severance package?
On top of the notice or pay in lieu of the notice, the employer must generally provide the employee a severance payment. The amount of the severance is provided in the legislations. It is not a very large amount.
For employees working under Ontario’s Employment Standards Act for at least 5 years, severance pay is calculated in the following way: regular wages for a regular work week*(number of full years of employment+(number of months that are not counted in the full year/12)).
For employees working under Canada Labour Code for at least a year continuously, the employee receives as severance the greater of the following: five days of pay as regular salary, or two days of pay of regular salary per every full year of service.
What are the circumstances termination pay does not apply (severance pay may still apply)?
The notice of termination and termination pay requirements of the ESA does not apply to an employee who (see https://www.ontario.ca/document/your-guide-employment-standards-act/termination-employment ):
- is guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer. Note: “wilful” includes when an employee intended the resulting consequence or acted recklessly if he or she knew or should have known the effects his or her conduct would have. Poor work conduct that is accidental or unintentional is generally not considered wilful (see Termination for Just Cause);
- was hired for a specific length of time or until the completion of a specific task. However, such an employee will be entitled to notice of termination or termination pay if:
- the employment ends before the term expires or the task is completed; or
- the term expires or the task is not completed more than 12 months after the employment started; or
- the employment continues for three months or more after the term expires or the task is completed;
- is employed in construction. This includes employees who are doing off-site work in whole or in part who are commonly associated in work or collective bargaining with employees who work at the construction site;
- builds, alters or repairs certain types of ships
- has his or her employment terminated when he or she reaches the age of retirement in accordance with the employer’s established practice, but only if the termination would not contravene the Human Rights Code.
- has refused an offer of reasonable alternative employment with the employer;
- has refused to exercise his or her right to another position that is available under a seniority system.
- is on a temporary lay-off under the Ontario Employment Standard Act and the temporary nature has not exceeded the threshold for termination in this statute;
- does not return to work within a reasonable time after being recalled to work from a temporary layoff;
- is terminated during or as a result of a strike or lockout at the workplace;
- has lost his or her employment because the contract of employment is impossible to perform or has been frustrated by an unexpected or unforeseen event or circumstance, such as a fire or flood, that makes it impossible for the employer to keep the employee working. (This does not include bankruptcy or insolvency or when the contract is impossible to perform as the result of an injury or illness suffered by an employee.)
How to calculate common law notice period or pay in lieu of notice?
Common law provides that the notice period or the pay in lieu of the notice must be reasonable.
The length of reasonable notice period depends on the character of employment, the length of service, availability of similar employment, and the age, the experience, training and qualifications of the employee. Usually, more the position is specialized, the longer must be the notice period. As of 2017, in contrast to some other provinces, in Ontario, higher hierarchically is the position held by the employee, the longer must be the notice period.
A reasonable notice for a white-collar employee who has worked a significant number of years would generally be around a year. Depending on the circumstances, it could even go up to 24 months.
Remember: supplementary damages such as punitive and mental distress damages may also be awarded if there is wrongful dismissal as ruled by a court or tribunal.
What is the duration of the notice or pay in lieu of notice under the Federal Canada Labour Code?
Canada’s Federal statute/legislation requires a bare minimum period of notice or pay in lieu of notice if the employee has worked for more than 3 months of two weeks. The common law indicates that notice period must also be reasonable, and the notice period could be longer.
What is the duration of the notice or pay in lieu of notice under Ontario’s Employment Standards Act?
Ontario’s provincial statute/legislation requires a bare minimum period of notice or pay in lieu of notice if the employee has worked for more than 3 months. The common law indicates that notice period must also be reasonable, and the notice period could be longer.
|Duration of work by the employee||Period of notice|
|Less than 1 year||At least 1 week before termination|
|1 year to less than 3 years||At least 2 weeks before termination|
|3 years to less than 4 years||At least 3 weeks before termination|
|4 years to less than 5 years||At least 4 weeks before termination|
|5 years to less than 6 years||At least 5 weeks before termination|
|6 years to less than 7 years||At least 6 weeks before termination|
|7 years to less than 8 years||At least 7 weeks before termination|
|8 years or more||At least 8 weeks before termination|
If you are terminating 50 or more employees within a four week period at the company’s establishment, this form must be completed and sent to the indicated address: https://www.labour.gov.on.ca/english/es/forms/termination.php
Which legislations/statutes apply, Federal or Provincial?
In general, either provincial or federal legislations apply to any given employee in a given subject matter, not both. The general breakdown is as follows:
- Federal statutes (Canada Labour Code): employees in banking (excluding insurance companies, and securities brokers and exchanges), interprovincial/international railways, telecommunication, aviation, interprovincial/international transportation, postal services, federal civil services, and maritime transportation
- Provincial statutes (Employment Standards Act): employees in any other sector, not under Federal statutes.
What to remember when terminating an employee?
You, as an employer, must give a notice in advance to the employee or pay in lieu of the notice for the termination (termination pay).
After the notice has been delivered, in general, the employer has the choice to ask the employee to continue to work during the duration of the notice, or not. The employee may have less incentive to work. The employer also has to allow the employee to take leaves for occasional job interviews.
The notice period is provided in statutes (either the Ontario’s Employment Standards Act or the Federal Canada Labour Code), and in common law, which states that the notice period must also be reasonable.
Generally, it is possible to exclude the common law notice period if it is specifically provided in the employment contract. Courts retain the equitable jurisdiction to set aside what is provided in the contract and nevertheless apply the common law (which is rare).
On top of the termination pay, there is a severance package that must be paid.
Benefits such as, but not limited to, vacation pay that has not been paid out must be paid out.
Be ready to give reasons why you are terminating an employee whether or not it is for just cause: it could be that your company is losing money on part of a business or is folding a business, the employee was a poor performer, location change, etc.
Remember: always act in good faith and courteously when dismissing an employee: failure to do so may lead to punitive and/or mental distress damages. The court may also award a longer termination pay period.
What is a constructive dismissal and how this relates to resignation and termination?
If the employer substantially changed the employee’s working conditions as defined or implied in the oral or written contract of employment (eg. hours, time, place of work) such that the employee resigns, a court may consider this as a constructive dismissal.
There may be punitive and/or mental distress damages awarded against the employer if an employee is constructively dismissed.
If you, as an employer, are sued for constructive dismissal, you must prove that the employee actually resigned and is not a masked termination by you, the employer.
You may want to reread the factors in what is a resignation by the employee?
What happens if a dismissed employee resigns?
To determine if there is actual resignation, please reread the previous section of what is a resignation by the employee? There may be a factual debate as to whether the employee intended to resign.
The general rule in Ontario is that, if an employee voluntarily resigns after he/she is terminated, he/she is not entitled to the termination pay after that the resignation takes effect.
The employee generally also lose the right to his/her severance package if the employee does not provide two weeks in advance of his/her intention to resign.
There are however huge caveats to these general rules on termination pay and severance packages. In certain cases, the employee is deemed to have been terminated by his/her employer and would be entitled to a severance. A lay-off that happened to be for too long or the permanent discontinuance of all of the employer’s business at an establishment is some of the examples. There may also be situations were termination would be deemed to terminated by the employer for the purpose of termination pay.
What is a resignation by the employee?
There may be a time that an employee resigns voluntarily to change jobs, to stop working or to retire.
Employers should generally ask for a written letter of resignation to make it clear that it was the employee who wanted to resign. The letter should also contain the effective date of the resignation.
Upon resignation by the employee, the employer generally has no obligation to pay a severance, nor salaries in lieu of a reasonable termination notice (termination package). A severance package must exceptionally be paid if it is provided in the contract.
In some instances, it is simply not possible to have the resignation in writing, and a resignation letter from the employee is also not a bullet-proof evidence. It is essential to look first, objectively, if the acts of the employee unequivocally suggest that he/she resigned. It is also important to look at the subjective intent of the employee. If the employee says that he/she is resigning on the heat of the moment, it is important to give a little time and ask the employee to confirm the resignation.
When does contract of employment generally end?
Generally, an employment contract ends when the employee resigns (see What is a resignation by the employee?), or when the employment contract is terminated by the employer (see What to remember when terminating an employee?).
It may also end if the employee was hired for a specific length of time or until the completion of a specific task. There are numerous exceptions to this rule. To determine whether a notice or a notice in lieu (also known as termination pay) and a severance package apply, please read the section: What are the circumstances termination pay does not apply (severance pay may still apply)?
Even when an employee resigns, in certain circumstances, the employee may sue for constructive dismissal. If you are sued for constructive dismissal, please read the section: What is constructive dismissal?
An employment contract may also end if an unanticipated event destroys the heart of the contract to the point where it cannot be fulfilled. That notably includes serious illness or injury, but also death. For serious illness and injury, both termination and severance packages must be paid out (the amount would be similar as a termination by the employer so please see the respective sections), but not for death. The nuance might be small if the employee cannot work anymore for illness and dies two months later. It depends on what the employer knows and, very importantly, what actually is the cause: illness/injury or death.
How do I pay my business’s income tax?
The method used to complete income tax returns and pay any income tax owed will depend on how your business is structured. If you have structured your business as a sole proprietorship or partnership, the income from the business will be reported on your personal tax return. When this is the case, taxes owed as a result of business income will be reflected in your personal income tax owing. If your business is structured as a corporation, the corporation is taxed independently of its owners. You will therefore need to file a corporate income tax return and the corporation will need to pay any tax that it owes.
Because sole proprietorship and partnership income is included in your personal tax return, you do not need to file a separate return to report your business income, profits or losses. Instead, when you file your personal tax return, you will include information associated with your business activities. More information about tax for sole proprietorships and partnerships is available at the following website: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships.html.
Corporate income tax returns must be filed annually, and corporations with annual gross revenues exceeding $1 million must file their taxes electronically using the internet. Corporations with lower revenues may file electronically or elect to file using hard copies of the relevant forms. More information about corporate income tax returns is available at the following website: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/corporation-income-tax-return.html.
How do I collect and remit sales tax?
If your business sells goods and services subject to GST or HST, you may need to register for a GST/HST account. Generally, businesses that sell less than $30,000 worth of taxable goods in a year do not need to register for a GST/HST account.
If you exceed this threshold, or are otherwise required to register for an account and remit GST/HST, you must collect the applicable sales tax from your customers when you make sales. You should indicate on receipts, invoices contracts or posted signs at the place of business whether the sales tax is included in quoted prices, or the total sales tax charged for a purchase. If your customers are also GST/HST registrants (for example, this may be the case if you supply goods or services to other businesses) you must include information in receipts, invoices or contracts that will allow them to identify your business and the amount of GST/HST you collected during the transaction when they fill out their tax returns. The information you, as a supplier, must provide is included in the chart available at the following website: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/gst-account/input-tax-credits.html#dcmts_rqrd.
When you collect money for the payment of GST/HST, you hold this money ‘in trust’ for the government until you remit it to CRA. It is your responsibility to ensure that the money you were required to collect is collected, documented, held securely, and remitted to the government using the processes required by law.
The following resources further explain the processes and rules relevant to determining the need to collect HST/GST, collecting GST/HST and remitting GST/HST to CRA:
- Information about GST/HST, and if it must be charged, can be accessed at the following website: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/charge-gst/charge-gst-hst.html.
- Information about GST/HST program accounts and determining if your business must register for this type of program account can be accessed at the following website: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/register-a-gst-hst-account.html.
- Information about calculating net tax, a requirement for completing a GST/HST return can be found at the following website: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/gst-account/file-a-gst-hst-return/calculate-net-tax-complete-a-gst-hst-return.html.
- Information about completing a GST/HST return can be found at the following website: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/gst-account/file-a-gst-hst-return/complete-a-gst-hst-return.html.
- Information about filing a GST/HST return can be found at the following website: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/gst-account/file-a-gst-hst-return.html
- Information about remitting GST/HST can be found at the following website: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/gst-account/remit-pay-gst-hst-including-instalment-payments.html.
How do I register for programs and a business number?
If you need to register for one or more programs and receive a BN, you can use the online registration process available at the following website: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/registering-your-business/business-registration-online-overview/business-registration-online-register.html.
Alternatively, you may fill out the form available at the following website and submit it according to the instructions on the form: https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/rc1.html.
What is a business number and does my business need one?
A business number (BN) is assigned by CRA when a business registers for its first program account. This nine-digit BN is unique to your business. Along with you BN, you will have a unique program account number for each program that your business participates in. You program account number will consist of your nine-digit business number, a two-letter code to identify the program type, and a four-digit reference number that will be unique to each program account.
You will be assigned a BN if you register for a program account. The BN will be used when you communicate with the CRA, and form part of the unique program account numbers for each of the CRA programs that your business must participate in.
Do I need CRA program accounts?
For businesses, the four most common programs are sales tax (GST/HST) (generally required if your annual sales of goods subject to GST/HST will exceed $30,000), payroll deductions (required if your business has employees), import-export taxes (required if your goods are imported from or exported to other countries) and corporation income tax (required if your business is structured as a corporation).
Other accounts needed by certain businesses include:
- Excise duty (RD)
- For businesses that need to charge excise duty on products
- Excise tax (RE)
- For businesses that need to charge excise tax on products
- Air travelers security charge (RG)
- For air carriers that charge the air travellers security charge
- Insurance premium tax (RN)
- For brokers and agents who place contracts of insurance
- Registered charity (RR)
- For charity organizations
- Softwood lumber (SL)
- For persons who export softwood lumber products.
More information about the criteria used to determine what programs a business must participate in can be found at the following website: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/registering-your-business/you-need-a-business-number-a-program-account.html.
What are CRA Program Accounts?
Canada Revenue Agency (CRA), Canada’s tax authority, classifies certain of its activities as ‘programs.’ Programs relevant to businesses include sales tax (GST/HST), payroll deductions, import-export taxes and corporation income tax. If your business is required to participate in a program, you must register for a program account to allow you to participate in the program and make payments to CRA.
How do I obtain a Preliminary Project Review (zoning review) for a business licence?
In Toronto, applications for certain types of business licences, such as restaurant licences, require proof that your planed use of a location complies with zoning by-laws. This process, called a Preliminary Project Review, requires submitting documents to the city including a survey (if available), a detailed site plan, floor plans, and elevations and cross-sections. The information must be prepared in a format that meets the city’s specifications. You can apply for a Preliminary Project Review either at any Toronto Building Customer Service counter or by e-mail using the e-mail ‘button’ at the top of the electronic application form.
Information from the City of Toronto about Preliminary Project Review requirements, the application process and a copy of the application form can be obtained from the following website: https://www.toronto.ca/services-payments/building-construction/preliminary-zoning-reviews-information/apply-for-a-zoning-review/preliminary-project-review/.
How do I apply for a business licence issued by the City of Toronto?
Each licence type requires different information and documentation to apply. If you need to apply for a licence issued by the City of Toronto, you must do so in person at the Licensing and Permit Issuing Office at the East York Civic Centre, 850 Coxwell Ave, 3rd floor.
For most licences, you will need to present identification documents for either yourself, your partnership or the corporation. For sole proprietors, these identification requirements are often two pieces of government-issued identification, one of which must have your photograph, from the following list:
- Canadian Passport (photo ID)
- Driver’s Licence (photo ID)
- Canadian Birth Certificate
- Citizenship card
- Permanent Resident Card
- SIN Card (Social Insurance Number)
- Valid Work Permit.
Because certain business licence applications require additional documentation, such as proof of compliance with the City’s zoning by-laws, you should familiarize yourself with the requirements of the specific licence(s) for which you will apply. Requirements for individual licences and permits are listed in the search results of licence search tools such as BizPaL (https://services.bizpal-perle.ca/) or can be obtained from the City’s permits and licences website (https://www.toronto.ca/permits-licences/).
Do I need a business licence?
Many businesses require one or more licences (sometimes called permits) from at least one level of government.
Various levels of government across Canada have created a search tool called BizPaL to help determine which permits and licences are required to operate a specific type of business in a specific location. To use BizPaL, first enter your location, then the type of business you wish to operate. Next, the tool will provide a list of suggested permits and licences. You can read the descriptions of the suggested permits and licences to determine which ones apply to your business.
The BizPaL service can be accessed at the following website: https://services.bizpal-perle.ca/.
What are business licences?
Business licences confirm that the government has given your business the right to operate or undertake certain activities.
Business licences are issued by various levels of government, depending on what the licence allows the business to do. For example, some licences permit individuals or corporations to operate a specific type of business in a specific municipality. These types of licences are issued by the municipal government in the area where you want to operate the business. Other types of licences, such as a licence to serve alcohol, give a business a right to perform a certain activity or operate a certain type of business and are issued by the provincial or federal government.
How do I register a business name?
To register a business name, you can either use the web, a third-party service provider or register in person at the Central Production and Verifications Branch of the Ministry of Government and Consumer Services in Toronto.
A search of the Ministry’s database of business names must be performed (searches cost between $8 and $16). After the search confirms that the name is available, the appropriate forms must be submitted to the Ministry of Government and Consumer Services. The forms are available on the web or from ServiceOntario. Registrations or renewals cost $80. Third-party service providers that assist with these activities will charge additional fees.
For more information on where to complete the registration, see: https://www.ontario.ca/page/registering-your-business-name#section-2.
For more information on what forms will be required and where to access copies of these forms, see: https://www.ontario.ca/page/registering-your-business-name#section-5.
Do I need to register my business’s name?
If you have formed a sole proprietorship and wish to carry on business under any name other than your legal name, you must register your business’s name. For example, if your business is structured as a sole proprietorship and your name is Jane Smith, you cannot do business under any name other than Jane Smith unless you register that other name. Similarly, if a partnership plans to carry on business under any name other than the legal names of the partners in a partnership, the partnership must register a business name. If you have formed a corporation, and you wish to do business under a name other than the legal name of the corporation, you must register that other name.
Ontario’s provincial government provides the following list of who needs to register a business name:
- sole proprietorships (one owner) carrying on business under a name other than the individual’s full name;
- partnerships carrying on business under a firm name other than the full names of the partners;
- corporations carrying on business under a name other than their corporate name;
- an existing general partnership or limited partnership registering a business name different from the registered firm name;
- limited liability partnerships;
- extra-provincial limited liability partnerships; and
- extra-provincial limited liability companies.
For more information, see:
What are business registrations?
Business registration allows individuals or corporations to operate their business using a name other than the person’s legal name. In order to register a name other than the legal name of the individual(s) or corporations running the business, you must pay for and perform a search to ensure that the name is not too similar to names already registered and submit the required forms.
If you register a name, you receive a Master Business Licence and/or a Business Identification Number (depending on your business structure). This information is proof that your or your corporation has registered the business’s name with the provincial government. This proof is used when you interact with the provincial government or financial institutions such as your business’s bank.
In Ontario, these registrations are valid for five years, after which they need to be renewed.
Where can I find additional information and resources about business structures?
In addition to consulting qualified professional advisors, you may wish to refer to resources created by governments that are available on the web. The federal government, through Canada Business Ontario, has created a business start-up guide with helpful information and important links. It can be accessed at:
What do I need to do to close my business?
You should cancel any registrations and licences that you or your business obtained by contacting the authority that issued the licence or registration. You should also notify tax authorities that you no longer need your CRA business number and program accounts.
There is an on-line government service called the Change of Business Information Service that allows you to close or cancel your business name registration and several common types of tax accounts. The service is available at the following website: https://www.buscoi.serviceontario.ca/cobi/ClientConsent.jsp.
If you have structured your business as a corporation, you can voluntarily close the corporation to avoid fees and reporting requirements for the corporation that you no longer need. Closing a corporation is called “dissolving” the corporation. Voluntarily dissolving a corporation gives you the maximum level of control over how and when the corporation ceases to exist. There are several legal requirements that need to be fulfilled to properly dissolve a corporation, including following procedures established by your corporation’s constating documents and corporate law. If you have a provincially incorporated corporation, you will also need to pay a $25 filing fee. It is important to remember that, even once you have dissolved the corporation, there are still some ongoing legal requirements that you must fulfill including requirements regarding the retention of certain documents such as corporate records.
Each corporation’s unique situation will determine the steps necessary to dissolve the corporation. Generally, the process will be more complicated if your corporation is currently carrying on business, owns assets, or has outstanding liabilities because each of these situations may add additional steps to the dissolution process. Both the provincial and federal governments have created websites with links to relevant information and the necessary forms to dissolve corporations. You may consult the website pertaining to the jurisdiction where your corporation has been incorporated. Both levels of government suggest that you may wish to consult a lawyer for legal advice regarding the process and your obligations when dissolving a corporation. Legal advice from a qualified professional can help you navigate the steps of the dissolution process which include, but may not be limited to, filling out the proper forms, ensuring that corporate procedures are followed and ensuring that you understand your various and potentially ongoing legal obligations.
Information about dissolving provincially incorporated corporations and links to the required forms can be found at the following website: https://www.ontario.ca/page/start-dissolve-and-change-corporation#section-5.
Information about dissolving federally incorporated corporations and links to the required forms can be found at the following website: https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs07074.html.
If you have structured your business as a sole proprietorship or partnership, your personal affairs and business affairs are combined. This means that the business is not a separate legal entity that needs to be dissolved. Beyond cancelling licences and registrations, partners in a partnership may consider consulting legal advice regarding the legal status of their partnership agreement and on what terms the partners may end their obligations to each other.
How do I form a corporation?
The basic steps to form a corporation are described below. This is not an exhaustive list. Several service providers can assist you with completing these steps. Alternatively, a lawyer can help you determine if forming a corporation is appropriate for your needs and, if you decide to form a corporation, assist with the with the incorporation process.
To form a corporation, you must first choose whether you want to incorporate your business federally or provincially. Federal incorporation requires additional steps, but will allow you to protect your business’s name nation-wide and will make doing business in other provinces easier. If you only plan to operate your business in Ontario, provincial incorporation may be sufficient.
Once you have decided which jurisdiction (provincial or federal) is most appropriate for your business, you must decide what you want to name your corporation. You may create a ‘numbered corporation,’ where a number is automatically assigned to your corporation in place of a name that you choose; however, you would still need to register a business name before you can carry on business under a name other than the number that was assigned to you. If you wish to choose the name of your corporation, you must choose a name that is distinct in your jurisdiction, does not include any terms that the government prohibits and includes a suffix such as “limited”, “incorporated”, “ltd.”, or “inc.”. To prove that your name is unique, you must pay for and submit a Nuans name search report. For more information and to access the Nuans system, see: https://www.ic.gc.ca/eic/site/075.nsf/eng/home.
After selecting a name, you must prepare a document called articles of incorporation in your chosen jurisdiction’s prescribed form. Articles of incorporation include:
- your proposed corporate name (unless you elect to receive a number as the name)
- your corporation’s province or territory in Canada
- your share structure and any restrictions on share transfers (this includes detailing the classes of shares and, if desired, the maximum number of shares of each class that can be issued)
- the initial number of directors your corporation will have
- any restrictions you might want to set for your business or business activities
- other provisions if desired.
You will also need to prepare a form that specifies the name of the initial director(s), the address of each director, and the address that will be used as the corporation’s registered office. The articles of incorporation and other forms must be filed with the provincial or federal government (depending on if you are incorporating provincially or federally) and you must pay a filing fee. To incorporate provincially in Ontario, the fee is $300 plus the fee charged by your service provider to file electronically or $360 to file by mail.
If you have chosen federal incorporation, you must also register your corporation with the provinces in which you want to do business. You can do this once you have created your corporation. Alternatively, if your federal corporation will operate in Ontario, Nova Scotia, Saskatchewan, or Newfoundland and Labrador, this can be done as part of the filing process. The amount of time that you have between creating a federal corporation and registering it with provinces depends on the province, and is often limited.
- For more information about forming a provincially incorporated corporation, see: https://www.ontario.ca/page/start-dissolve-and-change-corporation.
- For more information about forming a federally incorporated corporation, see: https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06642.html.
How do I form a Partnership?
General partnerships are similar to sole proprietorships, in that the partners conduct the business without distinction between their business and personal affairs. Legally, partnerships are created when people conduct business together in certain ways. However, to avoid uncertainty, a partnership agreement can formalize the business relationship between you and your partner(s). A copy of your written partnership agreement is also a requirement for partnerships to apply for certain business licences. Qualified legal advisers can help you create a partnership agreement. Once you have entered into a partnership agreement, you may still need to acquire various licences and registrations before you can operate your business (see below).
How do I form a sole Proprietorship?
Sole proprietorships involve doing business without a legal distinction between your personal and business affairs. Therefore, you do not need to take any steps to ‘form’ a sole proprietorship. However, before you start operating your business, you may need to acquire various licences and registrations (see the information on business registrations and licences, below).
What structure is best for my business?
The appropriate structure will depend on several factors, including the source(s) of financing for your business, your personal income tax situation, the number and involvement of business partners and the risks associated with the business. Seeking the counsel of competent tax, legal and insurance professionals can be an effective and cost-efficient way to ensure that you have considered all relevant factors before deciding how to structure your business.
Regardless of structure, you should consider using insurance, accounting and tax planning services to ensure that your risk mitigation and financial planning strategies are implemented effectively. Legal counsel can both advise on the appropriate structure for your business and assist you in preparing the appropriate documentation and agreements if you wish to form a partnership or corporation.
What are the advantages and disadvantages of different structures?
1) Sole proprietorship:
Sole proprietorships are businesses that you operate ‘in your name.’ There is no distinction between your personal financial affairs and the affairs of the business. Contracts related to the business are made by you directly, instead of by the business. The business’s income and assets are owned by directly by you, and you are personally responsible for any liabilities or debts the business incurs. Profits and losses are taxed as your personal income, at your personal tax rate.
- Simple and inexpensive to start and register.
- Few ongoing regulatory requirements.
- If the business loses money, losses may be deducted from your personal income and may lower the personal income tax that you must pay.
- You are personally responsible for all liabilities that you incur. This means that claims may be made against your personal assets if you do not pay your business’s debts.
- If the business is profitable, all profits will be taxed at your personal income tax rate which may result in an increased tax bill relative to what a corporation would pay.
- The business ceases to exist when you pass away and cannot be transferred or sold directly to someone else. You may, however, be able to sell some of your business-related assets to another person.
- Partnerships are similar to sole proprietorships, except that ownership of the business and personal responsibility for the business’s debts are shared between two or more persons (individuals or corporations).
- Although the law may consider a partnership to have been created automatically when two or more people carry on business together, persons wishing to create a partnership generally enter into a partnership agreement to specify their obligations to each other, how business decisions should be made and how the partners will share the business’s profits, losses and liabilities. For example, while the default presumption is that partners will each be entitled to equal ownership of the business, partners can agree to give one partner a larger or smaller share of ownership.
There are three common types of partnerships on Ontario:
- In general partnerships, each partner shares responsibility for the management of the partnership and liability for its debts. Normally in a general partnership, each partner is an agent of the partnership. This means that each partner can sign contracts and incur debt on behalf of the entire partnership. In a general partnership, each partner is individually liable for the business’s debts. This means that if one partner incurs debt on behalf of the business and the business cannot pay this debt, each of the other partners could be held personally liable for the entire amount of the debt.
- In limited partnerships, there are two categories of partners. General partners invest in the partnership, own a share of the partnership and participate in the management of the business. They are personally liable for the business’s liabilities. Limited partners invest in the partnership and own a share of the business, but must not participate in managing the business. If they follow the legal requirements to remain as limited partners, they will not incur personal liability for the business’s liabilities. This means that limited partner’s potential losses are limited to the assets that they have already invested into the business.
- A third type of partnership, a limited liability partnership, is generally only available to professionals such as doctors or lawyers.
- Less complex and expensive to form than a corporation
- Costs and management responsibilities can be shared between partners
- Your share of the partnership’s profits or losses will be taxed at your personal income tax rate. If the profits are low or there is a loss, this can result in a lower tax bill than if you started a corporation.
- Like in a sole proprietorship, you can be held personally responsible for all liabilities that the partnership incurs. Even if your partnership agreement says that you are only responsible for a certain share of the business’s expenses or liabilities, you may be held personally responsible for 100% of the business’s liabilities. This may occur even if another partner incurs those debts without your permission or agreement.
- You must find one or more suitable partners, whose actions may affect the success of the business. You and your partner(s) may disagree about how the business should be managed.
- Your share of the partnership’s profits or losses will be taxed at your personal income tax rate. If the profits are high, this may result in a larger tax bill than if you started a corporation.
- Unlike sole proprietorships and partnerships, corporations are separate legal entitles that exist separately from the corporation’s owners. Profits, losses and liabilities can be incurred by the corporation instead of its owners and contracts can be made by the corporation directly. The owner(s) of the corporation, which may be one or more individuals or other corporations, are not personally liable for paying the debts incurred by the corporation. This means that the owners’ losses are limited to the value of the assets that they have already invested into the business.
- Owners, also called shareholders, have limited liability. Their losses are limited to the money they have already invested into the business. Although there are some exceptions for certain types of liabilities, the owners’ personal assets are usually not at risk even if the corporation cannot pay its debts.
- The corporation is a separate legal entity that can enter into contracts with other parties, directly own assets, and incur debts.
- Ownership of the corporation is normally transferable from one person to another.
- It can be easier for corporations to raise capital from lenders or investors than it would be for businesses organized using other structures.
- Corporations are taxed on their profits or losses directly, at corporate tax rates. This may afford certain tax advantages depending on your personal tax situation.
- Setting up a corporation is more complex and more expensive than setting up a sole proprietorship or partnership.
- Extensive record keeping and the annual filing of documents with the government is required.
- If a corporation has multiple owners or directors (people to whom the owners delegate management responsibility) there may be conflict between these people including disagreements about how the business should be run.
- If the corporation is new, or does not own substantial assets, some lenders may require personal guarantees from the corporation’s owners (secured by personal assets) that the corporation will repay its debts.
- Directors may be subject to citizenship or residency requirements.
- This business structure involves an association of members pooling their resources to provide goods or services that the members (and sometimes the public) need. Similar to corporations, co-operatives provide limited liability and allow many members to share in the ownership, management and profits. For-profit co-operatives are taxed similarly to corporations.
- Members all participate in the ownership and management of the corporation through a democratic process.
- Members share in profits like shareholders of a corporation.
- Decision making may be complex and time consuming.
- Disagreement or non-participation by members can make it difficult to manage the business.
- Extensive recordkeeping is required.
What are the major categories of business structure?
Commonly used business structures include sole proprietorship, partnership, corporation and co-operative.
What is a business structure?
Business structure refers to the way a business is organized. The choice of structure will affect, for example, how a business is owned, how ownership of the business can be transferred to other people, how the business is taxed and who is responsible for its liabilities.