When Does a Business Need a Licence, Permit, Or Registration?

Starting a business can be exciting and overwhelming. While funding, incorporation, and marketing a business are vital, business owners need to register for business licences or permits. These are legal documents that let your business operate legally in a certain location or industry.

As legal documents, every entrepreneur should understand which licences and permits they need to register for their business to ensure compliance with government regulations. So, when does a business need a licence, permit, or registration? This guide will explore licences that businesses need, when to apply for them and where you can get them in Ontario.

Business licence and a permit; What’s the difference?

While both business licences and permits are legal documents that allow businesses to operate legally, the two have a slight difference. A business permit in Ontario is a document that allows a business to operate in compliance with local and federal regulations. Local authorities issue business permits, which can differ based on the type of licence and the location.

The difference between business licences and permits in Ontario is that permits show compliance with laws, while licences allow businesses to operate in a given location.

The requirements for obtaining a business permit can vary depending on the type of licence and the location. For example, a municipal business licence is typically required for businesses operating within a specific municipality.

However, not all businesses can apply for a business permit in Ontario. Some activities are exempt from this requirement.

Situations when a business needs a licence, permit, or registration 

Starting a business

If your business is operating with a name other than your legal name, you will need to register with Service Ontario. Other than the business name, if you decide to operate your company under a limited or corporate structure, you must register with the federal or provincial government.

Businesses will also need to register for taxes such as Value Added Tax (VAT) or income tax.

Operating from premises

If your business is operating from premises, you will need to obtain a business licence in Ontario. Specific municipalities or buildings may require business owners to obtain local licenses or permits for health, safety, or other operational requirements. 

Selling products or services

Some products and services require registration of licences and permits. Some products, such as food and beverages, will need a food handling business licence. Additionally, businesses involved in selling alcohol, pharmaceuticals, or tobacco will also need a business licence.

Hiring employees

Employers have to register for payroll taxes and workers’ compensation. Additionally, employers must also apply for workplace safety permits.   

Types of licences, permits, and registration in Ontario

Depending on the sector your business works under, there are three types of common business licenses such as;

Municipal business license: This is issued to businesses operating in a municipality. This licence is issued to ensure businesses comply with zoning requirements.

Provincial business licence: These licenses are issued to businesses that conduct their activities at a provincial level or are required to pay provincial sales tax.

Federal business licence: If your business conducts import and export activities, you may need a federal permit. Additionally, some companies require a federal business licence.

Businesses operating at the federal level will have to register for an Ontario Business Number (BIN). The business number is issued by the Canada Revenue Agency (CRA) once your business is incorporated.

What licences, permits, or registrations does your business need to apply

In Ontario, the government has an online tool, BizPal, that allows entrepreneurs to know which licences and permits they should apply for their business. The free service is provided by the federal, provincial, and municipal governments to help businesses research authorisation based on location, business activities, and industry.

Master business License: Required for sole proprietorships operating under a business name other than their legal name

Vendor Permit: Required for businesses that sell taxable goods or services in the province

Auctioneer business licence: Required by businesses that sell items through auction.

Building permit: Required to begin demolition, construction, or renovation on a property.

Professional license: Required for certain home-based businesses

Health and safety permits: Required for some businesses

Sign permit: Required for some businesses

Sales tax license: Required for some businesses

Drone licence: Required for businesses that use drones

Liquor sales licence: Required for businesses that sell liquor

Music licensing: Required for businesses that use music

Child care licence: For businesses that provide child care services

How can I obtain a business licence in Ontario?

The requirements vary widely depending on your industry and location. Using the BizPal tool will help you apply for the appropriate business licence. Here is a checklist of what to do to get a business licence for your business activities and location.

• • • Find out to which authorisation your business should apply for the licence (municipal, provincial, or federal)
    • Contact the issuing authorities to get more information on obtaining the business licence.
    • Obtain the necessary forms
    •  Gather the required documents and certifications
    •  Fill out the applications
    •  Submit according to the indicated procedure(s)
    •  Pay applicable fees
    •  Submit your application

What happens if I operate without a business licence in Ontario?

A business licence or permit is a legal requirement, and operation without it may attract serious consequences such as:

Penalties: The amount to be fined depends on the business structure, location, and many other circumstances.

Business closure: Your business may be temporarily forced to shut down.

Jail time: You may face a jail term in extreme cases.

Damage your business reputation: Your business may lose its reputation if consumers find out you aren’t running it professionally.

In conclusion, getting a business licence, permit, and registration is important for your business to operate legally in Ontario. Whether your business operates at the municipal, provincial, or federal level, your business will require a business licence. The type of licence you require will depend on the business activities and location. Make sure to use the government’s free tool, BizPal, to know the appropriate business licence to apply for.

Incorporate your business in Ontario with Canada, today with Icon Offices. It is not always easy to navigate the legal requirements of registering a business on your own, and that is why Icon Offices offers affordable registration services for your corporation, either federally or provincially in Ontario.

Contact us today to get more information on company registration at [email protected].