Ontario LLC

Do you want to register your existing LLC in Ontario or do you want to register an Ontario limited corporation?

Ontario LLC registration is available only for an unincorporated association, other than a partnership if the LLC was formed under the laws of another jurisdiction that grants to each of its members limited liability with respect to the liabilities of the association.

  • You may register your US or other foreign LLC in Ontario for $80. Use the Ontario Business Names Act form 6. It needs to be renewed every 5 years.
  • You cannot create an LLC in Ontario.
  • You may register an Ontario Limited company as an Ontario corporation. You may see these companies with names that have the legal ending of Limited or Ltd.; there is no legal difference between a Limited or a Ltd. legal ending. You should always use the exact legal ending that you put in your articles of incorporation.

LLC registration in Canada

Question: Can I register my New Hampshire LLC in Ontario?

Answer: Yes, fill in and file the Ontario foreign LLC form along with the Ontario government fee to register a New Hampshire LLC in Ontario.

Question: Can I create a new LLC in Ontario?

Answer: No, you may not create a new LLC in Ontario.

Question: Can I set up an LLC in Canada?

Answer: No, you cannot setup an LLC in Canada as this type of entity may not be created in Canada. LLC is an American business structure that is available in most US states and in Europe.

Generally, in Canada there are four forms of business ownership:

  • sole proprietorship,
  • partnership,
  • corporation, and
  • cooperative.

Partnerships

  • You may not register partnerships as an LLC in Ontario
  • You may register an LLP in Ontario, under the Limited Partnership Act.
  • You may also register foreign limited partnerships in Ontario using the Ontario Business Names Act form 6.

Ontario LLC

Register, renew, change or cancel a business name for a Limited Liability Partnership, Extra-Provincial Limited Liability Partnership or Extra-Provincial Limited Liability Companies: Ontario LLC Registration form for Limited Liability (Form 6, Business Names Act)

Cost:

New Registration: $80

Renewal: $80

Amendment/Cancellation: No charge

Courier Cost: $250 for in-person 1-Day service, Monday through Friday.

It is the responsibility of the applicant(s) to ensure that information submitted under the Business Names Act is accurate and complete. It is an offence under section 10 of the Act if a person, without reasonable cause, submits a statement in an application for a registration under this Act that is false or misleading with respect to any material fact. On conviction, a person guilty of an offence is liable to a fine of not more than $2,000 or, if the person is a corporation, to a fine of not more than $25,000. If a corporation is guilty of an offence, every director or officer of the corporation and every person acting as its representative in Ontario who authorized, permitted or acquiesced in such an offence is also guilty of an offence and on conviction is liable to a fine of not more than $2,000.

Payment Options: Visa , MasterCard , American Express , Debit , Cash , Cheque

Ministry of Government Services
Central Production and Verification Services Branch
393 University Ave., Suite 200
Toronto  ON  M5G 2M2

Physical Address:
Business and Personal Property Security Registration Office at 375 University Avenue, 2nd Floor, Toronto, Ontario

Payment Options:
Certified cheque, money order or personal cheque payable to the Minister of Finance.

Personal cheques must include pre-printed name, address, bank transit number and account number on the front of the cheque.

A $35.00 fee will be charged for returned non-negotiable cheques.

Form:  Registration – Ontario Limited Liability (Form 6, Business Names Act)

LLC Definition

Limited Liability Company “LLC” Is a business structure whereby the members of the company cannot be held personally liable for the company’s debts or liabilities. LLC entities differ slightly from state to state.

An LLC is a hybrid business entity having certain characteristics of both a corporation and a partnership or sole proprietorship (depending on how many owners there are). An LLC, although a business entity, is a type of unincorporated association and is not a corporation.

A US-based LLC may be taxed as a limited partnership, a C Corp, or an S Corp. Selecting an S-Corp status is a bad idea form most growing ventures. Read this exchange between a pair of Washington-based lawyers:

The filing of a Form 2553 S election for an LLC operates as two separate elections.  One to be classified as a corporation and another election to for subchapter S treatment.  If the S election is terminated the entity is still treated as a corporation, which will default to C corporation status.  It will not be easy to convert from C Corp to partnership classification.

Of course, the real question then becomes—what happens if you “elect out” of S by creating a second class of stock?  I fear you are not a C Corp because that was elected in order to get to the S Corp.   I have never had to look at whether an LLC that has elected corp. taxation can de-elect (if that is a word) and get to be taxed as a Partnership.  Perhaps someone else in the list serve has the answer?  Because I bet it would make virtually no difference (other than getting you a lot of flexibility) if you could get to partnership tax status.

The second class of stock regulations for S corporations look to the distribution and liquidation rights to determine if a second class has been created.  Providing one shareholder with a liquidation preference versus the others may result in a termination of the S election due to the creation of a second class of stock.  The regulations mention certain arrangements that will not be treated as a second class of stock, such as bona fide shareholder agreements / buy-sell agreements, etc.

We had this situation occur with a client that had gotten some poor advice from their former CPA to elect S status as an LLC, and then later they added some partners with vesting and different profit splits (which were fine for an LLC but not for an S Corp). The CPA advised revoking the S election to return back to an LLC but in fact, by revoking the S election they became a C Corp. This was uncovered sometime later in connection with a possible sale of the business (we were hired to represent them as a seller and discovered the problem in pre-transaction diligence). We tried to get the IRS to allow for a late or retroactive conversion to an LLC but the IRS declined to do that given the circumstances so the client had to remain as a C Corp for the time being.

It was a bad situation needless to say.

Always get tax advice from a tax law specialist who understands the ins-and-outs for growing startups.

Nevada defines an LLC as a “Limited-liability company” or “company” means a limited-liability company organized and existing under this chapter, including a restricted limited-liability company. NRS 86.061

An LLC registered in a US state, such as Nevada for example, is required to register in Ontario as an “extra-provincial limited liability company” if it also does business in Ontario.

Other foreign jurisdictions may also have an equivalent form of entity, such as Poland, but they are called “Spółka z ograniczoną odpowiedzialnością” (literally: Limited liability company) which is the legal title of a private limited company in Poland.
http://en.wikipedia.org/wiki/Limited_liability_company_(Poland)

Such companies are commonly abbreviated as “sp. z.o.o.” in Poland, but it appears that 2.1(3) of the Business Names Act prohibits the use of abbreviations of the company name in Ontario, because it is a name other than an LLC’s registered company name.

Registering an LLC in Ontario, if it was formed in another jurisdiction, in is discussed in section 2.1 of Ontario’s Business Names Act :

Extra-provincial limited liability company

2.1 (1) In this section,

“extra-provincial limited liability company” means an unincorporated association, other than a partnership, formed under the laws of another jurisdiction that grants to each of its members limited liability with respect to the liabilities of the association. 1998, c. 18, Sched. E, s. 33.

Registration

(2) No extra-provincial limited liability company shall carry on business in Ontario unless it has registered its company name. 1998, c. 18, Sched. E, s. 33.

Use of “Limited”

(2.1) Despite any other Act, the word “Limited” or any abbreviation of that word or any version of it in another language may be used in the registered company name of an extra-provincial limited liability company. 2010, c. 16, Sched. 8, s. 2.

Use of registered name only

(3) No extra-provincial limited liability company shall carry on business in Ontario under a name other than its registered company name.  1998, c. 18, Sched. E, s. 33.

Exception

(3.1) Despite subsections (2) and (3), an extra-provincial limited liability company may carry on business or identify itself to the public under a name other than its company name, if the name is set out in a partnership registration under subsection 4 (1) or a declaration under the Limited Partnerships Act.  2010, c. 16, Sched. 8, s. 2.

Laws of other jurisdiction

(4) The laws of the jurisdiction under which an extra-provincial limited liability company is formed shall govern its organization and internal affairs and the liability of its managers and members.  1998, c. 18, Sched. E, s. 33.

Service

(5) A person may serve a notice or document on an extra-provincial limited liability company at its Ontario place of business, if any, or its address required to be maintained under the laws of the jurisdiction of formation or its principal office address.  1998, c. 18, Sched. E, s. 33.

http://www.ontario.ca/laws/statute/90b17

 

Limited Liability Companies

Bulletin 4009
Published: March 2004
Content last reviewed: September 2012
ISBN: 0-7794-3339-4 (PDF)

Publication Archived

Notice to the reader: Effective January 1, 2009, the Canada Revenue Agency (CRA) administers Ontario’s corporate income tax, capital tax, corporate minimum tax, and the special additional tax on life insurers.

As a result, the Corporations Tax Act provisions described on this page and in other publications are only applicable to taxation years ending December 31, 2008 and prior.

For taxation years beginning January 1, 2009, the Taxation Act rules apply.

This publication was archived and kept for historical purposes. Use caution when you refer to it, since it reflects the law in force at the time it was released and may no longer apply.

Application

This bulletin replaces Information Bulletin Number 2753 originally published April 1997.

The bulletin sets out the policy of the Corporations Tax Branch (Branch) regarding the status of a U.S. limited liability company (LLC) for the purposes of the Corporations Tax Act (Ontario) (CTA). It is important to determine the status of an LLC because the application of many of the provisions of the CTA is dependent on the classification of an entity (i.e., corporation, partnership).

Introduction

  1. An LLC is an unincorporated organization, created under the laws of a particular state of the United States, that can generally offer its members the features and benefits of both a corporation (e.g., separate legal personality, limited liability to its members, etc.) and a partnership (e.g., flow-through taxation forU.S. tax purposes where the LLC is treated as a partnership under the Internal Revenue Code).

Corporation Versus Partnership

  1. For Canadian taxation purposes, the distinction between a corporation and a partnership is an important one. A corporation is a separate, taxable legal entity, whereas in the case of a partnership, it is generally the individual partners who are subject to tax, not the partnership itself.

“Corporation” for Federal Tax Purposes

  1. Federal Interpretation Bulletin IT-343R, issued by the Canada Revenue Agency (CRA), describes a corporation as an entity created by law, having a legal personality and existence separate and distinct from the personality and existence of those who caused its creation or those who own it. Where an entity has such a separate identity and existence, the CRA will consider it to be a corporation for taxation purposes under the Income Tax Act (Canada) (ITA).

State LLCs Considered as Corporations

  1. Based on the description of a corporation in paragraph 3, the CRA has reviewed the following statutes, and has determined that LLCs formed thereunder are to be treated as corporations for purposes of the ITA:Delaware (*)
    Chapter 18, subtitle II of Tier 6 of the laws of DelawareFlorida
    Florida Limited Liability Company ActIndiana
    Indiana Business Flexibility ActKentucky
    Chapter 275 Limited Liability Companies (known and cited
    as the “Kentucky Limited Liability Company Act”).Michigan
    Michigan Limited Liability Company ActNew Hampshire
    New Hampshire Revised Statutes Annotated, Chapter 304CNew York
    Chapter 34 of the Consolidated Laws of New York (1994)
    (known and cited as the “New York Limited Liability Company Law”)Ohio
    Section 1705 of the Ohio Revised CodeOregon
    Oregon Revised Statutes, Chapter 63

    Tennessee
    Tennessee Limited Liability Company Act

    Texas
    Texas Limited Liability Company Act

    Wyoming
    Wyoming Limited Liability Company Act

    (*) Except partnerships formed under the Delaware Revised Uniform Partnership Act. The CRA considers such entities to be partnerships for Canadian tax purposes.

Ontario Treatment of LLCs

  1. The CTA parallels the ITA in its definition of a corporation. It has also been the practice of the Branch to follow federal interpretation bulletins in cases where the CTA parallels the ITA.
  2. It is therefore the position of the Branch to treat LLCs formed under the statutes of those states mentioned in paragraph 4, as corporations for the purposes of the CTA. Several other jurisdictions now have legislation or proposed legislation designed to form LLCs based on one of the models in the above-noted states. Based on the current legislation, the Branch will continue to follow any further determinations made by the CRA relating to the status of an LLC for the purposes of the ITA.http://www.fin.gov.on.ca/en/bulletins/ct/4009.html

Questions? Need help? Call 416-239-1361 Dismiss