Whether you are a long-term business owner or planning to launch a startup, understanding business licenses and how they work in Ontario is critical for staying on top of your business’s obligations. The requirements for obtaining business licenses in Ontario can vary depending on the type of license and your location, so it is important to determine what types of business licenses you will need from the outset and identify the steps you need to take to obtain them.
This blog will provide a high-level overview of various types of business licenses in Ontario, as well as how to obtain them. It will also explore the potential consequences your business may face if you operate without a required license.
Why Do I Need a Business License?
Business licenses are typically required in Ontario to ensure that businesses are operating in compliance with regulations, to protect consumers, to generate revenue for the government (whether municipal, provincial, or federal), and to ensure businesses are on a level playing field.
Depending on the type of business, additional business licenses may be required to further regulate the business’s activities, as explained in further detail below.
Types of Business Licenses in Ontario
There are several types of business licenses that businesses may need to obtain in Ontario, and, depending on the sector of work your business operates under, you may need more than one.
Some of the most common types of business licenses include:
- Municipal Business Licenses: These licenses are typically required for businesses operating within a specific municipality, though exceptions can apply. The requirements for municipal business licenses can vary between municipalities, so be sure to contact your local municipality for further information.
- Provincial Business Licenses: Some businesses require a provincial business license. For example, if your business sells liquor, you will need to obtain a liquor sale license from the Alcohol and Gaming Commission of Ontario.
- Federal Business Licenses: Some businesses require a federal business license and you may need a federal permit to import or export goods.
Obtaining a Municipal Business License in Ontario
Most businesses will require a municipal business license, however, there are specific steps required in order to obtain and renew a municipal business license in Ontario. Entrepreneurs should note that BizPal is a helpful resource to consult with if you are having trouble determining what types of business permits or licenses your business needs, or does not need. This free service, provided by the federal, provincial/territorial, and municipal governments, can generally help you determine the appropriate permits and licenses for your business.
Requirements for Obtaining a Business License
The requirements for obtaining a municipal business license vary by municipality, so it is important to first check with your local municipality to ensure you obtain the appropriate municipal license.
Typically, you will need to provide your contact information, along with basic business information pertaining to your business. Depending on the application, you may need to make other declarations, such as confirming whether you or any partner, officer, or director of your business has been charged with a criminal offence or that you have appropriate insurance.
How Much Does a Business License Cost?
The cost of obtaining a business license can vary based on your municipality, depending on the number of business licenses in the municipality and the number and types of licenses used. For example, of several Ontario cities assessed in the 2021 MBN Canada Performance Report, business licensing costs ranged from $50.00 to $760.00 per year. For current information, it is important to consult your local municipality.
When Do I Have to Renew My Business License?
Business licenses in Ontario are typically valid for one year, so you will need to remember to renew your license annually. While the requirements for renewing a business license can vary, you will likely need to pay a renewal fee and may also be required to submit updated information or declarations.
Obtaining a Provincial or Federal Business License
Beyond municipal business licenses, you may also need to obtain a provincial or federal business license (or obtain one instead of a municipal license). As the requirements for obtaining these types of licenses can vary wildly based on your industry, consulting with BizPal and an experienced business lawyer can ensure that you purchase the appropriate license(s).
What Happens if I Operate Without a Business License?
Operating a business without the appropriate business license(s) can have a significant impact on your business and may result in personal consequences. Additionally, business licensees must ensure that they are complying with any regulations set out in relation to their business licenses.
At a minimum, businesses who fail to obtain or renew a business license, or otherwise fail to comply with the terms of their license, will likely face a fine. The amount of the fine will depend on a variety of factors, including your location, type of business, and the circumstances of your case. Beyond a fine, you may face regulatory penalties – such as having to shut down your business for a period – or, in extreme cases, jail time.
While not a legal consequence per se, keep in mind that being caught without the proper business licenses, or failing to comply with appropriate regulations, may also lead to a loss of reputation for your business. In a world where image is paramount, it is best to ensure your business remains compliant.
Final Thoughts on Business Licenses in Ontario
If you are operating a business in Ontario, you will need to at least consider whether you require a business license (or licenses). That is why it is critical to conduct thorough research when starting a business. Having all the information you need – including the types of business licenses or permits you might need – before getting your business off the ground will help you stay compliant from the start and avoid the consequences of operating without a business license.
However, it is not always easy to get a business going. Deciding on the structure of your business, filing the appropriate paperwork for your business, and managing the appropriate permits can be an extremely stressful and complex process which can be made less overwhelming with the assistance of a trusted corporate lawyer.
Toronto Corporate Business Lawyers at Baker & Company Advising Clients on Business Compliance
The seasoned corporate and commercial lawyers at Baker & Company regularly guide clients through various business-related matters, including proactive corporate compliance and commercial lease review, in addition to strategic succession planning and trust establishment. We help our clients develop comprehensive and practical business strategies to address their ongoing needs and advise them on issues that arise on a day-to-day basis. Contact us at 416-777-0100 or reach out to us online to schedule a consultation to learn how we can help you meet your business needs.
