You want to make a difference in your community, but you’re not sure whether starting a charity is the right move. Maybe your cause doesn’t fit neatly into traditional charitable categories, or perhaps you want more flexibility in your activities. Starting a nonprofit in Ontario might be exactly what you need.
Here’s what many people don’t realize: nonprofits and charities aren’t the same thing. While all charities are nonprofits, not all nonprofits are charities. This distinction matters more than you might think, especially when it comes to what you can do, how you raise money, and what paperwork you’ll face.
Starting a nonprofit in Ontario has become more straightforward since the Ontario Not-for-Profit Corporations Act (ONCA) came into effect, but there are still plenty of ways to trip up if you don’t know what you’re doing. The good news? With proper planning and the right guidance, you can have your nonprofit up and running in a matter of weeks.
Let’s walk through everything you need to know to start a nonprofit in Ontario, from choosing the right structure to maintaining compliance once you’re operational.
Nonprofit vs Charity: Which Structure is Right for You?
This is the first big decision you’ll face, and getting it wrong can limit your organization’s effectiveness for years to come.
What Makes a Nonprofit Different from a Charity
Nonprofits are organizations that don’t distribute profits to owners or shareholders. Any money left over after expenses goes back into the organization’s mission. That’s it – pretty simple.
Charities are a special type of nonprofit that meets specific legal requirements under Canadian law. They have exclusively charitable purposes (relief of poverty, advancement of education, advancement of religion, or other purposes beneficial to the community) and get special tax benefits in exchange for following strict rules.
When to Choose Nonprofit Structure
A regular nonprofit might be right for you if:
- Your purposes don’t fit the narrow definition of charitable purposes
- You want to engage in political advocacy as a primary activity
- You need flexibility to pursue different types of activities
- You’re focused on membership services rather than public benefit
- You want to start operating immediately without waiting for charity approval
Examples of organizations that work well as nonprofits include advocacy groups, professional associations, sports clubs, cultural organizations, and social clubs.
When Charity Status Makes More Sense
Charity status is usually better if:
- Your work clearly fits charitable purposes
- You plan to rely heavily on donations from individuals
- You want to apply for grants restricted to registered charities
- Tax receipts will be important for fundraising
- You’re comfortable with stricter oversight and regulations
If you’re torn between the two, remember that you can start as a nonprofit and apply for charitable status later. Many successful organizations begin as nonprofits and convert to charities once they’re established and ready to handle the additional compliance requirements.
The Hybrid Approach
Some organizations use a two-entity structure with both a nonprofit and a charity. The nonprofit handles advocacy and political activities while the charity focuses on direct service. This approach requires careful legal planning but can provide maximum flexibility.
Ontario Nonprofit Incorporation Process (ONCA)
Ontario’s nonprofit incorporation process is governed by the Ontario Not-for-Profit Corporations Act (ONCA), which modernized the rules for nonprofit organizations in the province.
Why ONCA Matters for New Nonprofits
ONCA replaced outdated legislation with clearer rules and better governance requirements. For new nonprofits, this means:
- More straightforward incorporation process
- Clearer governance requirements
- Better protection for directors and members
- More flexibility in organizational structure
Basic Requirements for Incorporation
To incorporate a nonprofit in Ontario, you need:
- At least three directors (who don’t have to be Ontario residents)
- A unique name that complies with naming rules
- Articles of incorporation that set out your basic structure
- Bylaws that govern how your organization operates
The Online Application Process
Ontario uses an online system called Ontario Business Registry (OBR) for nonprofit incorporation. The process involves:
- Name search: Check if your preferred name is available ($8)
- Prepare articles of incorporation: Basic information about your organization
- Submit application: Online through OBR with supporting documents
- Pay fees: $155 for online filing
- Receive certificate: Usually within 5-10 business days
Choosing Your Nonprofit Name
Your name must:
- Be unique and not confusingly similar to existing organizations
- Include a legal element like “Inc.,” “Incorporated,” “Corporation,” or “Corp.”
- Not suggest government affiliation unless you actually have it
- Not include restricted words without proper authorization
Consider getting a numbered company if you’re having trouble with name availability. You can operate under a business name while using the numbered corporation for legal purposes.
Articles of Incorporation Essentials
Your articles must include:
- Organization name and any French version
- Purpose of the organization (can be broad for nonprofits)
- Classes of membership and voting rights
- Number of directors (minimum and maximum)
- Restrictions on business activities (if any)
- Location of registered office
Keep your purposes reasonably broad to allow for evolution as your organization grows. You can always add more specific details in your bylaws.
Required Documents for Ontario Nonprofit Registration
Getting your paperwork right from the start saves headaches later. Here’s what you need to prepare:
Articles of Incorporation
This is your organization’s basic charter. Think of it like a birth certificate that establishes your legal existence. The articles are public documents that anyone can access, so keep sensitive information out of them.
Key sections include:
- Statement of purposes (keep these broad)
- Membership structure (if you plan to have members)
- Board composition and director qualifications
- Registered office location
Corporate Bylaws
Bylaws are your organization’s internal operating manual. Unlike articles, bylaws aren’t usually public documents, so you can include more detailed operational information.
Essential bylaw provisions cover:
- Board meeting procedures and voting requirements
- Officer roles and responsibilities
- Member rights and meeting procedures (if applicable)
- Conflict of interest policies
- Financial management and signing authorities
Initial Resolutions and Minutes
After incorporation, you’ll need to hold organizational meetings to:
- Adopt bylaws
- Elect officers
- Appoint an accountant
- Set up banking arrangements
- Approve initial policies
Document these decisions in formal resolutions and meeting minutes. Proper records protect your organization and demonstrate good governance to funders and partners.
Conflict of Interest Policy
ONCA requires nonprofits to have conflict of interest procedures. Your policy should cover:
- Definition of conflicts of interest
- Disclosure requirements for directors and members
- Procedures for handling conflicts
- Record-keeping requirements
Other Important Policies
While not legally required, these policies help your organization operate effectively:
- Financial management and investment policies
- Human resources policies (if you plan to hire staff)
- Privacy and information management policies
- Risk management and insurance policies
Governance Requirements Under ONCA
ONCA sets out specific governance requirements that Ontario nonprofits must follow. Understanding these upfront helps you structure your organization properly.
Board of Directors Requirements
Every Ontario nonprofit needs a board of directors with:
- Minimum three directors (unless you have fewer than three members)
- At least 18 years old
- Not bankrupt or mentally incapacitated
- Majority must be Canadian residents (unless you have fewer than four directors)
Directors have legal responsibilities including duty of care, duty of loyalty, and duty to act in the organization’s best interests.
Member Rights and Protections
If your nonprofit has members, ONCA gives them specific rights:
- Right to receive financial statements
- Right to vote on fundamental changes
- Right to requisition meetings
- Right to nominate directors
You can have different classes of members with different rights, but all members must be treated fairly within their class.
Meeting Requirements
ONCA requires:
- Annual member meetings (if you have members)
- Proper notice for all meetings
- Quorum requirements for valid decisions
- Minutes recording all significant decisions
Board meetings should happen regularly, even if not legally required. Good governance means staying engaged with your organization’s activities.
Financial Reporting and Accountability
Ontario nonprofits must:
- Keep proper accounting records
- Prepare annual financial statements
- Have financial statements reviewed or audited (depending on size)
- Make financial information available to members
Amendment Procedures
Changes to articles of incorporation require:
- Board resolution authorizing the change
- Member approval (if you have members with voting rights)
- Filing with the government
- Payment of amendment fees
Banking and Tax Considerations for Ontario Nonprofits
Setting up your financial systems properly from the start prevents problems later.
Opening a Business Bank Account
You’ll need a business bank account as soon as you’re incorporated. Most banks require:
- Certificate of incorporation
- Articles of incorporation and bylaws
- List of signing authorities (usually directors and officers)
- Valid identification for all signing authorities
Shop around for banks that offer nonprofit accounts with reduced fees. Some credit unions provide better service and lower costs for nonprofit organizations.
Tax Status for Nonprofits
Ontario nonprofits that aren’t registered charities have specific tax obligations:
- Generally exempt from income tax on revenues related to their exempt purposes
- May pay tax on investment income or unrelated business income
- Must file T2 corporate tax returns if required
- Pay HST on taxable supplies (may be eligible for rebates)
HST Registration and Rebates
Nonprofits must register for HST if their taxable supplies exceed $50,000 annually. However, nonprofits can claim rebates on HST paid:
- 50% rebate for qualifying nonprofits
- Higher rebates available for specific types of nonprofits
- Must file separate rebate applications
Bookkeeping and Financial Management
Establish proper financial systems early:
- Use accounting software designed for nonprofits
- Track restricted and unrestricted funds separately
- Maintain documentation for all transactions
- Prepare regular financial reports for your board
Common Legal Mistakes New Ontario Nonprofits Make
Learning from others’ mistakes can save you time, money, and legal headaches.
Mistake #1: Confusion About Charitable Status
Many people think incorporating as a nonprofit automatically makes them a charity. It doesn’t. If you want to issue tax receipts or be exempt from income tax, you need separate charity registration with the CRA after incorporation.
Mistake #2: Inadequate Governance Documentation
Failing to properly document board decisions, maintain corporate records, or follow your own bylaws creates legal vulnerabilities. Keep good records from day one.
Mistake #3: Poor Financial Controls
New nonprofits often operate informally without proper financial controls. This can lead to problems with funders, auditors, and regulatory compliance. Establish signing authorities, approval limits, and oversight procedures early.
Mistake #4: Ignoring ONCA Compliance
ONCA has specific requirements for things like financial reporting, member rights, and governance procedures. Ignoring these requirements can result in penalties or forced dissolution.
Mistake #5: Mixing Personal and Organizational Finances
Using personal accounts for organizational business creates legal and tax problems. Open a business bank account immediately after incorporation and use it exclusively for organizational activities.
Mistake #6: Operating Beyond Your Stated Purposes
While nonprofit purposes can be broad, you still need to operate within them. Activities that fall outside your stated purposes can jeopardize your tax-exempt status.
Ongoing Compliance for Ontario Nonprofits
Once you’re incorporated, staying compliant involves regular filings and good governance practices.
Annual Filings with Ontario Government
Ontario nonprofits must file annual returns through the Ontario Business Registry:
- Due within 60 days of your fiscal year-end
- $20 filing fee
- Basic information about directors, registered office, and activities
Missing filing deadlines can result in penalties and eventual dissolution of your corporation.
Corporate Tax Filings
Depending on your activities and income, you may need to file:
- T2 corporate tax returns (if required)
- HST returns (if registered)
- Payroll remittances (if you have employees)
Maintaining Corporate Records
ONCA requires nonprofits to maintain:
- Articles of incorporation and bylaws
- Board and member resolutions
- Minutes of meetings
- Financial statements and accounting records
- Register of directors and members
Keep these records organized and accessible. You may need to produce them for audits, funding applications, or legal proceedings.
Insurance and Risk Management
Consider essential insurance coverage:
- General liability insurance for your activities
- Directors and officers insurance to protect board members
- Property insurance if you own equipment or lease space
Regular Governance Reviews
Periodically review and update:
- Bylaws to ensure they meet current needs
- Policies to reflect best practices
- Board composition to ensure appropriate skills and diversity
- Strategic plans to guide organizational development
Converting Your Ontario Nonprofit to Charity Status
Many nonprofits eventually decide they want charitable status for the tax benefits and grant opportunities it provides.
When Conversion Makes Sense
Consider applying for charitable status when:
- Your activities clearly fall within charitable purposes
- You’re ready to handle additional compliance requirements
- Tax receipts would significantly help your fundraising
- You want access to grants restricted to registered charities
The Conversion Process
Converting to charity status involves:
- Ensuring your purposes and activities qualify as charitable
- Amending your governing documents if necessary
- Applying for charitable status with the CRA (Form T2050)
- Waiting 6-12 months for approval
- Implementing charity compliance systems
This process is similar to registering a charity in Ontario from scratch, but with the advantage that your organization is already established and operating.
Legal Considerations for Conversion
Before applying for charitable status:
- Review your articles and bylaws to ensure they meet charity requirements
- Assess whether your current activities all qualify as charitable
- Consider whether you can handle the additional oversight and restrictions
- Plan for the transition period while your application is being processed
Professional Help for Conversion
Converting to charity status involves complex legal requirements. Most organizations benefit from working with experienced charity lawyers who understand both nonprofit law and charity requirements.
Starting a nonprofit in Ontario gives you flexibility to pursue your mission while building toward potential charity status later. The key is understanding your options, following proper procedures, and maintaining good governance from the beginning.
Whether you’re considering the costs involved in starting a charity or want to begin with a nonprofit structure, proper legal guidance helps you make informed decisions that support your long-term goals.
Northfield & Associates helps Ontario organizations navigate both nonprofit incorporation and charity registration processes. The right professional support ensures you choose the structure that best serves your mission while maintaining compliance with all legal requirements.
Ready to start your nonprofit in Ontario with confidence?
Work with experienced professionals who understand the legal landscape and can guide you through each step of building a successful organization that makes a real difference in your community.
Contact Northfield & Associates for expert guidance on compliance requirements. Our team understands Canadian charity law and can help ensure your organisation follows proper procedures.
Get professional support today by email at info@northfield.biz, by phone at (416) 317-6806, or visit us or Schedule your free consultation to discuss your specific circumstances and receive expert assistance throughout the reinstatement process with our experienced legal team.
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We’re often asked by prospective clients what our Bookkeeping Service covers? People want to know what specific tasks we do, and what their responsibility is. This brief explainer page will answer that question. This is by no means an exhaustive list, but covers the most frequently asked questions.
Getting Started
- Review your existing books for needed corrections or back-work
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We do not offer bill-pay services at this time, nor do we manage Accounts Payable (AP) or Accounts Receivable (AR).
Payroll tax responsibility
Our bookkeepers can assist you in setting up your initial payroll service in QBO or Gusto. We are not responsible for entering payroll hours/salary, accruing payroll taxes, nor the transmittal of payroll taxes to the IRS or the state. Your full-service payroll provider (QBO, Gusto, or whatever other service a client uses) will be the responsible party for payroll and payroll tax compliance.
*Payroll deductions and benefits
We provide assistance with setting up a payroll account in either Quickbooks Online or Gusto, including entry of employee data. We do not assist in state registrations, benefits, or advise on deductions. Those service areas are provided directly by either QBO or Gusto.
Preparation of W2s
Similar to the last item, your full-service payroll provider (QBO/Gusto) is responsible for preparation of Form W2 for employees.
Sales tax reporting
For those nonprofits that sell taxable goods and/or services, your bookkeeper will assist in accounting for sales taxes collected and transmitted, but we do not prepare state sales tax reports.
Donation recording
We do not provide individual donation data entry into your neither your donor CRM nor Quickbooks Online, nor do we prepare year-end donor acknowledgements.
Administrative tasks
We cannot provide administrative services unrelated to our bookkeeping function.
Attend board meetings
Due to the constraints of time and distance, we are unable to be present, physically nor virtually, at a meeting of a client’s board of directors.*May incur additional fee per 1099-NEC or 1099-MISC.
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Northfield & Associates International Corporation is a global consulting firm serving private enterprises, public institutions, not-for-profit organizations, and institutional capital providers. Operating across Cambodia, Canada, and global markets, the firm supports capital deployment, regulatory navigation, and enterprise decision-making in complex economic and geopolitical environments. Northfield & Associates delivers customized, execution-focused advisory solutions that drive measurable transformation, strengthen competitiveness, and enhance long-term highest value opportunities. The firm incorporates consulting, legal, regulatory, financial, and risk expertise to enable disciplined capital allocation, strong governance, and operational resilience. Northfield & Associates upholds a culture of applied insight and innovation, supporting clients across digital transformation, growth strategy, and organizational capability building. The firm advises individual, leading global corporations, midsize enterprises, government agencies, and mission-driven organizations through long-term partnerships. Enterprise-wide risk management, professional ethics, and fiduciary standards are embedded across all operations. Northfield & Associates’ diverse, globally unified teams are committed to execution certainty and sustainable, risk-adjusted returns aligned with ESG and stakeholder objectives.
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