A master business license (MBL), also called a Business Name Registration, is a document made available for Ontario and other foreign businesses that wish to register their business at a nominal fee. This document lists your business name and address, business number, name and address of the business owner, a NAICs code for the business, and a brief description of your business activities. It also states the type of business you have, such as sole proprietorship, general partnership (now referred to as a Firm Name), or trade name.
A general partnership, also known as a Firm Name, is a business model designed for at least two individuals or corporations. When you establish a general partnership/firm name business in Ontario, you’ll need to get a master business license/business name registration in order to operate it. This document will be provided upon completion of the registration and will give your business the legal status it needs to operate legally. The master business license, also known as a business name registration, for operating a general partnership/firm name business is valid for five years, after which you can renew it or let it expire.
If you’re considering getting a master business license/business name registration, here are some of the things you should know about it:
- It isn’t for every business
A general partnership/firm name falls under a master business license so you cannot have one without the other. It is important to note that because a general partnership has more than one business owner, the business cannot be registered under a personal name.
If you also choose to incorporate your business, you’ll be exempt from getting the master business license/business name registration. However, if you want to incorporate it but have your business registration under a different name from its corporate name, you must get a master business license/business name registration.
- Who can apply
The registration of a master business license/business name registration is available for anyone over 18 years of age to register. Unlike incorporation, this form doesn’t require you to be a Canadian citizen or permanent resident. So, foreigners can also take advantage of this status and apply for a master business license/business name registration. However, if you’re unsure whether your immigration status qualifies you to register, you can check on your eligibility with the immigration department.
General partnership/Firm Name registration for a master business license/business name registration is available to either two or more people, or corporations running a business in Ontario. While there’s no predefined percentage between the partners, completing a partnership agreement is crucial. This will lay out the percentages held by each party for future business agreements.
- Does not provide liability protection for owners
While master business licenses/business name registrations provide your business with legal status, they don’t protect against liability incurred by the business. For example, if your business is faced with any financial loss or tax dispute, you and your partners are liable for those losses.
Moreover, a master business license/business name registration won’t give you name protection like incorporating does. So, competing unincorporated companies can operate under an identical name, but you can’t take legal action against them. The type of business you register will determine how protected you are, and a master business license isn’t good at it.
- Pros and cons of Business Name Registration/MBL
When getting your general partnership/firm name business under the master business license/business name registration, it’s essential to know what it offers and its limitations. This is important in ensuring that you get the best registration.
Some of the things it provides include the following:
- Registration that’s valid for five years, which can be renewed or canceled.
- The ability to operate a business name within Ontario, whether you’re a resident or a foreigner.
- The ability to open a bank account, tax accounts, obtain cheques, or business cards.
- Opportunity to get products at wholesale or discounted pricing from suppliers.
- You can also advertise the business name.
Despite the benefits of the MBL/business name registration, there are some significant limitations to it, such as the following:
- As mentioned, you don’t get name protection against other business names in Ontario, so competing businesses can use similar names.
- There’s no liability protection for the individual owner, unlike incorporation.
- You don’t get corporate tax benefits.
- There’s no continual registration.
- There’s no flexibility to make changes to the registration.
Knowing these benefits and limitations will allow you to be more informed on whether or not to apply for a master business license/business name registration.
Conclusion
A master business license/business name registration is an excellent way to get your business operational for at least five years before you can renew it again. However, there are some important details about this type of registration that you need to know when running a general partnership/firm name business. For example, you need to know what it offers, what it doesn’t, and many others discussed in this article, all of which will enable you to run a legal business in Ontario.