Sole proprietorship
lawyer.

Toronto sole proprietorship lawyer for startups and small businesses

Jonathan Kleiman is a sole proprietorship lawyer in Toronto who helps entrepreneurs, freelancers, and small business owners register, protect, and operate sole proprietorships in Ontario.

Whether you are launching a new business, converting a side project into a registered operation, or evaluating whether to incorporate — Jonathan provides practical legal advice tailored to your stage, your risk profile, and your budget.

Every engagement begins with a free 30-minute consultation.

What is a sole proprietorship?

A sole proprietorship is the simplest and most common business structure in Ontario. One individual owns and operates the business. There is no legal distinction between the owner and the business — you are the business.

This means the owner receives all profits, makes all decisions, and bears all liabilities personally. There are no shareholders, no board of directors, and no annual corporate filings.

If you are operating a business in Toronto under any name other than your own legal name, you are required to register that business name under Ontario's Business Names Act.

Benefits of a sole proprietorship

• Simple and inexpensive to set up — registration costs are minimal and there are no incorporation fees or legal requirements for bylaws or shareholder agreements
• Full control — the owner makes every decision without needing approval from partners, directors, or shareholders
• Tax simplicity — business income is reported on the owner's personal tax return, with no separate corporate return required
• Direct access to profits — no dividends, salary structures, or corporate distribution requirements
• Easy to wind down — closing a sole proprietorship is far simpler than dissolving a corporation

Risks and liabilities

The simplicity of a sole proprietorship comes with a significant trade-off: unlimited personal liability.

Because there is no legal separation between the owner and the business, the owner is personally liable for all business debts, obligations, and legal claims. If the business is sued, the owner's personal assets — including their home, savings, and investments — are exposed.

• Business debts become personal debts
• Lawsuits against the business are lawsuits against the owner
• Contract liabilities are personal liabilities
• No protection from creditors beyond what the owner holds personally

This is why strong contracts, proper insurance, and early legal advice are critical for any Toronto sole proprietor. Without a corporate shield, your agreements are your primary protection.

Business registration in Ontario

Registering a sole proprietorship in Ontario involves several steps. Jonathan handles the entire process — from name search through to registration — so you can focus on launching your business.

Contracts and legal protections for sole proprietors

Because a sole proprietor has no corporate liability shield, properly drafted contracts are the single most important tool for managing legal risk. Every agreement you sign — and every agreement you fail to sign — directly affects your personal exposure.

Jonathan drafts and reviews contracts for Toronto sole proprietors including:

• Service agreements — defining scope, deliverables, payment terms, and liability limits for client work
• Independent contractor agreements — protecting you when hiring subcontractors, with clear IP ownership and indemnification provisions
• Non-disclosure agreements — safeguarding confidential business information, client lists, and trade secrets
• Terms of service — for websites, e-commerce platforms, and online services
• Partnership and joint venture agreements — if collaborating with other sole proprietors or businesses on a project basis

Need a contract drafted or reviewed? See contract lawyer services.

Risk management strategies

Beyond contracts, Toronto sole proprietors should implement several risk management practices:

• Business insurance — general liability, professional liability (E&O), and commercial property insurance appropriate to your industry
• Separate banking — maintaining a dedicated business bank account for all business transactions
• Written agreements for everything — no handshake deals, no verbal understandings, no assumptions
• Record keeping — maintaining organized records of all contracts, invoices, payments, and communications
• Regular legal review — having a business lawyer review your standard agreements and practices annually

CRA and tax considerations for sole proprietors

Sole proprietorship income is reported directly on the owner's personal income tax return (T1). This is simpler than corporate taxation but requires careful attention to several obligations.

Income reporting and deductions

Sole proprietors report business income and expenses on Form T2125 (Statement of Business or Professional Activities). Legitimate business expenses — including office supplies, marketing, professional fees, insurance premiums, and a portion of home office costs — can be deducted against business income.

HST registration

If your business revenue exceeds $30,000 in a single calendar quarter or over four consecutive calendar quarters, you are required to register for and collect HST. Voluntary registration below this threshold is permitted and may be advantageous if your business incurs significant HST on purchases and expenses.

CPP contributions

Unlike employees, sole proprietors are responsible for both the employee and employer portions of Canada Pension Plan contributions. This is a significant additional cost that many new sole proprietors fail to anticipate.

Common mistakes sole proprietors make

Jonathan sees the same avoidable mistakes from Toronto sole proprietors every year:

• Operating without a registered business name — risking fines and the inability to enforce contracts
• Using template contracts from the internet — generic agreements that do not reflect Ontario law or the specific risks of the business
• Mixing personal and business finances — complicating tax reporting and weakening credibility in any legal dispute
• Failing to register for HST when required — resulting in penalties and interest from the CRA
• Not having proper insurance — leaving personal assets exposed to claims that insurance would have covered
• Waiting too long to incorporate — continuing to bear unlimited personal liability after the business has grown beyond the sole proprietorship structure

When to transition from sole proprietorship to corporation

A sole proprietorship is the right structure for many early-stage businesses. But as the business grows, the risks of unlimited personal liability and the tax disadvantages of reporting all income personally often outweigh the simplicity benefits.

Jonathan advises Toronto business owners to consider incorporating when:

• Business income exceeds what you need for personal expenses — to access the small business tax rate
• Liability exposure is significant — contracts, clients, or activities that create meaningful risk
• You want to bring on partners or investors — a corporation provides a clear ownership structure
• Credibility matters — certain clients, lenders, and government contracts require a corporate entity
• You need to retain earnings in the business — for reinvestment, equipment purchases, or future growth

The transition from sole proprietorship to corporation involves transferring assets, contracts, and registrations to the new corporate entity. Jonathan manages the entire process. For a full comparison, see our guide on sole proprietorship vs. incorporation in Ontario.

The sole proprietorship setup process

Working with Jonathan to register and protect your sole proprietorship is straightforward:

Most sole proprietorship matters — including registration, contract drafting, and startup legal advice — are handled on a flat-fee basis. You'll know the cost before the work begins.

The best time to talk to a business lawyer is before you need one. The second best time is now.

Why Toronto sole proprietors choose Jonathan Kleiman

Jonathan earned his B.A. (with distinction) at McGill University and his J.D. at Queen's University. He has been a member of the Law Society of Ontario since 2011.

Your sole proprietorship lawyer should understand the realities of running a small business — tight budgets, fast decisions, and the need for advice that is practical, not theoretical.

Talk to a sole proprietorship lawyer in Toronto today

Whether you are registering a new business, reviewing your existing contracts, or deciding whether it's time to incorporate — get experienced legal advice before you commit.

Call 416-554-1639 or book a free consultation.