Starting a Co-operative

Table of Contents

Introduction
Forming a Co-operative
Regulations
Financing
Taxation
Associations

Introduction

A co-operative (co-op) is a type of incorporated business that is owned by a group of people (known as members) with common needs and/or a common goal.

Some other differences include:

• Each member has an equal vote regardless of their capital contribution (one member equals one vote).
• The primary purpose of a co-op is to meet the common needs of the members, not to maximize profits for shareholders.
• At least two-thirds of the board of directors must be members that are elected at the general meeting.
• Payment of profit or surplus is often limited or distributed to the organization reserve.

Before you set up your co-operative, you may want to create a business plan that describes your organization, your objectives and your goals.

For copies of sample business plans, call the Business Info Line:
1-888-745-8888

Read online:
Business Planning Success
Business Plans - Templates and Samples

Forming a Co-operative

Co-operatives are set up as either federal or provincial corporations. Your needs, the needs of the members and the business location can help you determine which option is best for your co-op.

Provincial Incorporation

If you plan on opening a location(s) only in Ontario, you may choose to incorporate your co-op provincially.

There are three major parts of applying for provincial incorporation:

1. Complete a NUANS name search, which will confirm if your chosen business name is available.
2. Send the appropriate forms and documents to the Financial Services Commission of Ontario (FSCO). The documents provide the co-op’s name, purpose, share structure, directors and incorporators. Approval is needed before you can start doing business.
3. Pay the appropriate fee.

For more information and to access forms, contact the FSCO or visit their website.

Contact FSCO:
1-800-668-0128
Co-operative Corporations

Federal Incorporation

If you plan to open business locations in two or more provinces, you may choose to incorporate federally.

To incorporate federally, you need a minimum of three members who are at least 18 years old, of sound mind and not bankrupt.

The main steps involved in setting up a federal incorporation are:

1. Complete a NUANS name search, which will confirm if your chosen business name is available.
2. Send the appropriate forms and documents to Corporations Canada.
3. Pay the appropriate fee.

For more information and to access forms, contact Corporations Canada or visit their website.

Contact Corporations Canada:
1-866-333-5556
Create/Maintain a Corporation

Regulations

Your business may need licences and permits from the federal, provincial and municipal levels of government.

In addition to the information you will find in this guide, you can use BizPaL—an online search tool—to find licences and regulations that may affect your business. You can also contact the Business Info Line to speak to someone about starting your business.

Use online:
Permits and Licences Wizard

Contact the Business Info Line:
1-888-745-8888

You can also get information on some of the regulations that may affect your co-op from the following organizations:

Financial Services Corporation of Ontario (FSCO)

Find information on the Co-operative Corporations Act in FSCO’s guide for co-ops and learn about how it may affect your organization.

Contact FSCO:
1-800-668-0128
Legal Requirements for Ontario Co-ops

Deposit Insurance Corporation of Ontario (DICO)

If you are starting a credit union, contact DICO for information on general regulations and deposit insurance.

Contact DICO:
1-800-268-6653
Insured Credit Unions

Financing

A co-op's start-up capital often comes from the co-operative shares that are purchased by members. To explore other options for funding that may be available, the following tools and searches are available:

Canada Business and ONe-Source

Canada Business can help you find government financing options for your business. There are programs that apply to businesses across Canada, and others that apply only to businesses in Ontario. Use the Canada Business financing search tool or browse by type of financing.

You can also access Canada Business information through the ONe-Source online financing wizard. The wizard guides you through 3 easy steps to create a personalized list of results for Ontario business financing programs.

Search online:
Canada Business: Government Grants and Financing
ONe-Source Ontario Business Financing Guide

Contact the Business Info Line:
1-888-745-8888

The Ontario Business Program Guide (OBPG)

You can find Ontario-specific assistance for your business including advice, financing options, tax incentive programs and more using the Ontario government’s free online directory of support programs for business.

The OBPG provides:

• An at-a-glance directory designed for quick and easy scanning
• Programs and services for Ontario businesses
• Basic information on programs as well as links you can follow for more detailed information

Search Online:
Ontario Business Program Guide

Taxation

Co-operatives are generally responsible for the same taxes as other corporations. All corporations must file a corporation income tax (T2) return every tax year even if there are no taxes payable.

Read Online:
T2 Corporation Income Tax Guide

Most corporations can file their return electronically using the Internet. Filing online is mandatory for certain types of corporations with annual gross revenues over $1 million.

Read online:
Corporation Internet Filing

It is also important to know which taxes to charge, collect and remit on the goods and services you sell. In Ontario, you may need to set up an account for Harmonized Sales Tax (HST).

Business Number

Your Business Number is your single account number for dealing with the federal government regarding taxes, payroll, import/export and other activities. If you plan to hire employees, or if you will be importing and/or exporting products or services, you must register for a business number.

If you sell goods and services in Ontario, you may need a business number to charge, collect and remit the Harmonized Sales Tax (HST). Most businesses that make less than $30,000 in any 12 month period are not be required to register for HST; however, you can register voluntarily and claim input tax credits. Speak with the Canada Revenue Agency (CRA) for more information.

Contact CRA:
1-800-959-5525
Business Number Registration

Information on taxation is provided as a general guide. Consult an accountant or financial professional for more specific information on tax requirements for your co-op.

Associations

There are many associations that may be of interest to you. It is not necessary to join an association, but some of the advantages include:

• Promoting and exchanging marketing and promotional ideas among members
• Establishing and encouraging high standards of quality and professionalism

Examples of associations include, but are not limited to:

• Ontario Co-operative Association
• Ontario Co-operative Education Association
• Canadian Co-operative Association
• International Co-operative Alliance

You can also find books, magazines and other relevant print material at business service organizations in your community. To locate a Canada Business Ontario (CBO) community partner, contact us through the Business Info Line at 1-888-745-8888.

Need more information?

Click: Canada Business
Call: The Business Info Line, a collaboration between ServiceOntario and Industry Canada, at 1-888-745-8888
Visit: Find a Community Partner Location near you

Disclaimers

Information contained in this document is of a general nature only and is not intended to constitute advice for any specific situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.

Some of the organizations listed above are not subject to the federal Official Languages Act or the French Language Services Act of Ontario. Their services may not be available in both official languages.