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Starting a co-operative

Table of contents

Introduction
Forming a co-operative
Regulations
Financing
Taxation
Other resources

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 organizational reserve

Read online:
Information Guide on Co-operatives

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

Read online:
Business plan guide

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 Ministry of Government and Consumer Services. 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 ServiceOntario.

Contact ServiceOntario:
1-800-361-3223
Start, dissolve and change a co-operative corporation

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 to find licences and regulations that may affect your business. You can also contact us to speak to someone about starting your business.

Contact us:
1-888-576-4444
Permits and licences search

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

Financial Services Regulatory Authority of Ontario (FSRA)

Find information on the Co-operative Corporations Act, the requirements of capital raising and offering statements for co-operative corporations, other rules for credit unions (caisses populaires) and deposit insurance and how these requirements may affect your co-op.

Contact FSRA:
1-800-668-0128
FSRA - For Industry

Financing

A co-op's start-up capital often comes from the co-operative shares that are purchased by members.

Grants, contributions, subsidies and loan guarantees are available from various government sources. Use Innovation Canada’s online search tool to look for programs and services that may apply to your business.

Search online:
Grow your business

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 a business number 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 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.

Other resources

Managing 

From day-to-day operations to long-term planning, learn how to manage your business efficiently.

Associations 

If you are interested in finding an association, use our secondary market research service request and have us search for one based on your needs.

You can also find books, magazines and other relevant print material at business service organizations in your community. To locate a Small Business Services (SBS) community partner, contact us at 1-888-576-4444.