The corporation comes first, then OMVIC
OMVIC registers the legal entity that trades in vehicles, and a registration does not travel from you personally to your company. The corporation applies under the Motor Vehicle Dealers Act in its own name, discloses its officers, directors and shareholders, and the people behind it go through the same screening as any new applicant, while salespeople hold their own individual registrations. So the sequence is fixed: incorporate, then apply, and time the switch so the lot never trades a day outside a valid registration.
Name the company deliberately. A numbered corporation carrying a registered business name works for OMVIC, but the name on the articles, the dealer registration, the signage and the lender file should line up from the start, because mismatches surface at the worst moments: a floor check, a licensing renewal, a bank review.
Two CRA registrations follow in the same week. A dealership passes the $30,000 small-supplier threshold on roughly its first unit, so HST registration should be effective from day one, which also starts input tax credits flowing on auction purchases immediately. A payroll account follows as soon as there is a salesperson or detailer on wages. Our Incorporation service handles the corporation, the CRA accounts and the sequencing as one engagement.
What the floor-plan lender needs the corporation to look like
The floor-plan facility gets papered to the corporation: a general security agreement over inventory and usually over all corporate assets, personal guarantees from the principal, curtailment terms and audit rights for floor checks. Before any of that is signed, the lender wants the corporation's financial statements, clarity on who can bind the company and a structure it can read in one sitting.
That is worth designing for. Walla Assaf spent years in banking and corporate finance before founding Tauro, and the practical lesson from that side of the table is that a clean, single-purpose operating company with a tidy minute book gets a facility approved and renewed faster than a corporation carrying sideline assets and tangled shareholdings. If you are incorporating mid-facility, the lender re-papers everything to the new entity, so the bank belongs in the conversation early. Our Business Financing Advisory work sits on your side of that negotiation.
Share structure: simple now, sale-ready later
Voting common shares in the principal's hands is the right starting point for almost every independent dealer; add share classes only for a purpose you can name today. Family shareholdings deserve honesty up front, because dividends paid to relatives who do not actually work in the business are caught by TOSI and taxed at the top personal rate. Spreading shares around the dinner table stopped being a tax plan years ago.
The structure should also protect the exit. Shares of a qualifying small business corporation can shelter up to $1.25 million of gain per shareholder under the lifetime capital gains exemption, but only while the corporation's assets are substantially devoted to the active business. That test is the strongest argument for keeping everything that is not the dealership, surplus cash, investments and above all real estate, out of the operating company.
The lot property belongs in a holdco
If you are buying the land the cars sit on, buy it in a separate holding company and lease it to the dealership. The operating company faces the public, the lender's security and the trade creditors; the property company faces none of them.
| Question | One corporation | Opco plus holdco |
|---|---|---|
| Lot real estate | Inside the lender's security net | Held apart, leased to the dealer |
| Dealer liabilities | Reach every asset | Stop at the operating company |
| Capital gains exemption | At risk once property dominates | Opco shares stay qualifying |
| Selling the business | Land and dealership travel together | Sell the dealer, keep the land and rent |
| Running cost | One T2 | Two T2s and a lease to maintain |
The two corporations are associated, so they share one $500,000 small business limit; the holdco earns its keep through protection and exit options, not a second low-rate pool. And if the property already sits inside your dealer corp, it can usually be moved out on a tax-deferred basis, but that is a Corporate Restructuring project with land transfer tax questions attached. Starting in the right place is always cheaper than moving later.
We set up dealers across Mississauga and the GTA, and every incorporation is quoted in writing after a free 15-minute discovery call, so you know the full cost before the articles are drafted.
