The licence names a legal person, so decide who that person is
Since January 1, 2024, a temporary help agency cannot lawfully operate in Ontario without a licence under the Employment Standards Act. Operating unlicensed is an offence, clients are barred from knowingly using an unlicensed agency, and the province runs a public register that procurement teams now check before they sign. The application itself is concrete: a $750 fee and security in the form of a $25,000 irrevocable letter of credit, delivered electronically by your bank.
Every one of those pieces attaches to a legal person, which is why the entity question now comes first. Incorporate before applying and the licence, the register entry, the letter of credit, the payroll accounts and the client contracts all carry one corporate name from the first assignment. Incorporate afterwards and you have created a new legal person that needs its own application, while the register still shows a name your clients no longer pay. A compliance team that spots the mismatch mid-contract holds the invoice, and a held invoice in this business is next week's payroll.
A perm desk is a second licensed activity
The regime draws its line exactly where your revenue does. Assigning your own employees to work under a client's direction is temporary help agency activity; sourcing candidates a client hires onto its own payroll is recruiting, and each needs its own licence, though one corporation can hold both. We raise this during incorporation because many perm desks started informally, as a favour to a temp client, and were never papered as a business line. The licensing rules do not grade on history, so the corporate name should be licensed for both desks before the next placement fee goes out.
What the corporation shields at payroll scale, and the gap it leaves
An agency's obligations are payroll-sized. Wages, source deductions, vacation pay and WSIB premiums for the whole assignment roster run through your accounts on a margin that is a fraction of the flow, and one insolvent client can strand several weeks of payroll you have already funded. The corporation keeps the client agreements, the office lease, the financing and any commercial dispute at the company level, so a contract gone wrong is a claim against the business rather than against your house.
Be honest about the gap, because it sits exactly where staffing is biggest: directors remain personally liable for source deductions and HST that were withheld or collected but never remitted. Incorporation is not a licence for loose remittances; it works when the remittance leaves as part of the pay cycle itself, every week, without a decision being made.
One corporation or two for the temp and perm desks
Owners often ask whether the perm desk deserves its own corporation. Tax rarely decides it, because associated corporations split a single small-business limit and a single EHT exemption rather than doubling them. The genuine trade is risk separation against duplicated overhead.
| Question | Both desks, one corporation | Two corporations |
|---|---|---|
| Licensing | One name on the register, holding both licences | Two applications, two securities, two renewals |
| Tax | One small-business limit, one EHT exemption | Still one of each, shared through association |
| Risk | Perm fees sit beside payroll-scale liabilities | Perm desk stands apart from temp employment claims |
| Admin | One T2, one payroll file, one minute book | Two of everything, plus intercompany accounting |
| Fits when | Most agencies, most of the time | A perm brand worth insulating from a heavy temp book |
Our default is one corporation with the desks split cleanly in the books, revisited only when a buyer, a lender or a genuine liability concern argues for more. If the split earns its keep later, it can usually be done on a tax-deferred basis through Corporate Restructuring rather than by starting over.
The set-up order that avoids papering anything twice
The sequence we run: incorporate under Ontario's Business Corporations Act with a share structure that leaves room for a holding company later; open the corporate bank account; register the CRA program accounts so the payroll account is live before the first pay run; register with WSIB within 30 days of the first hire, and for EHT once Ontario remuneration will clear the exemption; then file the licence application in the corporate name with the letter of credit behind it. The security is a bank instrument, so the banking relationship matters early, and our Business Financing Advisory work often arranges the letter of credit and the operating line in the same conversation.
Already trading as a sole proprietorship or partnership? Contracts, goodwill and the roster can generally move into the corporation on a tax-deferred basis under a section 85 rollover, with the changeover timed to a single pay date so no week's hours straddle two employers. That, end to end, is our Incorporation engagement for agencies in Mississauga and across the GTA, scoped in writing after a free 15-minute discovery call.
Source: Ontario — Licensing for temporary help agencies and recruiters.
