Many business owners will eventually incorporate the business. Reasons for doing so include taxation benefits and personal liability protection.
From a LAW101 standpoint, a business owner who operates as a sole-proprietor is personally liable for the debts and wrongs arising from the operations of the business regardless of whether the business owner was directly involved; however, a business owner can find protection from a 'corporate veil' by incorporating the business as a separate legal entity and thereby distancing the business from the business owner.
Unfortunately, many business owners fail to properly amend business materials following incorporation. It is common that business materials such as brochures, websites, business cards, contracts, invoices, and other forms, will lack updating and therefore the incorporation details are omitted from the business materials.
When the existence of a corporation is omitted from documents relating to business dealings, the person failing to provide proper disclosure remains subject to the risk of personal liability without corporate veil protection; Kobes Nurseries Inc. v. Darren Convery and 1553022 Ontario Limited, 2010 ONSC 6499. This doctrine applies even in circumstances where the Plaintiff knows of the existence of corporate entity yet the person contracted in a personal name; Truster v. Tri-Lux Fine Homes Ltd., 1998 CanLII 3497 (ON CA).
Additionally, a business that fails to properly identify itself may be subject to liabilities or fines arising from Provincial Offences prosecution via various acts such as the Consumer Protection Act, 2002, S.O. 2002, Chapter 30 or Business Corporations Act, R.S.O. 1990, c. B.16, or Business Names Act, R.S.O. 1990, c. B.17, among others.