What is a business number?

A business number (BN) is a standard identifier for businesses, legal entities, and non-profit organizations in Canada. It consists of nine unique digits issued to every business by the Canada Revenue Agency for tax-related purposes.

The number acts as a tax ID and makes it easy for businesses to streamline their operations when engaging federal, provincial, and municipal governments. A business number comes in handy when filing income taxes, corporate taxes, payroll deductions, excise duties, and handling export and import accounts.

Many provincial governments also require businesses to have a BN when applying for permits, licenses, and Workers’ Compensation.

What is the purpose of business registration?

Nearly all businesses, except for sole proprietorships, must register in the respective provinces where they plan to do business. In any case, business registration is not optional since it is a legal requirement in all territories.

The purpose of registering your business is to make sure that you comply with trade and industry laws in your territory. Registration also ensures the federal government recognizes your business as a legal entity. This means you can carry out your operations legally without any hindrances.

Having a business number minimizes the chances of mistaken identity since the number will remain the same during the lifecycle of your business. This guarantees certainty and consistency in your interactions with all levels of government and other businesses.

Most importantly, registering your business ensures tax compliance. The Canada Revenue Agency (CRA) has a record of your business dealings, making it easy to file a tax return. You also enjoy various tax benefits when your business is registered.

Which Canadian businesses need registration?

Not all businesses in Canada need registration. There is an exception for sole proprietorships, which can legally operate without being registered.

In some provinces like Newfoundland and Labrador, sole proprietorships or partnerships do not need to register their business names or apply for a business number.

Other ways to qualify for exemption include:

• You are the sole employee
• Your total revenues before expenses are less than $30,000 over the last 12 months
• Your business does not involve the importation and exportation of goods

Step-by-step guide on how to get a business number in Canada

The process of applying for a business number in Canada depends on the location where you plan to set up the business. All provinces and territories except Quebec have the same requirements for BN registration.

When registering your business, you need to provide the following information:

• Type of business
• The names of the owners
• Social insurance numbers and occupation of all the owners
• Legal business name (or the name you want to use)
• Trading name
• Contact information
• The physical address of your business
• Brief description of your main business activities
• An estimate of expected sales

Registering a business in Canada is easy. You can register by mail, phone, fax, or online, through the province’s business registration website.

Registering by mail or fax

• Download the RC1 form from the CRA website
• Print the form and fill in your details
• Mail or fax the filled RC1 form to your nearest CRA office or tax centre

Registering by phone

• Download and print the RC1 form from the CRA website
• Call the CRA business inquiries line (1-800-959-5525) during hours of service
• Answer all the questions in the RC1 form

Online business registration

• Visit the CRA website
• Fill in the RC1 form
• Wait for a confirmation letter from the CRA

Registering a business name in Canada

After obtaining your business number, you need to register your business name. Except for sole proprietorships, all Canadian businesses have to register their names.

The name you choose cannot be the same as any other existing entity. You must select a unique name that reflects the products or services you are offering.

There are online search tools that make the process of finding a unique business name easier by identifying existing companies registered under the same name. You can also pay a third-party provider to perform the search on your behalf.

Once you select your preferred business name, pay the required registration fee, and obtain a Master Business License (MBL). The MBL document indicates the registration and expiry dates so you know when it’s time to renew your registration. You can use your MBL for various dealings like conducting business activities and opening bank accounts.

Business number FAQs

Is a CRA number the same as a business number?

No, a CRA number is not the same as a business number. However, a business number is part of the CRA number used when filing various tax returns such as corporate income tax, payroll deductions, and import/export returns.

While a business number consists of nine digits, a CRA number has three parts that make up a combination of 15 letters and digits in total. The first part of the CRA number is the nine-digit business number, and the second part is a two-letter identification code. The final part is a four-digit reference number.

Can I start a business in Canada without registering it?

Yes, you can start a business in Canada without registering it if it’s a sole proprietorship. However, there are significant benefits to registration, including lower tax rates.

How much does it cost to register a business in Canada?

The cost of registering a business in Canada depends on the province or territory and the type of business you want to operate. The cost ranges from $80 to $200, which makes it affordable for most aspiring entrepreneurs.

Although opening and running a business has its fair share of challenges, it is an achievable goal for many Canadians.

Obtaining a business name and number will ensure your enterprise is tax compliant and operating legally as you strive to achieve your business goals.