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Canada Starting a Business Guide

starting a business in Canada. The Business Number (BN) is the 9-digit identification number assigned by the CRA to the business. The BN is required for the GST/HST registration, the payroll deductions, and the import/export activities. The program accounts — the CRA assigns the 2-letter program codes after the BN (the "BN + program account" — the RT for the GST/HST, the RP for the payroll, the RM for the import/export, the RC for the corporate income tax. The business structure choice — the sole proprietorship (the simplest), the partnership (the shared ownership), or the corporation (the separate legal entity). The corporate incorporation — the incorporation is done at the federal level (the "Canada Business Corporations Act" — the CBCA) or the provincial level (the "Ontario Business Corporations Act" — the OBCA, the "BC Business Corporations Act" — the BCBCA). The NUANS search (the "Newly Upgraded Automated Name Search") is the trademark database search for the corporate name availability. The articles of incorporation (the "articles" — the document that establishes the corporation). The corporate minute book — the record of the corporate resolutions, the share issuances, and the director meetings. The municipal business license — the local permit (the "business license") required by the municipality (the City of Toronto, the City of Vancouver, etc.).

Business Structure Choice

• Sole proprietorship: The simplest structure. The owner and the business are the same entity. The income is reported on the T2125. The owner has the unlimited personal liability. The registration is the business name registration (the "business name" or the "trade name") with the provincial government.
• Partnership: The "general partnership" (the partners share the profits, the losses, and the liabilities) and the "limited partnership" (the limited partners have the limited liability). The partnership files the T5013 (the "Partnership Information Return") and allocates the income to the partners.
• Corporation: The separate legal entity. The shareholders have the limited liability. The corporation pays the corporate tax and distributes the profits as the dividends. The incorporation is more complex and more expensive but offers the liability protection and the tax planning opportunities.

Business Registration Steps

• Business Number (BN): The CRA issues the BN when the business registers for the GST/HST, the payroll, or the corporate income tax. The sole proprietor can use the personal SIN (the business does NOT need the BN unless the business registers for the GST/HST or the payroll).
• GST/HST registration (RT): The CRA program account for the GST/HST. The registration is mandatory when the taxable revenue exceeds $30,000 (the "small supplier" threshold). The RT account is used for the GST/HST returns (the Form GST34 or the GST/HST NETFILE).
• Payroll registration (RP): The CRA program account for the payroll deductions (the CPP, the EI, the income tax). The RP account is required when the business hires the first employee (except the owner-only business).
• Import/export registration (RM): The CRA program account for the customs and the import/export transactions. The RM account is required for the businesses that import or export the goods.
• Provincial registration: The province requires the business registration (the "provincial business registry") — the Ontario BIS (the "Business Information System"), the BC OneStop Business Registry, the Quebec Registraire des entreprises (the "REQ"). The provincial registration issues the provincial business number (the "Ontario BN" or the "BC BN").

Corporate Incorporation

• Federal incorporation (CBCA): The corporation is created under the Canada Business Corporations Act. The federal corporation can carry on the business anywhere in Canada (the "extra-provincial registration" may be required in the provinces where the corporation operates). The NUANS search is required for the corporate name.
• Provincial incorporation (OBCA, BCBCA): The corporation is created under the provincial act. The provincial corporation can carry on the business ONLY in the province of the incorporation (the "extra-provincial registration" is required for the business in the other provinces).
• Articles of incorporation: The document that establishes the corporation — the name, the province/federal jurisdiction, the share structure (the "classes of shares" — the common shares, the preferred shares), the directors, the restrictions, and the objects.
• Minute book: The corporate record book that contains the articles, the by-laws, the share certificates, the resolutions (the "director resolutions" and the "shareholder resolutions"), the share register, and the annual returns.

For the GST/HST registration and the filing requirements, see our GST/HST Guide →. For the payroll rules and the source deductions, see our Payroll Guide →.