When registering a firm in Canada, one of the essential steps is acquiring a Business Number (BN). This unique identifier is crucial for various tax and business-related activities.
In this article, we’ll explore the meaning of a business number, its significance, how to get one, and the several kinds of accounts associated with it.
What is a Business Number?
A Business Number (BN) is a nine-digit identifier provided by the Canada Revenue Agency (CRA) to a business or legal organization. It is used to simplify and streamline interactions with the federal, provincial, and municipal governments. The BN helps businesses manage their tax accounts, payroll, and other government-related services.
Importance of a Business Number in Canada
1. Simplified Government Interactions
Businesses can communicate easily with different government authorities when they have a BN. The BN serves as a central point of reference for any payroll account setup, GST/HST registration, tax filing, and account setup.
2. Required for Tax Purposes
Businesses that need to collect and remit taxes like GST/HST are required to have a BN. It guarantees accurate tax reporting and adherence to Canadian tax regulations.
3. Facilitates Business Operations
Businesses can use a BN to apply for business permits, engage in import/export activities, and access a range of government programs and services. Additionally, it helps create confidence with suppliers and customers and facilitates the opening of commercial bank accounts in canada.
How to Obtain a Canadian Business Number?
Step 1: Determine Eligibility
Any individual, partnership, corporation, or organization operating a business in Canada can apply for a BN. This covers partnerships, corporations, trusts, single proprietorships, and nonprofit institutions.
Step 2: Gather Required Information
To apply for a BN, you’ll need the following details:
- Legal name of the business
- Business structure (sole proprietorship, partnership, corporation, etc.)
- Social Insurance Number (SIN) for sole proprietorship
- Business address
- Description of business activities
- Date the business started
Step 3: Apply for a Business Number
You can apply for a BN through the CRA in several ways:
- Online: Use the CRA’s Business Registration Online (BRO) service.
- By Phone: Call the CRA’s business inquiries line.
- By Mail or Fax: Complete Form RC1, “Request for a Business Number (BN)” and send it to your tax services office.
Step 4: Receive Your Business Number
Once your application is processed, you will receive your BN. This number should be kept secure because it will be needed for a number of government and corporate operations.
Types of Accounts Associated with a Business Number
A BN can have multiple program accounts associated with it, each identified by a specific two-letter program identifier and a four-digit reference number. Common program accounts include:
1. GST/HST Account
Businesses that collect GST/HST on sales must register a GST/HST account. This account helps manage the collection and remittance of these taxes.
2. Payroll Deductions Account
If your business has employees, you’ll need a payroll deductions account to remit payroll taxes, including income tax, CPP, and EI contributions.
3. Import/Export Account
For businesses involved in importing or exporting goods, an import/export account is necessary to comply with customs regulations and manage duties and taxes.
4. Corporate Income Tax Account
Incorporated businesses need a corporate income tax account to file and pay corporate taxes.
Conclusion
One of the most important steps in starting and managing a company in Canada is getting a business number. It guarantees tax compliance, streamlines government interactions, and facilitates a variety of business operations. Incpass provides local Canadian business owners with an automated platform for business registration, which streamlines the process of obtaining your Business Number and other required registrations in a timely manner.
FAQs
Do I require a Business Number if I am a sole proprietor?
Yes, sole proprietors need a Business Number if they have employees, collect GST/HST, or participate in import/export activities.
How much time does it take to acquire a Business Number?
The time to receive a BN can vary. If you apply online, you may receive it immediately. Applications by mail or fax could take numerous weeks.
Can I use my Business Number for multiple businesses?
No, each business entity requires a separate Business Number. However, a single BN can have multiple program accounts.
What if I lose my Business Number?
If you lose your BN, you can contact the CRA for assistance in retrieving it.
