What is a Business Number? Does Your Small Business Need It?

Being your boss by starting a business or freelancing gives you freedom. While being in control of your work is great, it comes with several administrative, legal, and regulatory requirements. A business is a separate legal entity and has to communicate with society (government, customers, suppliers, peers) as a company. Like you have your identity through your name and a Social Insurance Number, a business gets its identity from a name and a unique 9-digit Business Number (BN). 

What Is a Business Number?

The Canada Revenue Agency (CRA) issues a business number (BN) to every business, self-employed person, legal entity, and non-profit organization in Canada. This unique identifier gives your business official recognition from the government. 

You use the BN in all your interactions with the federal, provincial, and municipal governments. It could be used to file income taxes, corporate taxes, payroll deductions, excise duties, and export and import accounts. Some provincial governments even need BN when applying for permits, licenses, and Workers’ Compensation. This number remains the same throughout the business lifecycle, making entering the system more accessible and pulling out information. 

By obtaining a BN, you can start your business legally without hindrances and avail of tax benefits your small business qualifies for. The CRA can also ensure that your business complies with trade and industry laws in your territory. 

Does Your Small Business Need a Business Number? 

Every business has to register and get a business number. The only exception is a sole proprietorship, and that too until it reaches a certain threshold and enrolls in a CRA program account. For instance, your business sells $30,000 worth of goods or services annually. Once it reaches this threshold, getting a GST/HST number and a CRA program account is required. At that time, the sole proprietor has to get a business number.

Here are some common CRA program accounts a business enrolls in at some point. Each account has a two-letter identification code. 

• GST/HST (RT) 
• Payroll deductions (RP) 
• Corporation income tax (RC) for incorporated businesses. 
• Import-export (RM) 
• Information returns (RZ) are for businesses that file information returns, such as tax-free savings accounts. 
• Registered charity (RR) 
• Underused Housing Tax (RU) for corporations filing Underused Housing Tax returns for the Canadian properties they own. 

Some specific businesses may register with different types of CRA program accounts: 

• Excise tax and special levies (RE)—for businesses that need to charge excise tax on products.
• Air traveller’s security charge (RG)—for air carriers that charge the air traveller’s security charge.
• Insurance premium tax (RN)—for brokers and agents who write insurance contracts. 

You don’t need any of the above program accounts to register your business. Some businesses may need BN to obtain a license to do business. If you already have a BN and are required to enroll in any of the above accounts, you can add your BN number to the program account. 

If you are incorporating your business later, you have to register for a new BN, generate an RC program account and add other CRA program accounts to the new BN. You can close the sole proprietor BN account.

How To Read a Business Number? 

The CRA’s program account number is divided into three parts: 

• The 9-digit business number – for 123456789
• A 2-letter program identifier as mentioned above – RT (for GST account) and RP (for payroll account) 
• A 4-digit reference number to identify multiple accounts. A business may have 3-4 payroll accounts, each with a different reference number.

For instance, company X has a payroll and GST account. Its CRA program accounts will look like this. 

• BN: 123456789
• Payroll account: 
• For permanent employees – 123456789 RP 0001 
• For contractual employees – 123456789 RP 0002
• GST account: 123456789 RT 0001 

How To Get a Business Number?

You will automatically get a BN number if you register for any CRA program account. Otherwise, you can register on the CRA’s website under Business Registration Online (BRO). At the time of registration, you need to provide the following information:   

• Business information: Type of business, brief description of the business activities, legal business name, trading name, expected sales.
• Owner’s information: Names, Social insurance numbers and owners’ occupation.
• Contact details: Contact information and physical address of your business.

When registering your business, you need a unique business name not in use and reflects your products or services. Several online search tools can help you identify the business names already in use.  

Contact DDL & Co. in St. Catharines to Help You Register Your Business 

Talk to a professional accountant to help you register your business and comply with all CRA requirements. To learn more about how DDL & Co. can provide you with the best accounting and bookkeeping expertise, contact us online or call us at 905-680-8669.