I remember when I started looking into setting up my business and tax number, it was daunting! The government’s website was not super helpful given that photography is a unique type of business here in Canada. But, when I finally got up the beans to do it, the process was simpler than I expected! Please keep in mind regulations may be added from province to province.
Here’s my story:
Once upon a time, I decided to start a business with the government. I decided to do so because I was making income from my photography and wanted to charge GST. I discovered that I needed two things. A business number and a GST number. Registries will help you with this, but they will charge you a fee. There is another way!
Step 1: Choose your Business Type
There are five types of business you can register with the CRA.
We can eliminate 4. and 5. right away. The co-operative is a bit complicated for a photography business and the non-profit is… well… not for profit. So let’s look at the other three.
A sole proprietorship is the simplest. If you are the business, and the business is you; it could not function without you, then you are likely a sole proprietorship. It costs nothing to call the government and set up. This type of business blurs the lines between you and the business. If the business has debt, you are personally liable for the debt.
The next part is said best by the government themselves:
This type of business comes under provincial jurisdiction. If the proprietor chooses to carry on a business under a name other than his/her own, he/she must register with the province. This function is now administered by the Private Registries. If a sole proprietor establishes a business in his/her own name, without adding any other words, registering the business is not necessary. Filing a Declaration of Trade Name to protect your business name is strongly recommended.
- GUIDE FOR NEW ALBERTA BUSINESSES (07/2013)
You can have a general partnership, typically between spouses, wherein each owner is 50% responsible and gets 50% profit versus a limited partnership where those things can be uneven. Equal partners in the business are each personally responsible for any debt or liability (bad stuff) the business might have. Equally, they share the profit. We chose to form a partnership so that one of us would not be the “employee” as we both work within the business. It was very, very easy to set up. And, cost us nothing! Partnerships can be identified by the letters LLP. Technically, our business is called “our business LLP”.
This is probably a less likely choice. A corporation is much more complicated and comes with expense. The advantage is that it is a separate entity from the owners. This means that debts, obligations and liabilities are not the personal responsibility of the person. Corporations can decide to issue shares publicly or privately and must split the dividend amongst the shareholders. Corporations are highly regulated, and can cost a great deal to set up with lawyer fees, accountant fees and more.
A corporation can be identified by the terms, “Limited”, “Ltd.”, “Incorporated”, “Inc.”, “Corporation”, or “Corp.”
Step 2: Gather the information you will need to have
When you call the CRA for a Business Number you will need the following:
The SIN number of all parties involved.
The birth dates of all parties involved.
You business name.
Type of business (Sole, partnership, corporation)
Your business address and phone number
A physical address is required if you are rural in addition to your mailing list.
A list of things your business will do.
Would you like to file your taxes annually?
What is the official start date.
How much do you think you might make per year?
Step 3: Call the government (and seriously… call them)
I tried to register online… disaster! So, I called 1-800-959-5525*. I had the 9 things above written out on a pad of paper. The lovely lady on the other end of the line knew why I was calling to begin with but still, I let her know that I needed a business number and GST number. She asked me some questions (the 9 things above), gave me some advice, and the whole thing took 5 minutes. She was able to tell me both numbers immediately. At the end, she informed me that I would be mailed a copy of my business number and GST number. Two weeks later, my official documents showed up in the mail! And, it cost me nothing!
*Hours of service: weekdays from 8:15 a.m. to 8 p.m. (local time).
And that, my friends, was the birth of our Canadian business. Nothing crazy, or overly exciting. Just a phone call! Once I finally made the call to the government, everything was easy. They were kind, and very understanding of all of my questions. I did not need my husband in the room to complete the call, which was lovely. In fact, I was in the airport waiting for him to arrive from Seattle when I made the call!