Is GST registration is required? What is a BN? Where do I register my trade name or corporation? Where do I get a business licence? What kind of other licences or permits will I need? These are all registration concerns that apply to every business in Alberta.
The first registration, and a prerequisite to all the others, is registering your trade name or corporation. Regardless of the business structure you have selected (see Step One – Basic Structure), you will need to register with Alberta Corporate Registry. Great, where is it? Well the good news is that Alberta has a privatized government registry system which means there are several hundred registry agent offices spread across the province. The bad news is that I cannot list all their locations here, their individual prices vary, and their levels of customer service vary widely. In addition, you can hire a business service or a law firm to assist you with registration, and for a corresponding price, you will definitely receive a higher level of service and help than just going to the nearest registry office. I see lots of do-it-yourself corporations in my business, and the vast majority require corrections and re-registrations that often cost more than the incorporation process did. The best advice is that you spend a little on some qualified help since this is a business matter more intricate than simply renewing your drivers licence. Either way, you will receive your registration documents from Alberta Corporate Registry. If you incorporate it will be a Certificate of Incorporation, if you register a trade name it will be a Trade Name Proof of Filing.
I must back up a little bit. You can simply register a Trade Name without conducting a name search, but there are some name conflict risks you may run into. Unless you are registering as a numbered corporation (such as 1111111 Alberta Ltd.), a clear name search is mandatory prior to incorporating. The name search (called a NUANS) usually comes in two parts: a pre-screen search which should be free; and a formal search which usually costs $40-$50 and is mandatory for registration. It is important to note that a seemingly clear search does not preclude the possibility of a name conflict and litigation, but it is the only means of determining an exact match conflict and an inability to register. Choose your business name carefully, both with the NUANS and also by checking if an internet domain name is available without being confusingly similar to an existing one. If you are not confident in these areas, a business service or good lawyer can assist you with these matters. Once you have the name, proceed to registration.
So, now that you have your Certificate of Incorporation or Proof of Filing, you will need to register with the Canada Revenue Agency (CRA) for a Business Number (BN) and maybe Goods and Services Tax (GST). Do not register for a BN before choosing your business structure and business name, because the BN is not transferable, and it becomes ridiculously confusing and expensive to have more than one BN for the same business. The BN is similar to a person’s Social Insurance Number in that it is the account number that the CRA uses to identify your business. You can register for the BN by paper, online, or by telephone, just look up the CRA in your local directory for contact information. Your tax account with the CRA will be the BN with a RC0001 suffix.
If your expected taxable sales are more than $30,000 annually, you must register for GST. If not, you may, and often should, register voluntarily. Your GST number will be your BN followed by suffix of RT0001. When you register for GST, you will be asked how often you wish to file: annually, quarterly, or monthly. Unless you are expecting sales in excess of $1.5M, you have a choice, and I generally advise that you first have a conversation with your accountant or bookkeeper. There are different schools of thought on filing frequency, and benefits or detriments to each. Filing more often helps keep you on track and prevents you from getting too far behind in remittances, but the downside is increased administrative costs. Filing annually is favoured by many advisors, but with the added protection of making regular monthly instalments. There is nothing fun about filing at the end of the year and realizing you owe $5,000 in GST remittances, and I’ve seen that cause significant trouble for many business owners. I tend to recommend filing quarterly which, in my humble opinion, provides the best mix of maximized cash flow flexibility and minimized paperwork. However, if your bookkeeper or accountant suggests otherwise, you should take that advice very seriously, since they will be the person filing the return.
If you will have employees, you will also need to register with the CRA for a payroll account. The payroll account number will be the BN plus a suffix of RP0001. Note that if you do not have employees, or if your accountant has advised paying yourself as a management fee or dividends instead of as an employee, do not register for a payroll account. Filing zero dollar payroll remittances is a monthly administrative nuisance to avoid whenever they are not necessary.
Next, you will want a municipal business licence. You should have this whether you operate from home or from a commercial/industrial site. Many home based businesses skip this step because they have been told they can get away with it, it is a nuisance, and just another tax. However, for the small cost of registration, usually less than $500, it will avoid fines and negative public reaction, and many customers or suppliers will only do business with properly registered businesses. Regardless of home based or not, this process often involves obtaining a development permit and building permit prior to the business licence, and you should check with your municipality for specific regulations and costs. Also, it is worth noting that most municipalities have a requirement for non-resident businesses to be licenced. This means that a business based and licenced in the City of Leduc, that also does work in Edmonton, is required to have a licence in Edmonton. Non-resident licences are frequently overlooked and do lead to fines.
Depending on the nature of your business, there may be specialized licences or permits required. For example, if you handle food, a food handling permit is required from Alberta Health Services. If you sell door to door, you need a Fair Trading Act direct seller’s licence. If you are a home contractor, you will likely need a prepaid contractor licence and a bond. There is an exhaustive list of licences required in our current society, and it is best to do some homework on your own at Service Alberta’s website before hiring a business service or a lawyer. Some of the specialized licences, permits, or bonds are very simple processes, while others can be quite complex. If you need advice or help in this area, it is best to seek a professional with experience in the appropriate area.