Importance of Business Number
A business number is assigned by the Canada Revenue Agency (CRA) to identify businesses for various purposes including interactions with government. Sole proprietors may need a business number depending on the nature of their activities and CRA requirements to ensure compliance.
Requirements for Sole Proprietorship
To start a sole proprietorship: choose a business name; open a bank account; get insurance; and register your name locally. You can change the business name by filing paperwork.
Employer Identification Number (EIN) for Sole Proprietors
Sole proprietors typically use their Social Security Number instead of a separate tax ID number. However, you may need an Employer Identification Number (EIN) if you have employees, file certain tax returns, have a retirement plan, or want the advantages of a separate business ID. You can easily get an EIN from the IRS website.
FAQ: Does a Sole Proprietor Need a Business Account?
You need a Business Number if you require CRA “Program Accounts” like GST/HST, Payroll, and Import/Export. Sole proprietors may voluntarily register under the MSME Act for benefits.