Onboard Your Registered Business with Square
Last updated: August 2023
Please note that this guidance is general in nature and does not constitute legal, tax or any other type of professional advice. If you’re unsure about your business structure we suggest that you consult with a professional.
Due to regulatory requirements, we request certain information about your business structure when you open a Square account and the information requested can vary depending on the type of business you operate. The guide below will walk you through the type of information we’ll be looking for to help you get started with Square.
Business Structure
Individual/Sole Proprietorship
A sole proprietorship is an unincorporated business owned exclusively by one person. In a sole proprietorship, the business owner is the business – the owner does not have a separate legal status from the business. If you’re running a small business on your own, you may choose to establish your business as a sole proprietorship.
Being a sole proprietor doesn’t prevent you from hiring other people
As a sole proprietor, you pay personal income tax on the net income generated by your business
You can operate and bill your customers in your own name, or operate under a registered business name and bill your customers or clients in the business’ name. Note: if you’re using a business name, you may need to file a DBA (Doing Business As) to open a separate bank account with that business’ name.
While becoming a sole proprietorship can be a low-cost option, it won’t protect your personal assets: you’re responsible for all company payments, debts and expenses.
Learn more about sole proprietorship on the Government of Canada website.
Partnership
A partnership is established between two or more individuals, corporations, trusts or partnerships (tiered partnership) to do business. There are two types of partnerships: general and limited. In a general partnership, partners share profits and losses and are jointly liable. A limited partnership can have both general and limited partners.
Most partnerships are governed by a written agreement defining the partnership rules (scope of operations, division of income, etc.)
Share Structure
Corporation
Corporations are businesses incorporated under the federal Canada Business Corporations Act (CBCA) or under similar provincial statutes, such as the Ontario Business Corporations Act. Public corporations can be listed or unlisted. Listed companies are registered on the stock exchange and their shares are traded openly. Unlisted public companies are firms with shares that aren’t listed on a stock exchange. Private corporations are corporations whose shares aren’t traded in the public stock exchange, and that aren’t controlled directly or indirectly by public corporations.
Find out more about types of corporations on the Government of Canada website.
Charities and Non-profits
Canadian organizations can also be incorporated under federal or provincial not-for-profit (NFP) legislation. Non-profit corporations are not always considered “registered charities” or “non-profit organizations” when it comes to income taxes, thus they aren’t necessarily exempt from paying regular corporate taxes under Canada’s tax laws.
The main difference between non-profit corporations and business corporations is their different structures: business corporations issue shares, while non-profit corporations do not issue shares. Business corporations have shareholders whereas non-profit corporations have members and do not pay dividends.
Find out more about nonprofit corporations on the Government of Canada website.
Other
Other business structures may include associations, unit trusts and cooperatives. Associations are groups of people who work together for a common purpose other than profit. They may not need to be registered with the government. Unit trusts are trusts for which the interest of each beneficiary can be described at any time by referring to units of the trust.
Cooperatives are legally incorporated corporations owned by a group or association of persons to satisfy common needs such as access to products or services, or employment.
Legal Business Name
When you register your Canadian business, you’ll be asked to select a business name for your company. The Government of Canada website offers guidelines on different types of names, how to choose a business name and registration process.
Doing Business As (DBA)
DBA refers to an assumed name you use for your business. For example, if you use another name on your company website or social media, you can file a DBA document to let the public know you’re the actual business owner.
Business Registration Numbers
Federal Corporation Number is the four- to nine-digit number obtained from Corporations Canada when you first incorporate your business. This number is used for filing legal documents such as annual tax returns. To find your Federal Corporation Number:
- Check the incorporation documents of your business
- Use the search tool in the Government of Canada website, or
- Contact Innovation, Science and Economic Development Canada (ISED).
Federal Business Number is the 9-digit number assigned by the CRA and is used to register a GST/HST account. If your Federal Business Number is displayed as 123456789-RP-0002, the first nine digits are your Business Number. To find your Federal Business Number:
- Use the search tool in the Government of Canada website
- Contact Innovation, Science and Economic Development Canada (ISED) or
- Contact CRA directly.
Provincial Corporation Number is the number assigned to your business at the time of incorporation in the province of your registration. This number figures on the incorporation documents along with the province. You can also apply for extra-provincial registration in order to operate in other provinces.
| Province | Format |
|---|---|
| AB | 8–10 digits |
| BC | 7–9 digits |
| CA (Federal) | 7, 8 or 10 digits |
| MB | 7–8 digits |
| NB | 6 digits |
| NL | 5 digits |
| NS | 7 digits |
| NT | 7, 8 or 10 digits |
| NU | 7, 8 or 10 digits |
| ON | 7, 8 or 10 digits |
| PE | 8–9 digits |
| QC | 10 digits |
| SK | 9–10 digits |
| YT | 6 digits |
Ownership and Control Structure
Ownership
Beneficial owners are the individuals who, directly or indirectly, own or control 25% or more of the business. If the business is owned by a trust, beneficial owners include the trustees, known beneficiaries and the settlers of the trust. Beneficial owners cannot be other corporations, trusts or entities; and it may be necessary to go through layers of ownership to arrive at the individuals who are beneficial owners.
For example: Larry’s Coffee Shop is owned 50% by Larry Anderson and 50% by Smith Holdings Inc. Smith Holdings Inc. is owned 50% by Alex Smith and 50% by Jennifer Smith. In this scenario, beneficial owners include Larry Anderson (direct ownership), Alex Smith and Jennifer Smith (indirect ownership).
Control
In addition to the individuals that own an entity, individuals who control an entity are also considered in the business ownership structure. For corporations, controlling persons usually include directors. Every corporation needs to have at least one director; and the number of directors is specified in the corporation’s articles of incorporation. Directors aren’t necessarily shareholders of a corporation, unless required according to applicable law and the corporation’s articles of incorporation. Find out more about the board of directors in a corporation and the duties and liabilities of directors and officers on the Government of Canada website.
In a partnership, partners are the persons who control the partnership. Partners can be individuals, corporations, trusts or other partnerships. Partners share the profits or losses of the company as specified in the partnership agreement. Learn more about partnerships on the Government of Canada website.
Note that links to the Government of Canada website contained in this article are for informational purposes only and refer to federal requirements which may differ from provincial or local laws applicable to your business structure.