You’ve got questions and we’ve got answers! Here are answers to more of your top business tax information questions

CRA SOURCE ARTICLE

Last summer, we issued a tax tip with answers to five of the top business tax information questions. Here are answers to five more!

Question 1: How do I register for a business number?

A business number (BN) is a 9-digit number that identifies a business or legal entity. Your business will only have one BN so once you have registered, keep the information safe. If you are planning on creating a CRA program account or interacting with other federal, provincial, and municipal governments in Canada, you might be asked to provide your BN.

If you don’t have a BN
The fastest way to get a BN is through the Business Registration Online (BRO) portal.

To request a business number through BRO, you will need to provide your:

• last name

• social insurance number (SIN)

• date of birth

• personal postal code (where you live)

Once you have registered your BN
Keep your BN in a safe place so that you can reference it in the future. You will now be able to access the tax information associated to this BN in the CRA’s My Business Account, as long as your name and SIN match the information the CRA has on file for your business.

Question 2: How do I prove my business is in good standing with the CRA?

If your business is asking for a loan from the bank or considering purchasing real property, you may be asked to provide a comfort letter or a Filing and balance confirmation letter. These letters are often requested by a financial institution or a lawyer to confirm that your business’s CRA program accounts are in good standing.

The request for a comfort letter must be done in writing. The business owner or authorized third party must send the written request to the nearest CRA tax services office.

The request for a Filing and balance confirmation letter can be done through My Business Account or Represent a Client as a business owner or authorized representative. Once the online request is submitted, the letter will immediately be accessible in the My Business Account online “Mail” service to be viewed and printed.

For this request, you will need:

• your BN

• the CRA program accounts for which the comfort letter is requested

• the language in which you wish to receive the comfort letter, if different from the language of the request

• the name and position of the person making the request

• a letter of authorization or a completed Form AUT-01, Authorize a Representative for Offline Access

Question 3: How do I know what business expenses can be tax deductions?

Some business expenses qualify as tax deductions that can reduce your taxable income. Before filing your taxes, it is important to find out if any of your business expenses are deductible.   

Here are some examples of business expenses which may be tax deductible:

• Business travel expenses (e.g., public transportation fares, hotel accommodations, meals)

• Cost of items used indirectly to provide goods or services (e.g., cleaning supplies)

• Small office supplies (e.g., pencils, paper clips, stamps)

Employers can refer to Employers’ Guide – Payroll Deductions and Remittances for information on eligibility for tax deductions and General Information for GST/HST Registrants.

Incorporated small businesses can read Small business deduction rules for information on eligibility for tax deductions.

Question 4: What is considered a receipt?

When you purchase something for your business, you must keep a record of the expense. By ensuring that you have a record of the transaction, you can be better prepared for filing your income taxes. Records of your transactions will support your income and expense claims.

A receipt is an expense record that confirms that the business has sold or bought something.

For a receipt to be accepted for income tax purposes, it must have the following:

• the date of the purchase

• the name and address of the seller or supplier

• the name and address of the buyer

• the full description of the goods or services purchased or sold

• the vendor's business number if they are a GST/HST registrant

Additionally, credit card statements are not generally accepted as a replacement for receipts unless it contains the above and other requested information.

For more information, go to Business records.

Question 5: Where can I find information on first-time filing as a small business?

The CRA offers a number of tools to help businesses file their income taxes. Here are a few of them:

• You can check out this tax tip: Do you have questions about filing as a business for the first time? The CRA is here to help.

• You can meet with a Liaison Officer: The Liaison Officer service is a free service the CRA offers to owners of small businesses and self-employed individuals to help you understand your business tax obligations. A visit from a Liaison Officer is 100% confidential; the information you choose to discuss with a Liaison Officer will not be shared with other areas of the CRA or anyone else. You can request a visit by phone or videoconference here.

• You can check out the CRA’s E-services for businesses, which are designed to assist with managing your taxes and finances.

• You can refer to Payments for businesses, which provides the information you need about payments to the CRA. Our step-by-step guides and catalogue of articles will help answer the questions you have about how to make a payment, how to confirm that a payment was received, how to know when you owe money, and more.

• You can check out our Checklist for Small Businesses, which has an assortment of links to resources that can help you get started with filing your income taxes. Additionally, the checklist provides a series of forms and publications that may apply to your situation.

• You can see if your business qualifies for Scientific Research and Experimental Development (SR&ED) tax incentives. The CRA offers free services and tools to assist you in finding out if your research and development work is eligible for SR&ED tax incentives, help you in estimating the investment tax credits you could earn and aid you in understanding what you need to complete a claim.

If you have further questions

Visit Canada.ca: We’re improving the information on our web pages to make it easier for Canadians to find what they need online. For example, the CRA gets thousands of questions each year from businesses as they go through different changes. Our Changes to your business and Canada Revenue Agency program accounts page will give you information on what the CRA needs in many common situations, such as administrative changes, growing your business, and changes to business operations. If you are an Indigenous individual, you can find more information about filing your tax return at Taxes and benefits for Indigenous peoples.

You can learn more about your tax obligations by visiting the links above or by scheduling a free consultation with us.