If you run a normal Canadian business, or you are an executive or trustee of some other organization with employees, you are required to withhold a certain amount of money from each employee’s paycheck for various taxes. Those taxes must then be paid or remitted, if you want to sound fancy to the Canada Revenue Agency. To get credit for making the necessary payments, the CRA needs some way to identify your company, and that’s where opening a payroll program account comes in.
A payroll program account (PPA) is just an account with the government and a serial number that tells the CRA who you are and what you owe in withheld employee taxes. This is vital for accurate assessment of taxes due, and it also ensures you get full credit for payments you owe. Remitted money can be assigned to your company’s unique PPA number, which usually satisfies the CRA.
To open a PPA, you need a business number (BN). These are assigned by the CRA, and almost all businesses already have one. If you don’t have a BN yet, don’t worry you can ask for one at the same time you’re setting up your PPA. To get either (or both), visit the CRA’s website and download Form RC-1. Fill this out and mail or fax it back to the CRA. Alternatively, if your company meets eligibility requirements, you can probably file your RC-1 online. After you’re done, the CRA mails you an official confirmation of your account and you can get started making payments right away.