Industry Canada
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Key Small Business Statistics - July 2008
How many businesses are there in Canada?
The Business Register of Statistics Canada maintains a count of business establishments1 and publishes results twice a year. Business establishments can belong to the same company; each company owns at least one business establishment. For an individual business establishment to be included in the Business Register, the company to which it belongs must meet at least one of the following minimum criteria: it must have at least one paid employee (with payroll deductions remitted to the Canada Revenue Agency (CRA)), it must have annual sales revenues of $30 000, or it must be incorporated and have filed a federal corporate income tax return at least once in the previous three years.
As of December 2007, there were more than 2.3 million business establishments2 in Canada, as shown in Table 1, compared with 2.4 million establishments in December 2006. About half of all business establishments are called "employer businesses" because they maintain a payroll of at least one person (possibly the owner). The other half are classified as "indeterminate" because they do not have any employees registered with the CRA. Such businesses may indeed have no workforce (they may simply be paper entities that nonetheless meet one of the criteria for recognition as a business establishment) or they may have contract workers, family members and/or only the owners working for them. The "indeterminate" category was created because information about their workforce is not available.
Approximately 56 percent of all business establishments in Canada are located in Ontario and Quebec. Virtually all the rest are divided between the western provinces (36 percent) and the Atlantic provinces (7 percent). The Northwest Territories, Yukon and Nunavut represent only 0.3 percent of Canada's businesses.
Relative to population, the western provinces, Yukon and Prince Edward Island have more business establishments than elsewhere, with the highest rates in Alberta and Yukon at 94.7 and 91.4 per 1000 population respectively. Nunavut, Newfoundland and Labrador, Nova Scotia and New Brunswick have the lowest ratios of business establishments per 1000 population. Ontario and Quebec are below the national average of 70.7, with 68.5 and 60.6 business establishments per 1000 population respectively.
In terms of gross domestic product (GDP) per business establishment by province, the Northwest Territories shows the highest ratio at $1 576 000 per establishment. (This is likely due, in part, to the low number of establishments per 1000 residents; therefore, its GDP is spread over fewer establishments.) More broadly, there is a noticeable negative relationship between the number of establishments per 1000 inhabitants and contribution to GDP per establishment in that a higher number of establishments per 1000 population corresponds to a lower GDP per establishment. Alberta is an exception to this rule, with a relatively high GDP per establishment as well as a high number of establishments per 1000 residents.
Of the 1 077 047 employer businesses, 2904 or about 0.3 percent have 500 employees or more. The vast majority of employer businesses (98 percent) have fewer than 100 employees, 75 percent have fewer than 10 employees and 55 percent have only 1 to 4 employees (see Table 2).
About one quarter of all business establishments (indeterminate and employer businesses alike) produce goods, whereas the remainder provide services. Small firms (those with fewer than 100 employees) make up 97 percent of goods-producing employer businesses and 98 percent of all service-producing employer businesses (Table 2 and Figure 1). Using an alternative definition of small businesses in the serviceproducing sector that defines small businesses as those with fewer than 50 employees, small firms account for 95 percent of all service-producing employer firms.
Figure 1: Distribution of Business Establishments in the Goods-Producing and Service-Producing Sectors by Firm Size (Number of Employees), December 2007
Source: Statistics Canada, Business Register, December 2007.
Note 1: By conventional Statistics Canada definition, the goods-producing sector consists of North American Industry Classification System (NAICS) codes 11 to 31–33, while NAICS codes 41 to 91 define the service-producing sector.
Note 2: The "indeterminate" category consists of incorporated or unincorporated businesses that do not have a Canada Revenue Agency payroll deductions account. The workforce of such businesses may consist of contract workers, family members and/or owners.
Table 3 shows the distribution of employer businesses by size of business establishment in each province and territory. Generally speaking, the distribution by size in the provinces is similar to the national average distribution by size. However, there is some variation among the provinces and territories; for example, there is a higher percentage of micro-enterprises (1 to 4 employees) in Alberta (59 percent) and Newfoundland and Labrador (58 percent) than in Ontario (54 percent), Quebec (52 percent) or the territories (from 25 percent to 50 percent).
1. Statistics Canada uses four standard business units for purposes of compiling statistics. Establishments are the smallest unit/ grouping for which data are published. Establishments must:
a) produce a homogeneous set of goods or services;
b) not cross provincial boundaries; and
c) provide data on the value of output together with the cost of principal intermediate inputs used, along with the cost and quantity of labour resources used to produce the output.
For example, a business unit of a larger enterprise that provides independent accounting information to the government on sales taxes and payroll deductions would be recognized as an individual business establishment.
2. This number includes both commercial and non-commercial business establishments.
