Definitions and Concepts used in Business Register

• Business register coverage
• Data quality and limitations
• Key definitions found in Business Register Data
• Available Data
• Contact information

Business Register coverage

The Business Register is a repository of information reflecting the Canadian business population and exists primarily for the purpose of supplying frames for all economic surveys in Statistics Canada. It is designed to provide a means of coordinating the coverage of business surveys and of achieving consistent classification of statistical reporting units. It also serves as a data source for the compilation of business demographic information.

The major sources of information for the Business Register are updates from the Statistics Canada survey program and from Canada Revenue Agency’s (CRA) Business Number account files. This CRA administrative data source allows for the creation of a universe of all business entities.

Included in the Business Register are all Canadian businesses^{Note 1} which meet at least one of the three following criteria:

1. Have an employee workforce for which they submit payroll remittances to CRA; or
2. Have a minimum of $30,000 in annual revenue; or
3. Are incorporated under a federal or provincial act and have filed a federal corporate income tax form within the past three years.

The data provided in our products reflects counts of statistical locations by industrial activity (North American Industry Classification System), geography codes, and employment size ranges.

Notable changes to the data

Starting with the June 2015 reference period our product’s name changed from Canadian Business Patterns to Canadian Business Counts.

A number of changes that occurred for the December 2014 reference period resulted in a significant increase in the total number of businesses in Canada. The changes are made in an effort to be more coherent with our definition.

The changes are the following:

- There are two sets of CANSIM tables replacing the previous set of tables:

• Locations with employees (CANSIM 552-000x)
• Locations without employees (CANSIM 553-000x)

- There are two general industrial classification categories:

• Unclassified: new category for businesses which have not received a NAICS code
• Classified: existing category for businesses which have received a NAICS code

The impact of adding the unclassified category is an additional 78,718 locations with employees and 313,107 locations without employees. These counts can be easily identifiable because they are in a separate category.

- Businesses without employees correspond to the “indeterminate” employment category from the previous reference periods. The counts of businesses without employees now cover all enterprises which meet one of the following criteria:

• is incorporated
• shows a minimum of $30,000 in revenue (non-taxable and/or taxable)

This change affects businesses that did not have $30,000 in taxable revenue in previous years but did have at least $30,000 in overall (non-taxable and taxable) revenue. These businesses will now be included and represent approximately 600,000 units. Business counts in NAICS 53 - Real estate and rental and leasing and 62 - Health care and social assistance have the largest increases.

Starting with the June 2012 reference period, Canadian Business Patterns CD products are no longer available. Data by provinces and territories is available through CANSIM tables 551-000x, 552-000x and 553-000x. As well, all other previous data are still available through custom requests by contacting the Business Register Division’s Dissemination Unit.

The December 2008 reference period introduced the use of ‘statistical location’ counts, in addition to the usual establishment counts. The use of location counts provides a better measurement of actual business units. Definitions of the statistical establishment and location are provided later in this document under the “Statistical Establishment” and “Statistical Location” sections.

Data quality and limitations

The Business Register is largely based on the Business Number (BN) registration source as collected by the Canada Revenue Agency (CRA). Therefore, the quality of counts is heavily dependent on the quality of the information submitted by Canadian businesses when applying for their Business Number.

Creations

In general, a location creation on the Business Register occurs shortly after a BN is created for each business registrant by CRA. The BN registrations are used to update the Business Register database on a weekly basis, which results in most new business locations being created only a few weeks after their administrative entry. For a small number of business locations the creation process is delayed by the imprecision or the lack of information concerning the nature of business activity as submitted to CRA. In these cases, the business is contacted to obtain the necessary information for the creation of a location record.

Inactivation

Businesses are assigned an inactive status on the Business Register when neither a tax payment nor payroll remittance has been made by these businesses for some time. Therefore, the possibility exists that a business may have ceased operation within this time period but remains recorded within the CBP counts.

Failure to make contact with a business during the conduct of Statistics Canada survey activities may also lead to the inactivation of Business Register units.

Data variations due to methodological changes

In December 2014, a revision of the employer status on all units of the Business Register resulted in approximately 70,000 businesses with employees to shift to the businesses without employees category. This is mostly noticeable in the smaller employment size ranges. Business counts in NAICS 72 - Accommodation and food services, 62 - Health care and social assistance, 31-33 – Manufacturing and 44-45 - Retail trade see the largest decreases. Also, the change in coverage to businesses without employees represents an increase of approximately 600,000 to cover all businesses which meet the criteria (see 1st section on Business Register Coverage).

In December 2000, you will note a drop in the number of businesses. As well in June 2005, the number of smaller businesses significantly declined. During the last few years, the Business Register Division has analyzed new administrative sources in order to detect more rapidly and accurately business closures. This has resulted in the use of new signals that are now part of the processes to update the Business Register.

The June 2006 reference period shows an increase in the number of businesses as a result of a methodological change. There is a new way of identifying newcomers on the Business Register. The following sectors have been affected: NAICS 48-49 (Transportation and Warehousing), NAICS 53 (Real Estate and Rental and Leasing) and NAICS 54 (Professional, Scientific and Technical Services).

The December 2007 reference period is based on the redesigned Business Register. The statistical structure (including establishments) has been simplified to better reflect the operating structure of the business. The decrease in the number of establishments is the result of our continuous efforts to detect inactive businesses as early as possible.

The December 2008 and June 2009 reference periods show a decrease in the number of businesses. This can be attributed to the introduction of new ‘inactivation rules’ that expanded the ability to identify units that are not reporting any economic activity.

For the first time, the December 2010 reference period includes all unincorporated (T1) businesses with sales of at least $30,000. This integration of T1 businesses is intended to create a more comprehensive representation of the business population on our Register. In particular, this change has mainly affected the following sectors: NAICS 53 (Real Estate and Rental and Leasing), NAICS 44-45 (Retail Trade) and NAICS 62 (Health Care and Social Assistance). The introduction of these units has not had a significant impact on total CBP counts and represents 1.6% of all locations in December 2010.

A large overall increase in the June 2013 reference period is due to incorporated businesses which are now required to auto-code a NAICS in order to record their tax form information with the Canada Revenue Agency. The increase represents an accumulation of about two years of auto-coding. This change affected almost every sector and accounts for most of the growth in the data between December 2012 and June 2013.

A small portion of the increase in businesses in December 2013 is due to new rules regarding the acceptance of auto-coded NAICS which resulted in these businesses being included in the data. The impact was not as wide-spread as the initial NAICS auto-code increase in June 2013 but mostly affected non-employers and the majority of sectors.

Geography

The Business Register adopted the Standard Geographical Classification, 2011 version, starting in June 2013. The spatial coding of locations is based on the Standard Geographical Classification (SGC-2011) maintained by Statistics Canada. The link between a specific business and its geographical code is made using the postal code.

Since the postal code is designed by Canada Post and targets the efficient delivery of the mail, there are many situations where one postal code does not align exactly to the boundaries of a single SGC geographic unit. The smaller and rural geographic units are more subject to this possibility. These situations are more prevalent in rural areas, where the addresses are defined by a single rural route, box or post office within the postal code.

Where a single postal code crosses different SGC geographical units, the Business Register assigns all the locations claiming the same postal code to a single geographical unit, which in general, is the major geographic unit in the surrounding area. There are some situations where locations are counted in geographical units (particularly at the census subdivision level) slightly askew to their true physical locality.

Starting in June 2014, only CSD with a count of 1 or more are included in the data tables. This resulted in a difference of 1,598 CSD from December 2013 to June 2014 but did not have any impact on the data.

Employment size ranges

As of December 2007, for most establishments/locations, the employment estimate is based on a Canada Revenue Agency form (PD7) filled by the employer where the number of employees over the last pay period (full time or not) is reported. This variable is updated on a monthly basis.

Prior to December 2007, for most establishments, the employment estimates were derived using, as a primary input, the amount of payroll deduction remittances made by employers on behalf of their employees. These were estimates and should not be confused with estimates produced by the Labour Force Survey or the Survey of Employment, Payroll and Hours. They are used by Statistics Canada for survey stratification purposes.

Businesses which do not have a payroll deduction account with CRA, but may still have a workforce of contracted workers, family members or business owners, are included in our tables without employees (formerly the indeterminate category).

Industrial classification code

Locations are coded based on the concept of major business activity in a manner consistent with the approach outlined by the North American Industry Classification System (NAICS-2012).

For newly created businesses, the primary industrial coding is initially processed using automated coding software. This software evaluates the activity description indicated by the business and assigns the appropriate industry classification coding (about 50% of new business records). Activity descriptions lacking precision are subjected to a manual coding process (about 50%^{Note 2} of new business records). Subsequent to this initial classification process, the industry code may be further updated if:

• the Business Register is notified of a change of activity as a result of a survey contact;^{Note 3}
• a subsequent update from the CRA administrative source which mentions a change in the business activities; or
• a business profile is conducted by the Business Register.

Over the course of 1997, the BR implemented the conversion of the 1980 Standard Industry Classification (SIC) coding system to the newly developed North American Industry Classification System (NAICS). The fundamental concepts behind the classification systems (SIC and NAICS) were different: NAICS is based on a production-oriented principle whereas the SIC’s basis was the various goods and services produced. While the BR had sufficient information to assign a NAICS code for the majority of business records, over 300,000 businesses were contacted to obtain additional information regarding the nature of their business. Based on this new information a NAICS code was assigned and, where appropriate, the SIC was also updated. The SIC and NAICS 1997^{Note 4} coding systems are available on our products as of December 1998 and the SIC is available up until June 2004. Therefore, any data disseminated after October 2004 only have available the North American Industry Classification System (NAICS) code.

In December 2014, we added businesses which did not yet have an assigned NAICS and separated them into two categories, the Classified and Unclassified categories.

In December 2012, we implemented a new revised version of the NAICS: NAICS 2012. Various kinds of changes are brought into NAICS for 2012. Many changes involve clarification of the definition and boundary of classes through changes to the descriptive text of the definition; the illustrative examples; the exclusions; and titles of industries. Some changes involve the reduction of industry detail, while other industries are detailed further. Several other changes involve code numbering changes, by pushing 5-digit detail down to the 6-digit level, with otherwise no changes in content. This was done to keep the NAICS coding consistent at the trilateral level. Among the most notable changes are changes relating to outsourcing of manufacturing production, video game publishers and developers, book publishing exclusive agents, and crafts.

In December 2006, the NAICS 2007 version was implemented. It is important to note that the majority of changes occurred within sector boundaries with two exceptions. Real Estate Investment Trusts (REITs) which moved from sector 52, Finance and Insurance to sector 53, Real Estate and Rental and Leasing. Executive Search Consulting Services moved from sector 54, Professional, Scientific and Technical Services to sector 56, Administrative and Support, Waste Management and Remediation Services. The greatest change introduced by this revision is in the area of telecommunications, as was the case in the NAICS 2002 revision. As of December 2006, NAICS 2002 has been replaced, in our products, by NAICS 2007.

In June 2002, NAICS 1997 was replaced by NAICS 2002. Two sectors were affected: Construction, and Information and Culture industries.

Key definitions found in Business Register Data

Statistical Entities

Statistical Enterprise

An enterprise is the legal operating entity at the top of the operating structure. There is only one enterprise per operating structure. It is associated with a complete set of financial statements.

Statistical Establishment

A statistical establishment is the production entity or the smallest grouping of production entities^{Note 5} which:

1. Produces a homogeneous set of goods or services;
2. Does not cross provincial boundaries; and
3. Provides data on the value of output together with the cost of principal intermediate inputs used along with the cost and quantity of labor resources used to produce the output.

For example, a plant in the manufacturing industry which provides accounting information regarding the value of shipments (sales), direct costs and labor costs is considered a single establishment. However, two stores in the retail industry may be considered one establishment if the accounting information, described in item (c) above, is not available separately, but is combined at a higher level.

Statistical Location

The location is an operating entity, specifically a production entity which:

1. Conducts economic activity at or from a single physical location or group of locations;
2. Resides within the smallest standardized geographical area;
3. Is able to provide employment data at a minimum.

Employment

Source

Employment is based on both corporations’ payroll remittance and profiling/survey data. These data are at first edited and imputed before being used as input for other processes.

For simple units, attached to only one legal entity, the employment is derived from payroll deductions using the 2nd maximum input within the last 12 months of data. For the complex units, aggregated employment, obtained from profiling, is first determined at the enterprise level. This value is afterward distributed at the establishment and location levels based on the profiled employment distribution from the Business Register.

These employment estimates are used for survey stratification purposes. Using other sources of data such as the Survey of Employment Payroll and Hours may lead to different results.

Employment Size Ranges

The following are the employment size ranges available in the Business Register:

1 to 4
5 to 9
10 to 19
20 to 49
50 to 99
100 to 199
200 to 499
500+

Locations without employees include the self-employed, i.e. those who do not maintain an employee payroll, but may have a workforce which consists of contracted workers, family members or business owners. These also include employers who did not have employees in the last 12 months.

Please note that locations are assigned to employment size ranges based on employment size estimates derived from payroll remittance and profiling data. The primary purpose of the employment size data is to improve the efficiency of samples selected to conduct statistical surveys. These data should not be used in any manner to compile industry employment estimates. Employment size estimates, as grouped in employment size ranges, tend to measure the annual maximum number of employees, full time or not.

Geography

The Standard Geographical Classification (SGC) is Statistics Canada’s official classification for the geographical areas in Canada. It was developed to facilitate the analysis of statistical data using a uniform geographical area definition. It produces a range of geographical areas that are useful for analysis, convenient for data collection and compilation on this basis. It is intended primarily for the classification of statistical units such as locations.

Two criteria were used in the selection of the geographical areas for the Standard Geographical Classification:

1. Easily recognized by the respondents who are asked to report geographical detail because they routinely conduct business with administrative units such as a municipality, regional municipality or province; and
2. Useful geographical areas for the purpose of statistics.

The Standard Geographical Classification identifies three types of key geographical areas:

1. Provinces and territories (13 in total)
2. Census divisions (293 in total)
3. Census subdivisions (5,253 in total)

Structure of the Standard Geographical Classification

Each of the three sets of areas covers all of Canada. They are hierarchical: a census subdivision aggregates to a census division, which in turn aggregates to a province or territory.

(1) Province and Territory

'Province' and 'territory' refer to the major political units of Canada. From a statistical point of view, province and territory are basic areas for which data are tabulated. Canada is divided into 10 provinces and 3 territories.

(2) Census Division

Census division (CD) is the general term for provincially legislated areas (such as county and regional district) or their equivalents. Census divisions are intermediate geographic areas between the province/territory level and the municipality (census subdivision).

Usually they are groups of neighbouring municipalities joined together for the purposes of regional planning and managing common services (such as police or ambulance services). These groupings are established under laws in effect in certain provinces of Canada. For example, a census division might correspond to a county or a regional district. In Newfoundland and Labrador, Manitoba, Saskatchewan, Alberta, Yukon, Northwest Territories and Nunavut, provincial/territorial law does not provide for these administrative geographic areas. Therefore, Statistics Canada, in cooperation with these provinces and territories, has created equivalent areas called census divisions for the purpose of collecting and disseminating statistical data.

Census division boundaries tend to be relatively stable over many years. For this reason the census division has been found useful for analysing historical data on small areas.

Census divisions (CDs) are classified into 12 types. Ten of these types were created according to official designations adopted by provincial or territorial authorities. The other two types - the "census division" (CDR) and the "territory" (TER) - were created as equivalents by Statistics Canada, in cooperation with the affected provinces and the territory, for the purpose of collecting and disseminating statistical data.

(3) Census Subdivision

Census subdivision (CSD) is the general term for municipalities (as determined by provincial/territorial legislation) or areas treated as municipal equivalents for statistical purposes (e.g., Indian reserves, Indian settlements and unorganized territories).

Municipalities are units of local government. There are two municipalities in Canada that straddle provincial boundaries, Flin Flon (Manitoba and Saskatchewan) and Lloydminster (Saskatchewan and Alberta). Each of their provincial parts is treated as a separate CSD. Three Indian reserves also straddle provincial limits, Shoal Lake (Part) 39A and Shoal Lake (Part) 40 (Ontario and Manitoba); and Makaoo (Part) 120 (Saskatchewan and Alberta); and are treated as separate CSDs.

Beginning with the 1981 Census, each Indian reserve and Indian settlement recognized by the Census is treated as a separate CSD and reported separately. Prior to the 1981 Census, all Indian reserves in a census division were grouped together and reported as one census subdivision.

There is a total of 961 Indian reserves and 28 Indian settlements classified as CSDs. These are populated (or potentially populated) Indian reserves, which represent a subset of the approximately 3,100 Indian reserves across Canada. Statistics Canada works closely with Aboriginal Affairs and Northern Development Canada (formally known as Indian and Northern Affairs Canada) to identify the reserves and the settlements to be included as CSDs. Furthermore, the inclusion of an Indian settlement is dependent upon the agreement of the provincial or territorial authorities.

Census subdivisions are classified into 54 types. Fifty-two of these were created according to official designations adopted by provincial, territorial or federal authorities. The other two types - "Subdivision of unorganized" in Newfoundland and Labrador, and "Subdivision of county municipality" in Nova Scotia - were created as equivalents to municipalities by Statistics Canada, in cooperation with the two affected provinces, for the purpose of collecting and disseminating statistical data.

Please take note, when using the CSD, of the volatility of the counts between the different reference periods (specifically with regards to rural areas). Units move from one CSD to another, not due to actual changes in physical location, but due to changes in linkages between a specific CSD and postal code.

Census Metropolitan Area and Census Agglomeration

Census metropolitan areas and census agglomerations are other standard units created to present statistics for the largest urban centers in Canada.

A census metropolitan area (CMA) or a census agglomeration (CA) is formed by one or more adjacent municipalities centred on a population centre (known as the core). A CMA must have a total population of at least 100,000 of which 50,000 or more must live in the core. A CA must have a core population of at least 10,000. To be included in the CMA or CA, other adjacent municipalities must have a high degree of integration with the core as measured by commuting flows derived from previous census place of work data.

If the population of the core of a CA declines below 10,000, the CA is retired. However, once an -area becomes a CMA, it is retained as a CMA even if its total population declines below 100,000 or the population of its core falls below 50,000. All areas inside the CMA or CA that are not population centres are rural areas.

Other Geographies

Economic Region

An economic region (ER) is a grouping of complete census divisions (CDs) (with one exception in Ontario) created as a standard geographic unit for analysis of regional economic activity.

Census Tract

Area that is small and relatively stable. Census tracts usually have a population of 2,500 to 8,000. They are located in large urban centres that must have an urban core population of 50,000 or more.

Federal Electoral District

Area represented by a Member of Parliament (MP) elected to the House of Commons.

Dissemination Area

Small area composed of one or more neighbouring blocks, with a population of 400 to 700 persons. All of Canada is divided into dissemination areas.

Forward Sortation Area

Area composed of the first three digits of the postal code which is a six-character code defined and maintained by Canada Post Corporation for the purpose of sorting and delivering mail.

‘000’ Residue

Please note that codes have been created for residues. They consist of the province/territory code followed by zeroes. This residual category reflects statistical units in Canada where there is insufficient information to precisely locate the locations within a census division/census subdivision as determined by the 2011 Standard Geographical Classification. The information does, however, indicate within which province/territory the location resides.

Starting with the December 2007 reference period, the number of businesses coded as “residue” (see description below) has increased with the change to the new Standard Geographical Classification (SGC). Since the new geography is based on a more recent version of postal codes, a number of existing postal codes no longer find a matching geography code. A similar impact affected the June 2013 data for the same reason.

Note that for the census metropolitan areas and census agglomeration geography, the code for the residue has been set to ‘blank’. This was implemented to counter the geography change from SGC1996 to SGC2001 where the code 000 represents the territories.

Industry Codes - North American Industry Classification System

The North American Industry Classification System (NAICS) is an industry classification system developed by the statistical agencies of Canada, Mexico and the United States. Created against the background of the North American Free Trade Agreement, it’s designed to provide common definitions of the industrial structure of the 3 countries and a common statistical framework to facilitate the analysis of the 3 economies. NAICS is based on supply or production oriented principles, to ensure that industrial data, classified to NAICS, are suitable for the analysis of production-related issues such as industrial performance.

NAICS is a system encompassing all economic activities. It has a hierarchical structure. At the highest level, it divides the economy into 20 sectors. At lower levels, it further distinguishes the different economic activities in which businesses are engaged:

The first four levels of NAICS (2 to 5-digit codes) are designed for the production of comparable economic statistics by the three countries. At the fifth level (i.e. 6-digit code), each country can elaborate the national detail it requires for its own statistical purposes.

NAICS is designed for the compilation of production statistics and, therefore, for the classification of data relating to establishments and locations. It takes into account the specialization of activities generally found at the level of the producing units of businesses. The criteria used to group establishments into industries in NAICS are similarity of input structures, labour skills and production processes.

NAICS can be used for classifying enterprises. However, when NAICS is used in this way, the following caveat applies: NAICS has not been specially designed to take account of the wide range of vertically- or horizontally-integrated activities of large and complex, multi-establishment companies and enterprises. Hence, there will be a few large and complex companies and enterprises whose activities may be spread over the different sectors of NAICS, in such a way that classifying them to one sector will misrepresent the range of their activities.

Please note that the 5-digit codes are not included in any Business Register tables.
For a list of changes between NAICS 2007 and NAICS 2012 please go to our website.

Revenue

Source

These revenues are derived mostly from administrative files from C.R.A. (Canada Revenue Agency). They are based on both corporations’ income tax revenues and GST sales remittances. These data are at first edited and imputed before being used as input for other processes.

For simple units, attached to only one legal entity, the revenue is derived from a regression-model using the GST sales as independent variable, the income tax revenue being the dependant variable.

For the complex units, aggregated revenue is first determined at the enterprise level. This value is afterward distributed at the establishment and location levels based on the profiled revenue distribution from the Business Register.

Available Data

CANSIM - Canadian Business Counts / Canadian Business Patterns

Location counts with employees by province/Canada, NAICS and employment size ranges are available on CANSIM tables 552.

Location counts without employees by province/Canada and NAICS are available on CANSIM tables 553.

Location counts by province/Canada, NAICS and employment size ranges are available on terminated CANSIM tables 551.

Tables with no confidential measures applied

Units: Location, establishment or enterprise counts
Geography: All geographies
Industry: All levels of NAICS
Employment Size Ranges: Standard 9 ranges or custom 13 or 21 ranges

Revenue Ranges

Units: Location, establishment or enterprise counts
Geography: Province and CA/CMA
Industry: NAICS-2, 3
Confidentiality measures: Rounding

Profit/Non Profit Data (December only)

Units: Establishment counts
Geography: Province
Industry: NAICS-2
Confidentiality measures: Suppression

Business Type and Public/Private Data (December only)

Units: Enterprise counts
Geography: Province and CMA (14)
Industry: NAICS-2
Confidentiality measures: Suppression

Contact Information

Contact us:

Business Register Dissemination Unit
Statistical Registers and Geography Division
Statistics Canada
Jean Talon Building, 8-A8
Tunney’s Pasture
Ottawa, Ontario
K1A 0T6

statcan.brd-information-dre-information.statcan@statcan.gc.ca

Fax: (613) 951-6274

Notes