It’s important to understand the ecosystem in which your business operates. This session outlines the legal and tax considerations of starting a business, including how to register and structure your business and how to maximize the value of distribution partners, industry contacts, lawyers and specialists to ensure your company’s success.
Entrepreneurial Ecosystem and Legal Fundamentals - Entrepreneurship 101 (2013/2014)
1. Entrepreneurial Ecosystem
and Legal Fundamentals
The Nuts and Bolts of Starting a Business
Presented by:
Tony Redpath
MaRS Senior Fellow
MaRS Discovery District
October 16th, 2013
Slide 1
MaRS
3. Memory at Work
!
When you start an enterprise, you have to work within an
existing ecosystem while seeking to create your own
relationship network and ecosystem.!
!
– Customers!
– Suppliers / Providers!
– Government!
– Regulatory bodies!
– Trade Associations!
!
!
Pg 3!
6. Memory at Work
For Profit and Non Profit Organizations:!
- For Profit Incorporation !
- Federal incorporation!
o Canada Business website!
o Canada Business Corporations Act!
!
- Non Profit Organizations!
o Canada Non for Profit Corporations Act !
o Non for Profit Incorporators Handbook !
o Charitable Status !
!
!
Pg 6!
!
7. Memory at Work
Provincial For Profit Incorporation!
- Service Ontario website!
- Business Corporations Act!
Provincial for Non Profit Organizations !
- CRA Website !
!
!
!
Pg 7!
8. Memory at Work
For Profit Options:!
- Delaware incorporation!
o US Investor Base !
Non Profit Options !
- Guide Star !
- Filing Requirements – IRS !
- L3C Legal Structure !
!
!
!
Pg 8!
9. Memory at Work
Regardless of incorporation jurisdiction, taxes are a requirement!
- Federal Corporate Tax!
- Provincial Corporate Tax!
- HST!
Pg 9!
10. Memory at Work
“The incorporation process can be very complex. You may wish to
obtain legal and tax advice to assist you with the preparation of the
incorporation documents and shareholders' agreements.”!
- Canada Business website!
Approximate cost to hire an accountant / lawyer to handle all the above
paperwork is $800 - $1500!
Remember – you are building a structure for success!
Pg 10!
11. Memory at Work
Federal and
provincial gov’t!
Your suppliers!
You Inc.!
Your customers!
Accountant!
Pg 11!
12. Memory at Work
You will need a shareholders agreement – it can be 1 page or 100
pages, but it must cover, at a minimum:!
- What is the ownership split (at the start; sweat equity vs salary)!
- How are decisions made!
- What are each person’s responsibilities!
- Assignment of Intellectual Property (esp. employees)!
- There are many other issues that can be covered in a shareholders
agreement (see Term Sheet lecture)!
o Legal advice is highly recommended!
!
You should have a Board of Directors!
!
Remember - you are building for success!
Pg 12!
13. Memory at Work
You will need an employee agreement that covers not only the job
description and salary, vacation etc. but also IP ownership,
confidentiality, non-compete, non-solicit clauses.
!
More taxes – you need to remit payroll deductions for income tax,
Employment Insurance, Canada Pension Plan (the good news is that
when you get the other federal tax numbers, you will also be set up for
payroll taxes)!
You need to register with the Workplace Safety and Insurance Board
(WSIB)!
Pg 13!
14. Memory at Work
!
• Shareholders agreement: Sample template!
• http://www.marsdd.com/articles/shareholders-agreement-sampletemplate/!
• Employment agreement: Sample template!
• http://www.marsdd.com/articles/employment-agreement-sampletemplate/!
• General partnership agreement: Sample template!
• http://www.marsdd.com/articles/general-partnership-agreementsample-template/ !
• Term sheet: Sample template!
• http://www.marsdd.com/articles/term-sheet-sample-template/!
!
Pg 14!
15. Memory at Work
Federal and
provincial gov’t!
You Inc.!
Your suppliers!
Bank!
WSIB!
Lawyer!
Accountant!
Board!
members!
Your customers!
Trade associations !
Trade shows!
Conferences !
Regional networks!
Regulatory bodies!
Pg 15!
16. Memory at Work
How do I register my enterprise name?!
Canada Business website!
!
How can I get tax credits for my research (SRED)?!
!http://www.cra-arc.gc.ca/txcrdt/sred-rsde/ !
!
How do I seek information about trademarks & patents?!
Canadian Intellectual Property Office website!
Pg 16!
17. Memory at Work
CRA!
CRA!
SRED!
SRED!
Federal and
provincial gov’t!
You Inc.!
Your suppliers!
Bank!
WSIB!
Lawyer!
Accountant!
Board!
members!
Your customers!
Trade associations !
Trade shows!
Conferences !
Regional networks!
Regulatory bodies!
Pg 17!
18. Memory at Work
Building Effective Relationships 101 !
- Professional Organizations & Trade Associations!
- Be Strategic!
o Too many to count…!
o Why do I need to be there? Who do I need to meet?!
- Scientific Conferences!
- Trade Shows!
Partners!
- Government Officials !
- Your Bank!
Pg 18!
19. Memory at Work
CRA!
SRED!
Federal and
provincial gov’t!
You Inc.!
Your suppliers!
Bank!
WSIB!
Lawyer!
Accountant!
Board!
members!
Your customers!
Trade associations !
Trade shows!
Conferences !
Regional networks!
Regulatory bodies!
Pg 19!
20. Memory at Work
Your
Compe*tors
Memory at Work
CRA!
SRED!
Federal and
provincial gov’t!
You Inc.!
Your suppliers!
Bank!
WSIB!
Lawyer!
Accountant!
Broad!
members!
Your customers!
Trade associations !
Trade shows!
Conferences !
Regional networks!
Regulatory bodies!
Pg 17!
Your
Channel
Partners
Your
Distributors
/
Value
Added
Resellers
Pg 20!
21. Memory at Work
Don’t run out and commit to a big office with lots of fancy furniture –
get the space that you need, shop at IKEA and grow your space as
necessary!
Don’t hire your relatives simply because they are available – get the
team that you actually need!
Don’t hire your lab, old college university friends mates UNLESS
they can offer you something to build your organization !
Don’t assume that the “understanding” that you have with a
colleague / employee is indeed an understanding!
Remember – attitudes change when there is money on the table!
Pg 21!