This lecture outlines the legal and tax considerations of starting a business, including how to register and structure your business. You are introduced to the importance of understanding the entire “ecosystem” of your business, including distribution partners, industry contacts, lawyers and human resource specialists.
3. `
Nuts and Bolts of Starting
a Business
Presented by:
Tony Redpath
Vice President, Partner Programs
MaRS Discovery District
October 20th, 2010
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4. Creating an Ecosystem…
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
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5. Your Ecosystem..
Just at the beginning…..
Your You Your
Suppliers Inc. Customers
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6. What should be my first step?
Incorporation
For Profit and Non Profit Organizations:
For Profit Incorporation
Federal incorporation
– Canada Business website
– Canada Business Corporations Act
Non Profit Organizations
Canada Non for Profit Corporations Act
Non for Profit Incorporators Handbook
Charitable Status
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7. Incorporation in Ontario
Provincial For Profit
Incorporation
Service Ontario website
Business Corporations Act
Provincial for Non Profit
Organizations
CRA Website
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8. Incorporation in the US
Moving South of the Border?
For Profit Options:
Delaware incorporation
US Investor Base
Non Profit Options
Guide Star
Filing Requirements – IRS
L3C Legal Structure
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9. After incorporation, taxes will follow
….
Regardless of incorporation jurisdiction, taxes
are a requirement
Federal Corporate Tax
Provincial Corporate Tax
HST
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10. Rules of the Incorporation & Taxes
Lesson number 1: Get Help!
“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
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11. Your Ecosystem
The Expansion Continues
Federal and
Provincial Govt.
Your You Your
Suppliers Inc. Customers
Lawyer Accountant
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12. Post Incorporation..
Founders, partners & employees
Youwill 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
There are many other issues that can be covered in a
shareholders agreement (see Term Sheet lecture)
Legal advice is highly recommended
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13. Are you going to have employees?
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)
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14. Your Ecosystem
Federal and
WSIB
Provincial Govt.
Your You Your
Suppliers Inc. Customers
Lawyer Accountant
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15. Where should I register my
enterprise name?
How do I register my enterprise name?
Canada Business website
How do I seek information about trademarks &
patents?
Canadian Intellectual Property Office
website
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16. Types of Organizations
Research and Development
Scientific Research and Experimental Development tax credits
(SREDs)
A major advantage for Canadian companies
Claimants can apply for SR&ED investment tax credits for
expenditures such as wages, materials, machinery, equipment,
some overhead, and SR&ED contracts.
Generally, a Canadian-controlled private corporation (CCPC)
can earn an investment tax credit (ITC) of 35% up to the first $2
million of qualified expenditures for SR&ED carried out in
Canada
Scientific Audit and Financial Audit
To qualify for the SR&ED program, work must advance the
understanding of scientific relations or technologies, address
scientific or technological uncertainty, and incorporate a
systematic investigation by qualified personnel. Slide 16
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17. Your Ecosystem
Federal and
CRA WSIB
Provincial Govt.
Your You Your
Suppliers Inc. Customers
Lawyer Accountant
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18. Beginning to build your network
Establish a commercial network that compliments
your existing networks
Building Effective Relationships 101
Professional Organizations & Trade Associations
Be Strategic
Too many to count….
Why do I need to be there? Who do I need to meet?
Scientific Conferences
Trade Shows
Partners
Government Officials
Your Bank
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19. Your Ecosystem
Federal and
CRA WSIB
Provincial Govt.
Your You Your
Suppliers Inc. Customers
Trade associations
Trade Shows
Conferences
Bank Lawyer Accountant Regional Networks
Regulatory Bodies
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20. Consider things NOT to do….
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
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