Entrepreneurial Ecosystem and Legal Fundamentals - Entrepreneurship 101 (2013/2014)
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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.
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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
- 2. Slide 2 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!
- 5. Memory at Work Your! Suppliers ! You! Inc.! Your! Customers! Pg 5!
- 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!