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Basic Nuts and Bolts of Starting a Company

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Speaker Tony Redpath. Part of the CIBC Presents Entrepreneurship 101 lecture series. Read more and watch the video here: http://www.marsdd.com/Events/Event-Calendar/Ent101/2008/entrepreneurship-types-10292008.html

* How do you incorporate?
* What government agencies do you have to engage with (after all, they will want to tax all that money you are making)?
* How do you start off plugging yourself into your customer community?

Part of the CIBC Presents Entrepreneurship 101 lecture series. Read more and watch the video here: http://www.marsdd.com/Events/Event-Calendar/Ent101/2008/entrepreneurship-types-10292008.html

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Basic Nuts and Bolts of Starting a Company

  1. ` Nuts and Bolts of Starting a Business Presented by: Tony Redpath Vice President, Partner Programs MaRS Discovery District 29 October 2008 Slide 2 MaRS
  2. Basic Premise:  When you start a business you have to fit into an existing ecosystem.  Thismeans establishing numerous links with different groups:  Customers  Suppliers / Providers  Government  Regulatory bodies  Trade Associations Slide 3 MaRS
  3. Your Ecosystem Your You Your Suppliers Inc. Customers Slide 4 MaRS
  4. Getting Incorporated  Two choices:  Federal incorporation   Canada Business website   http://www.canadabusiness.ca/gol/cbec/site.nsf/en/index.html   Canada Business Corporations Act   http://corporationscanada.ic.gc.ca/epic/internet/incd-dgc.nsf/en/ h_cs01914e.html Slide 5 MaRS
  5. Getting Incorporated (cont.)  Two choices:  Provincial incorporation   Service Ontario website   http://www.gov.on.ca/ont/portal/!ut/p/.cmd/cs/.ce/7_0_A/.s/ 7_0_252/_s.7_0_A/7_0_252/_l/en?docid=STEL01_033449   Business Corporations Act   http://www.gov.on.ca/ont/portal/!ut/p/.cmd/cs/.ce/7_0_A/.s/ 7_0_252/_s.7_0_A/7_0_252/_l/en?docid=STEL02_163189 Slide 6 MaRS
  6. Getting Incorporated (cont.)  A third choice – for the future:  Delaware incorporation   Needed to attract US investors Slide 7 MaRS
  7. The Tax Man Cometh ….  Regardless of where you are incorporated, you will have to register your company with a variety of tax collectors:  Federal Corporate Tax  Provincial Corporate Tax  GST/PST Slide 8 MaRS
  8. 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   Ballpark cost to hire an accountant / lawyer to handle all the above paperwork is $800 - $1500 Slide 9 MaRS
  9. Your Ecosystem Federal and Provincial Govt. Your You Your Suppliers Inc. Customers Accountant Slide 10 MaRS
  10. Do you have co-founders?   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 There are many other issues that can be covered in a shareholders agreement (see Term Sheet lecture) Legal advice is highly recommended Slide 11 MaRS
  11. Your Ecosystem Federal and Provincial Govt. Your You Your Suppliers Inc. Customers Lawyer Accountant Slide 12 MaRS
  12. 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)   http://www.wsib.on.ca/wsib/wsibsite.nsf/Public/EmployerRegisterWSIB Slide 13 MaRS
  13. Your Ecosystem Federal and WSIB Provincial Govt. Your You Your Suppliers Inc. Customers Lawyer Accountant Slide 14 MaRS
  14. Company Name Registration  Selecting and registering your business name  Canada Business website   http://bsa.canadabusiness.ca/gol/bsa/site.nsf/en/su06937.html  Trademarks, patents  Canadian Intellectual Property Office website   http://www.cipo.ic.gc.ca/epic/site/cipointernet-internetopic.nsf/en/wr00034e.html Slide 15 MaRS
  15. Are you doing research and development?   Scientific Research and Experimental Development tax credits (SREDs)   A major advantage for Canadian companies   http://www.cra-arc.gc.ca/sred/   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 MaRS
  16. Networking  You need to establish a commercial network (just as you had an academic network)   Trade Associations   Trade Shows   Scientific Conferences   Regulatory Bodies   Your Bank   Regional networking organizations (e.g. MaRS)   Professional bodies (e.g. PEO) Slide 17 MaRS
  17. Your Ecosystem Federal and WSIB Provincial Govt. Your You Your Suppliers Inc. Customers Bank Lawyer Accountant Trade associations Trade Shows Conferences Regional Networks Regulatory Bodies Slide 18 MaRS
  18. Some Don’t’s …   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 mates – you are not building a research lab, you are building a company Slide 19 MaRS

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