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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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Slide 2
MaRS
`
Nuts and Bolts of Starting a Business
Presented by:
Tony Redpath
Vice President, Partner Programs
MaRS Discovery District
29 October 2008
Slide 3
MaRS
Basic Premise:
When you start a business you have to fit into an existing ecosystem.
This means establishing numerous links with different groups:
Customers
Suppliers / Providers
Government
Regulatory bodies
Trade Associations
Slide 4
MaRS
Your Ecosystem
You Inc.
Your Suppliers
Your Customers
Slide 5
MaRS
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 6
MaRS
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 7
MaRS
Getting Incorporated (cont.)
A third choice – for the future:
Delaware incorporation
Needed to attract US investors
Slide 8
MaRS
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 9
MaRS
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 10
MaRS
Your Ecosystem
You Inc.
Your Suppliers
Your Customers
Federal and Provincial Govt.
Accountant
Slide 11
MaRS
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 12
MaRS
Your Ecosystem
You Inc.
Your Suppliers
Your Customers
Federal and Provincial Govt.
Lawyer Accountant
Slide 13
MaRS
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 14
MaRS
Your Ecosystem
You Inc.
Your Suppliers
Your Customers
Federal and Provincial Govt.
Lawyer Accountant
WSIB
Slide 15
MaRS
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 16
MaRS
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 17
MaRS
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 18
MaRS
Your Ecosystem
You Inc.
Your Suppliers
Your Customers
Federal and Provincial Govt.
Lawyer Accountant
WSIB
Bank Trade associations Trade Shows Conferences
Regional Networks Regulatory Bodies
Slide 19
MaRS
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