Entrepreneurship & Small Business

Ready To Start Down The Entrepreneurship Road. Is There An Order Of Steps I Should Take?

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Nov 22, 2006
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Ready To Start Down The Entrepreneurship Road. Is There An Order Of Steps I Should Take?

So after several years of working at my previous employer, I’ve decided that I want to try to start up my own company in the same field. Right now I’m doing a lot of free lance work and have a good amount of time, so I figure why not.

That being said, most of the products that I will be manufacturing will be sold to U.S and international customers(hence most transactions will be done in USD). I need to setup a U.S bank account, and taking the advice of many on these forums I will go with a BMO Harris account. I’m also planning to grab a U.S credit card hopefully(so I don’t have to keep paying exchange fees for all the supplies I’m purchasing from U.S distributors).

My main question is with regards to registering my business. From what I have read, it seems better to become incorporated rather than a proprietorship(for liability reasons). What would be the best way to do this. Should I contact a lawyer to get the ball rolling(and how much should I expect to pay in Ontario)?

Business insurance is another thing, but I guess that comes after I register the business.

My background is in engineering, and my business acumen isn’t the greatest when it comes to all the technicalities. Hence why I’m here now before I decide to set sail.
12 replies
Deal Guru
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Sep 1, 2005
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Markham
I don't think you should accept advice from a forum for this. Seek an qualified CPA for proper advice as your situation is complex...you might need to setup US structure if your customers are all US and if you have US presence (ie where is the manufacturing going to be done)? There are other cross border tax issues...like filing.

You can do some reading...just so you don't burn a ton of cash asking questions or figuring out what questions you should ask.

https://www.google.com/search?q=canadia ... e&ie=UTF-8
We're all bozos on the bus until we find a way to express ourselves...

Failure is always an option...just not the preferred one!
[OP]
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Nov 22, 2006
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gr8dlr wrote: I don't think you should accept advice from a forum for this. Seek an qualified CPA for proper advice as your situation is complex...you might need to setup US structure if your customers are all US and if you have US presence (ie where is the manufacturing going to be done)? There are other cross border tax issues...like filing.

You can do some reading...just so you don't burn a ton of cash asking questions or figuring out what questions you should ask.

https://www.google.com/search?q=canadia ... e&ie=UTF-8
Manufacturing is going to be done here and shipped to the U.S. I know things also get complicated with CUSMA/USMCA exemptions.

My main problem is that I don't know who does what. Should I go talk to a corporate/business tax lawyer first to get the business registered or should I go to a CPA?
Deal Guru
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Sep 1, 2005
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I'd start with the CPA.

Since your previous employer was in the same field...are you trying to duplicate what they do? If that's the case, you might want to know if there's any issue there ie non-compete? approaching clients? etc
We're all bozos on the bus until we find a way to express ourselves...

Failure is always an option...just not the preferred one!
Deal Addict
Jun 27, 2006
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gr8dlr wrote: I'd start with the CPA.

Since your previous employer was in the same field...are you trying to duplicate what they do? If that's the case, you might want to know if there's any issue there ie non-compete? approaching clients? etc
+1 setting up the company can be done without a CPA but there are more things to consider. State and local tax for example is extremely complicated in US which varies by area. https://www.avalara.com/vatlive/en/coun ... s-tax.html
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Sep 16, 2015
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Calgary, AB
J-Taiko wrote: I need to setup a U.S bank account, and taking the advice of many on these forums I will go with a BMO Harris account. I’m also planning to grab a U.S credit card hopefully(so I don’t have to keep paying exchange fees for all the supplies I’m purchasing from U.S distributors).
A couple of quick thoughts:

- Harris will give you a business debit Mastercard that you can use to purchase in USD from your US account without worrying about exchange fees.
- Set up a Transferwise account. It allows you to transfer money quickly between the US and Canada at extremely competitive rates. You can also send low cost wire transfers in USD (which I use regularly with Chinese suppliers)

Don't overthink things too much. Register a corporation and make sure you're set up with GST and import accounts.

Selling things into the US can be easy. If your product is appropriate for Amazon, you can use Amazon FBA to fulfill directly from their US distribution centers. If you're selling your product direct to customers from Canada, remember that the US allows you to send packages worth up to $800 to US customers without worrying about US taxes or duty. There are a number of shipping companies across Canada (Chit Chats, DYK Post, etc) that will transfer your packages across the Canada/US border at very reasonable prices and deliver them to the US Postal Service, FedEx or DHL for "local" delivery that looks like it's US-based for your customers.
[OP]
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Nov 22, 2006
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gr8dlr wrote: I'd start with the CPA.

Since your previous employer was in the same field...are you trying to duplicate what they do? If that's the case, you might want to know if there's any issue there ie non-compete? approaching clients? etc

I looked over all the contracts that I signed and they never made me sign a non-compete clause. By the timeline I'm aiming for, it'll be almost two years since I left. I'm confident that I can deliver a better product and put the customer first(hence hoping that word gets out around the industry).

maple1 wrote: +1 setting up the company can be done without a CPA but there are more things to consider. State and local tax for example is extremely complicated in US which varies by area. https://www.avalara.com/vatlive/en/coun ... s-tax.html
I thought most things can be settled out with a W-8BEN form:

https://www.freshbooks.com/blog/w-8ben-form-canada-tax

I could be really wrong regarding this matter, but I'm sure a CPA can help me out that is knowledgeable with U.S tax laws.

jaybeeg wrote: A couple of quick thoughts:

- Harris will give you a business debit Mastercard that you can use to purchase in USD from your US account without worrying about exchange fees.
- Set up a Transferwise account. It allows you to transfer money quickly between the US and Canada at extremely competitive rates. You can also send low cost wire transfers in USD (which I use regularly with Chinese suppliers)

Don't overthink things too much. Register a corporation and make sure you're set up with GST and import accounts.

Selling things into the US can be easy. If your product is appropriate for Amazon, you can use Amazon FBA to fulfill directly from their US distribution centers. If you're selling your product direct to customers from Canada, remember that the US allows you to send packages worth up to $800 to US customers without worrying about US taxes or duty. There are a number of shipping companies across Canada (Chit Chats, DYK Post, etc) that will transfer your packages across the Canada/US border at very reasonable prices and deliver them to the US Postal Service, FedEx or DHL for "local" delivery that looks like it's US-based for your customers.
Thanks for the info regarding the card and money transfers.

Unfortunately I can't sell on Amazon, but getting it shipped from the U.S is definitely something I would want to do. On top of that, a lot of suppliers don't like to ship to Canada at all(or charge an arm and a leg to do so). More than likely I'll have to use a service to bring parts across the border for me.

The exemption of tariffs and customs fees is something that I know almost nothing about when it comes to USMCA/CUSMA, hence why I'm looking for someone that knows their stuff.

Also, I'm open to any recommendations of CPAs or lawyers that specialize in this field and people have experience with.
Deal Addict
Jun 27, 2006
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Sorry, I have no idea of that the W8BEN form is.

The last place I was at, we had a tax specialist responsible for global taxation and the US was the most complicated. We sold to end-users and resellers. The level of complexity in tax code along with volume of transactions made it an easy choice to engage a company that specialized in US tax. Speaking to a CPA firm is your best approach as they can make recommendations on a more detailed understanding of your situation. GL!
Sr. Member
Oct 1, 2009
537 posts
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West coast
If you're company will be Canadian based and do business in the US, the US will usually require a W9 but a W8-BEN is what you'll have. Also, since/if the company is Canadian, you won't need to collect US based taxes. You'll only do this if the company that buys your product is Canadian.
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Jan 21, 2018
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J-Taiko wrote: My main problem is that I don't know who does what. Should I go talk to a corporate/business tax lawyer first to get the business registered or should I go to a CPA?
One of the first things you will learn is that lawyers are very expensive. Sometimes you need them, but a lot of the time you can get more focused results from a better and cheaper source, such as your accountant.

As for the W-8BEN-E form:

The purpose of this IRS form is to declare that your company is a foreign entity (from the U.S. perspective), that you have no presence in the U.S. that would make you resident for tax purposes, and that you reside in a country that has a tax treaty with the U.S. (i.e., Canada, and you provide your CRA business number). The -E "Enterprise" version of the form is for corporations instead of persons.

You provide this form when a U.S. customer asks you for a T9. They are required to keep it on file to show why they are allowed to pay your invoices in full without withholding tax. They do not send it to the IRS, they just keep it on file in case they are audited. Your U.S. bank will also ask for this form.

Most U.S. customers will already know about the W-8BEN-E form, but occasionally you will get one who doesn't and insists that you need a T9 and a U.S. tax number. It is possible to get a U.S. tax number, but it's a lengthy process and costs you extra money every year for separate tax accounting fees, so not worth it when it's not required. Unfortunately it's very hard to find a specific simple document or U.S. government web page you can provide to an ignorant customer to convince them - typical tax guidance is all wrapped in dense legalese with hedging and qualifications everywhere. We've only encountered this situation a couple of times in many years of doing business in the U.S., and they gave in easily enough when we explained since it doesn't really matter to them - they're just covering their asses with the IRS. If we ever found a customer who was adamant about withholding tax, I guess we would just charge them extra and say fine, withhold the tax. :)
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Jul 26, 2007
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J-Taiko wrote:
Also, I'm open to any recommendations of CPAs or lawyers that specialize in this field and people have experience with.
Once you get into specialized accountants and lawyer, you are going have your balls tied to their yearly increasing demands.

Start today to minimize the cost you will inflict by doing most yourself. I would spend the time because you can spare now, on what you need for an accountant and minimize the need to just a bookkeeper that can handle hst, payroll and corp tax filing. Do the incorporate yourself whether fed or provincial, apply for gst/hst account. Few days research should suffice. As for a lawyer... Why do you need one?
[OP]
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Nov 22, 2006
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Scote64 wrote: One of the first things you will learn is that lawyers are very expensive. Sometimes you need them, but a lot of the time you can get more focused results from a better and cheaper source, such as your accountant.

As for the W-8BEN-E form:

The purpose of this IRS form is to declare that your company is a foreign entity (from the U.S. perspective), that you have no presence in the U.S. that would make you resident for tax purposes, and that you reside in a country that has a tax treaty with the U.S. (i.e., Canada, and you provide your CRA business number). The -E "Enterprise" version of the form is for corporations instead of persons.

You provide this form when a U.S. customer asks you for a T9. They are required to keep it on file to show why they are allowed to pay your invoices in full without withholding tax. They do not send it to the IRS, they just keep it on file in case they are audited. Your U.S. bank will also ask for this form.

Most U.S. customers will already know about the W-8BEN-E form, but occasionally you will get one who doesn't and insists that you need a T9 and a U.S. tax number. It is possible to get a U.S. tax number, but it's a lengthy process and costs you extra money every year for separate tax accounting fees, so not worth it when it's not required. Unfortunately it's very hard to find a specific simple document or U.S. government web page you can provide to an ignorant customer to convince them - typical tax guidance is all wrapped in dense legalese with hedging and qualifications everywhere. We've only encountered this situation a couple of times in many years of doing business in the U.S., and they gave in easily enough when we explained since it doesn't really matter to them - they're just covering their asses with the IRS. If we ever found a customer who was adamant about withholding tax, I guess we would just charge them extra and say fine, withhold the tax. :)

Alright thanks for clearing that up. I think I'm overthinking this somewhat with regards to trying to get things over the border. I know most customers wouldn't be to happy with getting hit with tariff fees and I know that a lot of things can be deemed as "tariff free" under CUSMA/USMCA. It's navigating this aspect, but I guess I'll cross that bridge when I get there.
peteryorkuca wrote: Once you get into specialized accountants and lawyer, you are going have your balls tied to their yearly increasing demands.

Start today to minimize the cost you will inflict by doing most yourself. I would spend the time because you can spare now, on what you need for an accountant and minimize the need to just a bookkeeper that can handle hst, payroll and corp tax filing. Do the incorporate yourself whether fed or provincial, apply for gst/hst account. Few days research should suffice. As for a lawyer... Why do you need one?
With the lawyer thing, I'm more concerned about getting parts across the border (both ways) tariff free. There are a lot of provisions for small busnisses, it's just a matter of understanding things initially.

As for doing the incorporate myself, I know there are a couple of online options, but then I come across things like this and it just throws me for a loophole:

https://kalfalaw.com/do-i-need-a-lawyer-to-incorporate/

Obviously it's a lawyer trying to sell a service, how important is it is another question.

My background is in engineering (I'm all about the details), but perhaps I'm looking into the details too much here. :rolleyes:
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Jan 21, 2018
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J-Taiko wrote: My background is in engineering (I'm all about the details), but perhaps I'm looking into the details too much here. :rolleyes:
Another good lesson to learn about small business is that a lot of the time you have to just ignore the details and get on with it however you need to get it done.

There's an amazing amount of rules and regulations governing everything that government officials, lawyers and politicians have ever touched. Nobody knows what they all are, and nobody is compliant with all of them. You just do the best you can in a feasible amount of time and effort, try to hit the important stuff, and don't worry about the rest until you have to. If that stresses you so that you can't sleep at night, then you won't be a successful business entrepreneur.

Every time we do business with a government agency in Canada or dozens of other countries in the world, even just to buy a simple product, they frequently present us with something like a mandatory 100-page contract that references up to 50,000 (!) other rules and regulations, many unique to their country. They tell us we must agree to be fully compliant in order to sell our product. So of course we hire lawyers and take several years to review these regulations, spending $thousands where necessary to correct any non-compliance before proceeding - NOT! They have no freakin' idea what's in all those regulations and they're not going to waste their own time checking them. They are an artistic monument to unchecked bureaucracy. We just sign and don't worry about it. With decades of practical experience, we know what matters and what doesn't. If someone ever comes by with a ruler to check the size of our bathrooms for minority indigenous women according to FAR AF54400.d(iii).87rev9 after buying a standard software product from us, we'll deal with it then. :)

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