[Feld0]

> obligatory "IANAL" note

There's no equivalent to LLC's in Canada so you'll need to create a corporation up here. You can incorporate in the federal jurisdiction or a provincial one; you'll want to read the relevant acts that you'd be incorporating under to figure out the differences. BC corporations, for example, require at least one director to be a BC resident; federal for-profit corporations, on the other hand, require 25% of the board to be Canadian citizens.

I created a federal corporation in Canada last year, mainly relying on the info and "how-to" guides on Corporations Canada's website to educate myself: http://corporationscanada.ic.gc.ca/eic/site/cd-dgc.nsf/eng/h...

I also went through the Canada Business Corporations Act and Not-for-profit Corporations Act a few times; they lay out the bureaucratic details you need to be aware of.

The most awkward part was opening a US-based bank account afterward; BMO Harris was one of very few US banks I came across that was willing to talk shop with a Canadian company (I'd love to hear if anyone knows of any other foreign company-friendly US banks).

If you name yourself as the only director and shareholder (or voting member, in the case of a nonprofit), you still have to hold board and shareholder/member meetings but they'll be very straightforward since you'll be their only attendee. _Definitely_ consult with a lawyer if you're contemplating a voting structure that extends beyond yourself or the directors.

For creating a nonprofit in particular, you may be able to get pro-bono legal advice through an organization like Access Probono (http://accessprobono.ca). Corporations Canada also offers a super-useful By-law Builder tool which gives you "sane defaults" for the corporation's structure: https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/h_cs04734.html

[ohstopitu]

I've been reading up about this - why do companies setup provincial corps when they could be setting up federal corps (as in, it costs $100 more and there seem to be no downsides last I checked)?

Also, how do you manage taxes? (especially for revenue earned from other countries for example).

[Feld0]

I see federal incorporation as a "sane default" but this is what I know that favours provincial incorporation:

- The bureaucratic details differ between the various provincial jurisdictions and the federal one (like the one I mentioned with requirements for the makeup of the board). This could make a particular province's corporate rules a better fit for your business than the federal ones.

- That provincial incorporation is cheaper can matter for local businesses that have no intention of expanding nationally.

- Some provinces may require corporations from other jurisdictions (other provinces or the federal jurisdiction) to "register extraprovincially" to operate there, at extra cost. This is avoided by incorporating locally.

- If your business name is already taken by a provincial corporation in another province, you may have an easier time creating a provincial corporation by the same name than a federal one.

*

> obligatory "I'm not an accountant or tax expert" note

Taxes... I'm still figuring those out but CRA allows corporations to file in USD [1]. To the best of my knowledge, a Canadian corporation that only has Canada-resident employees and shareholders, and doesn't own property or servers in other countries, only has to deal with Canadian taxes. Expect to fill out a few W-8BEN-E forms to assert this. Depending on what your company does, you may have to charge your Canadian users sales tax.

[1] http://www.cra-arc.gc.ca/tx/bsnss/tpcs/crprtns/fnctcrncy/men...

[kejaed]

Thanks for that. I've been reading through the Federal government's website lately and was wondering about any gotchas.

If you don't mind sharing, why did you need an American bank account?

[Feld0]

American bank accounts are the only way to get USD out of a PayPal account; PayPal will refuse to send anything but CAD to a Canadian bank account, regardless of what currency the account holds.

Since my organization mainly operates with USD, and many of its paying users really like PayPal, a US bank account was a necessity.

As for gotchas... be aware that directors cannot hire-and-fire each other unless they also happen to be the corporation's voting members or hold its voting shares. This might be weird to wrap your mind around if you've only been a sole proprietor before, and is why I advise consulting with a lawyer if you plan to split up control.