| Canadian operating a digital business here as well. Most of the above points are accurate. One point I'll disagree with is the viability of s
SRED. It's a documentation nightmare and hiring a consultant to file for you is basically mandatory - they take 25% of your return. IMO, not worth the distraction in general, and definitely not if you're questionably eligible due to u.s. status cofounder. Canadian banks, even with USD accounts, are handicapped. ACH for example, is a non existent term at Canadian banks. Canadian customers are fine paying USD, if your business is USD based. All your expenses/providers will be, so it only makes sense to bill in USD. Nexus is a serious issue. Hire an accountant who is familiar with this. I learned for example, that _where your website is hosted_ is factored into the decision. You can claim to be Canadian, but offering services/downloads to u.s. customers served from a u.s. server counts as 100% u.s. As mentioned above, % of sales is another big factor. If you trip 51% (and you will, Canada is too small a market), you risk being assessed. Incorporating and filing taxes will work out roughly the same in either country. I'd need the recommendation to incorporate in Delaware, and just file as a u.s. company. |
SR&ED: We've used it to great effect, and have never used a consultant. The rules are actually not that complicated; CRA presents seminars on how to determine what is eligible, as well as on how to complete the T661. It's a small time investment to attend those to determine if&how SR&ED can work for you. Documentation, it depends: lab notebooks and a spreadsheet of hours can go pretty far. They've tightened up process on first time claimants (all go through review now afaik), but at the same time they've introduced programs for first timers where you can get an opinion on eligibility ahead of time and can then check in with them periodically during the first period for their ongoing evaluation and comment, in which case they guarantee no surprises during the review. As always YMMV: for us SR&ED had the same effect as outsourcing our dev to a far lower cost country, but effectiveness is reduced if largely doing things like crud apps, or with single employees who are also substantial shareholders.