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Canadian Marketers - Business Information

by AcidJazz
19 replies
Im feeling a little confused and Im not sure which road to take.:confused:


When it comes to running an IM business in Canada (I live in Canada)....


1) What type of biz is best to operate under? inc, corp, LLP, soleprop ???
and why?

2) When it comes to taxes - Are there any tricks or special things to know?

3) Do you have any advice at all on setting up a Canadian IM business ???


When I talk to accountants about IM stuff they don't seem to know much about it. So I have no idea if they would do things right or not.

I hope there's an experienced Canadian IM'er on here who can provide me with a little help on getting set up the right way etc...

Any advice would be greatly appreciated.

Thanks
#business #canadian #information #marketers
  • Profile picture of the author calculon
    Fellow Canadian IMer here.

    It depends a little on which province you are in. In general, my honest advice to you is not to take any legal or tax advice from a public forum such as this, no matter how well meaning the person giving it is.

    Consult a tax or accounting professional. Mention your revenue will come from outside Canada (unless you are doing e-commerce shipping from within Canada, I am assuming you will be getting revenue through Paypal, Clickbank, Amazon or other U.S. based company), because that will mean no GST to worry about.

    Also decide if you want to pay yourself a salary (means you will have to pay salary taxes monthly) or take money out of the business in annual or semi-annual shareholder dividends.

    I went with a numbered provincial corporation business structure. My decision was based on the fact that this would best protect my personal assets in case of any liabilities brought against my websites.
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    • Profile picture of the author AcidJazz
      Originally Posted by calculon View Post

      Mention your revenue will come from outside Canada (unless you are doing e-commerce shipping from within Canada, I am assuming you will be getting revenue through Paypal, Clickbank, Amazon or other U.S. based company), because that will mean no GST to worry about.

      Also decide if you want to pay yourself a salary (means you will have to pay salary taxes monthly) or take money out of the business in annual or semi-annual shareholder dividends.

      I went with a numbered provincial corporation business structure. My decision was based on the fact that this would best protect my personal assets in case of any liabilities brought against my websites.

      Thanks for the info
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    • Profile picture of the author Tim_Carter
      Originally Posted by calculon View Post

      Fellow Canadian IMer here.

      , because that will mean no GST to worry about.
      Be careful - this is incorrect.
      Sales outside of Canada are zero rated not exempt. Meaning that if your international sales are more than 30k you must file a GST return. And you are required to keep track by ip address so that sales taking place in Canada are taxed properly (or that you pay it).

      This is a common misunderstanding that can get you in much trouble.
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  • Profile picture of the author SuzanneH
    Here are some good resources:

    Small Business Canada – How to Start a Business – Run a Business

    Canada Revenue Agency - Main menu

    Home - Industry Canada Site

    Check your province's government website, too.

    Suzanne
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  • Profile picture of the author Istvan Horvath
    1. Do you know at least what kind of legal business forms exist in Canada (not likely, so read: Corporation, partnership, or sole proprietorship? - Canada Business Network)

    2. Ask your accountant - and for "tricks" consult the court documents of condemned tricksters

    3. Is an "IM" business different than any other business when it comes about legalities, paperwork and taxes?

    Is your business already making money? If not, don't bother (yet) with all that legal stuff. Just do it as a sole proprietor/self-employed. As you progress, you will learn more and will be able to decide what you need.

    And as it was said: never ask legal & tax advice in international public forum.
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    • Profile picture of the author AcidJazz
      Thanks for the info guys....

      Point taken - do my homework and ask an accountant!


      I was hoping that someone who has already gone through the set up phases could let me know the best all around route to take.

      I guess starting off as a sole prop and than moving into a Corporation once things pick up is the way to go.

      I hope to gather peoples thoughts and take those to a few different accountants to see what they say. This way I have some knowledge and Im not at the mercy of some ignorant accountant.

      Myself... I am in Ontario Canada

      Most of my money made is through Adsense & Affiliate Sales
      I also sell a couple of my own eBooks as well.

      Ive also done some "under the table for cash" work on some peoples websites and it seems things are picking up. That means it's time to get Legit so I can look like a "real" business! lol.

      Ive heard if you dont have the right company set up you will pay high Taxes etc... So Im trying to figure out the best options.


      Any other info is welcome if you want to share!

      Thanks guys
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  • Profile picture of the author Bill Jeffels
    Good advice from above.

    One thing when I was starting. Doing business in US and being in Canada alot of the payment processors will want you to have a US account.

    I'm not taking the Canadian Us account you get from your local bank.

    I'm taking real US account with the "9 digit Routing number".

    I'm working with authorize and 1shoppingcart. One thing to remember is that Paypal will do recurring billing memberships and all that stuff.

    Best,


    Bill Jeffels



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  • Profile picture of the author BeyondTheMargin
    Banned
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    • Profile picture of the author humbledmarket
      Banned
      Originally Posted by BeyondTheMargin View Post

      Hi AcidJazz,

      I'm a Chartered Accountant, I also live in Ontario (Toronto). I'll answer your questions in your sequence:


      1) What type of biz is best to operate under? inc, corp, LLP, soleprop ???
      and why?

      -->Depends on the amount of money you earn and how much you're planning to keep in the business. There is no benefit to incorporating until you're making close to $100,000.

      In addition, if you are planning on taking all the money out of our business at year end, then theres no difference between sole prop. and a corporation. For example, if you make $100,000 in sales, and plan to only withdraw the entire amount, the corporation pays corporate taxes, then you pay personal tax on that income. That double taxation makes it approx equal to personal tax as sole prop.

      If however you only declare $30K as dividend, then $70K only pays for corp tax.

      To sum it up, in a corp, if you plan to leave money in the business, you can manage your taxes and defer them to future years to bring overall cost of tax down.

      2) When it comes to taxes - Are there any tricks or special things to know?

      --> Like what? One piece of advice I can give you is NEVER omit reporting your revenues. Its a federal crime and the CRA punishes that very badly. What you should do is report all your revenue, then overstate your expenses. The CRA almost expects people to overstate their expenses, so its not as thoroughly checked. As long as all your revenue streams are in, you're good & can be creative with deductions.

      3) Do you have any advice at all on setting up a Canadian IM business ???

      Start small, do it on your own all on a cash basis, if you make more than $30,000/year, then create a sole prop. if you're going to take all the money earned from the business and put in your personal account. If you're planning on leaving money generated from the biz in the biz account, then incorporate and defer taxes.
      Hey BeyondTheMargin,

      Thanks for your post here. I am not as experience as you in this field but recently been doing some looking around online myself and there seems to be quite a few who say:
      1. Moving from a Sole Prop to an Inc is a lot more complicate
      2. It's better to get started straight with an Inc...cheaper too overall

      Do you agree with this?

      Also do you have any recommendations/contacts on someone who can help with registering an Inc Business?
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    • Profile picture of the author AcidJazz
      Originally Posted by BeyondTheMargin View Post

      Hi AcidJazz,

      I'm a Chartered Accountant, I also live in Ontario (Toronto).

      Hey BeyondTheMargin,

      Since you are an accountant. What are your thoughts on the NewMexico idea?

      Thanks
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  • Profile picture of the author milla04
    I am not a lawyer or accountant and you should always get legal advice, HOWEVER, i have studied this topic in get detail being as i am a non-us person. I set up my LLC business in New Mexico, why... The set up costs are very minimal, but thats not what is important here, its the on going costs i.e annual fees. Now, I know new Mexico doesnt have any annual tax fees, franchise tax fees, business tax fees (NOTHING), you wouldnt have to pay anything, apart from paying a registered agent (R.A) fees, which you can find some reasonably cheap ones between $50 - $99 a year.

    I know most states will have a minimal annual fee of $250 a year, plus R.A fees such as Delaware. You see my point. You have two options do it yourself: Go find a forwarding street address in US, then go Incorporate a business using your street address as your main principle address. Go get an EIN then you can apply to banks in the US to open you a real US a a bank account. The other option is find a do it for you service that will do everything including opening a bank account.

    I had my bank account opened from the Uk here: http://myusbusiness.com.s3.amazonaws...pg_updated.jpg.

    This can be done
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    • Profile picture of the author AcidJazz
      So I should set up a company in NewMexico?

      That sounds like fun.

      What are the rules around opening a biz in another country and also living and operating outside the country you are registered in.

      It all sounds a little 007 . lol


      Thanks
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      • Profile picture of the author milla04
        Originally Posted by AcidJazz View Post

        So I should set up a company in NewMexico?

        That sounds like fun.

        What are the rules around opening a biz in another country and also living and operating outside the country you are registered in.

        It all sounds a little 007 . lol


        Thanks
        Hey, its very simple to do even if you are outside the US, but be carful some companies charge $600 to incorp an LLC then you will need to pay for a registered agent for one year would be an extra $50. The only rules would be make sure you file to the IRS either in March or December, however the date could very depending on the state you fill in. But in NM it will be those dates I have just mentioned. If you are finding it tough MyUSbusiness.com does it all for you, including bank account openings, of course if you live in a blacklisted country it wont happen. BTW, it is my company and service and the fees are very minimal.
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        • Profile picture of the author Trabais
          Great information. Thank you every one and Thanks OP to have asked.
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        • Profile picture of the author AcidJazz
          Originally Posted by milla04 View Post

          Hey, its very simple to do even if you are outside the US, but be carful some companies charge $600 to incorp an LLC then you will need to pay for a registered agent for one year would be an extra $50.
          Sounds like you have done it many times. Must be cause you have your own company that handles all that.

          Why not provide us with some contact information on where to register etc...

          Who did you use?

          You say its simple. You say to be careful. You say you have a company.

          You came this far.... So why not help us out with some real info?

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          • Profile picture of the author milla04
            Originally Posted by AcidJazz View Post

            Sounds like you have done it many times. Must be cause you have your own company that handles all that.

            Why not provide us with some contact information on where to register etc...

            Who did you use?

            You say its simple. You say to be careful. You say you have a company.

            You came this far.... So why not help us out with some real info?
            AcidJazz, as i mentioned in the above post, MyUSbusiness.com which is my service that offers setting up LLCs, opening bank accounts and setting up real merchant accounts. There are some requirements you need to do, which is outlined on the website.
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    • Profile picture of the author Green Moon
      Originally Posted by milla04 View Post

      I know most states will have a minimal annual fee of $250 a year, plus R.A fees such as Delaware.
      You are right that New Mexico exempts LLCs from annual reporting, and that is certainly an advantage. You are also right that Delaware's annual LLC tax is $250. However, you are wrong that most states will have a minimal annual fee of $250 a year. A few states are that high (California's is $800!) but most are less than $200 and many are $100 or less.

      Still, New Mexico, at $0, is impossible to beat.
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  • Profile picture of the author thedanbrown
    This advice was very helpful, thanks!
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  • Profile picture of the author sundown16
    thanks for the info guys..
    awesome clarification by BeyondTheMargin
    the decisions have to be made when you hit revenues 30k
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  • Profile picture of the author Chris Thompson
    AcidJazz,

    I'm also in Toronto. Here's what I did.

    First - sole proprietorship. Just put everything on your personal T1 return.
    Second - incorporated with a lawyer and got an accountant. Now I have more flexibility on what I want to do.

    Regarding all the stuff about incorporating in another jurisdiction, there is no rush. If you eventually find that's the way to go, just shut down your Canadian business. All the assets are intellectual anyway.
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