Starting up a company in the U.S. and Canada?
I am a U.S. citizen working in Canada on a work visa. A small team and I have been working on a startup in our free time up here in the great north, so we're primarily based out of Canada. However, our business definitely has potential applications in the U.S. as well.
I was wondering if anyone has experience running a startup concurrently in both the States and Canada?
At this point I'm mainly wondering if it will be a logistical nightmare starting up in two countries simultaneously because of different laws regarding taxes, incorporation, etc. Would it be best to focus on one country at a time?
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What is your question? – Tim J 12 years ago
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At this point I'm mainly wondering if it will be a logistical nightmare starting up in two countries simultaneously because of different laws regarding taxes, incorporation, etc. Would it be best to focus on one country at a time? – Marisa Bernstein 12 years ago
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@MarisaBernstein You can focus on both if you choose and you don't have to incorporate in both countries although depending on the business you will be in it may be advantageous to have to separate entities. One in each country. – Karlson 12 years ago
1 Answer
The start up I'm involved with just went through this and based on our experience, I would suggest having the entity in the market where you see the most potential. Having one entity operate in both countries introduces a lot of tax complexity and can be challenging from a cashflow point of view as you are paying taxes in both countries and although you can claim some of the tax you pay back, it is months later.
Having 2 separate entities, one in each country, has it's complexities too. Specifically when it comes to intellectual property. You have to be really clear on which company owns any IP and if both companies are going to use the IP, there needs to be a formal agreement between the 2 stating such plus the terms involved.
And lastly, if you're looking for investors, think about which country you will find them. Most start-ups don't have the luxury of lots of interested investors, so if you have any complications around the 2 entities, agreements with IP, and so on, that might be enough of a reason for an angel or a VC to stay away.
My advice, pick the country you feel has the most market and investment potential, start there with the expectation that your international expansion would be well down the road.
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I'm inclined to go down the road of two separate entities, because I feel like we do have potentially robust markets for the product in both countries (better economy in Canada, larger population in the U.S., very generally speaking). I will have to research the IP issue of two entities, but I was thinking it would be complex because of taxes. I'd also be inclined to start the U.S. entity as LLC and incorporate the Canadian entity (they don't do LLC's up here). Looks like I have a lot of research to do. – Marisa Bernstein 12 years ago
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thank you for your answer, L Robertson. – Marisa Bernstein 12 years ago
