BOTB #02 - Incorporating
Welcome back! If you've made it here, you either read our first entry or this post was the latest clickable piece of content from our homepage.
As mentioned in our last entry, we're going to post by topic, not in chronological sequence. There was quite a bit of backstory between Ryan/Adam prior to incorporating the business, but that part of the story we will share in a future entry.
The one topic we wanted to share was our journey to incorporation. Before we get to far into it - first and foremost - the disclaimer. We're sharing an experience, not giving advice. If you're planning on starting a business, know that there are different ways to get things done, and you should always talk to the experts to understand what's best for you. On the flip side, also know that we may have completely done it wrong too! If you're reading this and notice something that doesn't sit right, please, let us know.
"But who are the experts?" you ask. Well, we cheated a bit (sorta). We are deeply thankful for the friends and family that stepped forward to share advice on how to get things going. The goodness here wasn't to "take it and run with it", but rather, it helped us narrow down the sort of questions we needed to be asking. And more importantly, where to start.
Of course, Zuck and Meta were listening, because shortly after the discussions started, we were immediately bombarded with display ads on Social. The basic message - do it all yourself and save money. Admittedly, the idea of saving any dollar possible as a startup is music to the ears. One option that stood out was Ownr. For those of you unfamiliar with Ownr, it's a self-serve incorporation platform powered by RBC Ventures. While we didn't end up using Ownr to incorporate Stim Coffee, our ownership team ended up using it for other ventures. (Ownr - if you're reading this, know that we plugged you without an affiliate link. Paying it forward...)
The reason we chose not to use Ownr was because we wanted to make sure we dotted all the i's, and crossed all the t's. So we opted to retain a lawyer. But once again, you only know what you know. And if any of you know, lawyers can cost you.
But what if there's an in-between? A solution where you can enlist the help of a lawyer, but not be charged each time they open an email or pick up your call? Enter: the "all-inclusive" world of corporate law. For us, we were referred to Julia Lin Law. What drew us to Julia's practice was her flat-rate approach - there's a standard process/playbook she and her team works off of to get a business incorporated. They ask the questions, you give the answers. Verifying your identity, signing off paperwork - all virtual. Got a question - send an email, and you get a response back. No read/reply fee. If it's part of the program, you get a response. If it's not, you're informed ahead of time, and can choose to opt-in to an over-and-above paid consult, or figure it out independently. When every dollar is being tightly managed, this is a great way to avoid surprises.
Next up - we found ourselves an accountant. Ideally, one that lived a double life, but since those are hard to come by, we went with Davidson & Co. Highly recommend retaining a firm (or independent CPA) specifically for tax advisory. We have no shame in admitting this - we didn't really understand the service until the team at Davidson & Co. walked us through it.
In a nutshell, if you've ever found it frustrating when the accountant says you can't do something during tax season, that's because it's too late by the time you're filing taxes. Advisory is the professional service that comes beforehand. You ask questions about what could happen, and you get advice on how to manage towards, through, or around it. It's pay-to-play, so make sure you get yourself organized with your questions/responses to avoid overcharges.
Another important nuance - many people often assume the professionals will give them the answers. Kinda, sorta. You're given credible information, and you make your decision from there. (There's a time and place for Reddit, but when it comes to key decisions, we let the professionals advise us.)
A lawyer and accountant were the perfect tag team we're lucky to have. One party does the work to insure your legal documents are bulletproof, while the other ensures what's going into the documents drive the best financial outcome. Sure, we're putting in money upfront for this service, but it'll save us the headaches down the line.
Closing off this segment with a laundry list of considerations that really helped us during this phase of the startup. Until next time!
Our consideration set:
- For us in Canada, consider if you want to incorporate Provincially or Federally
- As an extension to #1, consider if you plan to trademark? This could impact your incorporation complexity and future tax filings
- Structuring ownership - tax advisory can really help here. There's a shared legal and accounting strategy to how ownership is held. Also, consider the Lifetime Capital Gains Exemption (LCGE) if selling the business is a possibility; how you organize your ownership could change whether you qualify for critical tax breaks down the line.
- Sources of truth - The internet is equal parts beautiful and frustrating. The answers are right in front of you, but the tradeoff is the overwhelming volume of "stuff". While technology is the greatest modern ally, consider bringing onboard an incorporation lawyer and tax advisory support so you can get in front of issues before they happen. Weigh your skill set, options, and risk tolerance - sometimes it pays off to set things up right the first time.
