BDO - The Back Office - FounderFuel Spring 2014
-
Upload
founderfuel -
Category
Economy & Finance
-
view
572 -
download
1
Transcript of BDO - The Back Office - FounderFuel Spring 2014
THE BACK OFFICE:KEY AREAS OF FOCUS
WINTER 2014 COHORT
Presented by: Matt Harrison February 6, 2014
AGENDA
• Compensation • Capital Structure • Sales taxes • SRED • U.S.A.
COMPENSATION
! METHODS TO TAKE OUT MONEY:
! Draws (shareholder loans): " Common in young companies with irregular revenue " No SRED value:
• Note: can be converted, but requires payment of DAS
! Dividends: " Common in young companies to clear shareholder
loans – requires hard look at share structure " No SRED value
# Straight salary: " More common in post angel mid seed round
companies " Highest SRED value
! REVENUE QC-FED – REMIT DAS ON TIME!
CAPITAL STRUCTURE
! DID YOU INCORPORATE ONLINE OR WITH A LAWYER? # What share capital was authorized and issued?
# Did you pay?
! WHAT ELSE IS OUT THERE? # Did you offer shares for services?
# Stock options
# “Phantom” stock plans – “I promised…”
# Warrants, rights, convertible prefs….
! NEED CLEAR AND CONCISE CAPITAL TABLE
SALES TAXES
! ARE YOU REGISTERED? # Why not?
# NOT dependent on having revenue
! WHERE DO YOU BUY FROM OR SELL TO? # Watch for HST provinces for proper bill
# Possible need to register with provinces with own PST system, example: QC, MB,SK
! REVENUE QUEBEC: # Do NOT miss a remittance – aggressive
! COMPLEX RULES ON INTERNET SERVICES
! CONSULT PROFESSIONAL TO ENSURE COMPLIANCE
SR&ED: SCIENTIFIC RESEARCH AND EXPERIMENTAL DEVELOPMENT
WHO DID YOU PAY? ! Salaries for shareholders < 10% and
employees are the highest rewarded
! Contractors: " Arms length – Quebec knocks it down " Non-arms length – FED completely ignores
! Specified employees (> 10% shares): " Key issue is how it limits or caps the proxy amount
! U.S. contractor or employee: " Zero
! Warning: Did you really pay? Accounting!
WHAT IS THE SRED LANDSCAPE CURRENTLY? ! The Federal Government is changing the process by
which companies comply to receive ITC credits in the following four areas:
# Investment in compliance: # Government is spending 14 million dollars on new auditors across
Canada who each will service say 100+ claims
# Adherence to new criteria: # 3 former criteria to 5 specific questions. No = out
# Strict compliance guidelines and fines: # Fines range with failure to produce proper filings ($1k) to fraud
which carries a fine of 5 X claim
# New information required: # New questions that ask who is doing your claim # How much are they charging
U.S.A
! Ways we touch the border: • Permanent Establishment:
- Authority to contract
- Office or in some cases home office
- Deemed Permanent Establishment
• Sales – Sales Tax? Amazon court case..Reps/Affiliates
• Purchases – Transfer pricing issue?
• Economic Nexus HOT – How much sales to the state
• Subsidiaries – Transfer pricing HOT
• Investors – What do they want?
! Be very careful because it’s likely you are not in compliance with filing requirements in the U.S.
! Remember that the individual states don’t necessarily follow the Federal treaty
! Consult a specialist
CONCLUSIONS
$ Be careful to plan how you compensate
$ Clarify your capital structure
$ Register immediately for GST & QST
$ Watch who you pay for SRED and be careful with your consultants
$ If you touch the U.S. border - Consult!
THANK YOU!