I am a PR living in Montreal. Currently, I am exploring a tech startup idea and will need to incorporate soon. I am running into a few basic questions about where to incorporate.
I like Montreal, and given a choice would love to incorporate in Quebec. It’s a nice city to live in and the rent is substantially low. But, I have anecdotally heard that QC can be a very unfriendly province for immigrants who are looking to run a business here. And, then there are language laws (I don’t speak French). Also, the taxation, bureaucracy etc can be a burden. If anyone has any experience or knowledge on this, I would love to hear from you.
Ontario (and BC) are considered the most entrepreneur friendly provinces. While I don’t mind moving there, especially given Toronto’s prominence as a growing startup hub, the cost of living is substantially higher throughout the state. My startup is at an idea stage right now and I am working fulltime on this, implying that I wouldn’t be making money for quite a while. Consequently, the cost of living matters to me, and I would prefer to have a long runway with my savings. Both ON and BC fail on this aspect - even the smaller cities are more expensive than Montreal.
I am not sure if I can incorporate in ON/BC (with my Montreal home address) while continuing living in Montreal, or if I can opt for Federal incorporation only and avoid QC incorporation altogether while living in QC. I suspect serious taxation issues with both scenarios.
Any other entrepreneur in my shoes who are dealing with these issues in Toronto/Vancouver/Montreal (or people with knowledge), hit me up? Many thanks in advance!
Yes, Quebec is an unfriendly small business venue, … and spectacularly so if you are a transplant. The entire incorporation process will be in French and there are a host of monthly/quarterly/annual filing requirements all unilingual French. The name of your company also must be French and you will be subject to civil servants inspecting your every move for compliance with French language regulations. Your incorporation documents and annual income tax returens will be unilingual French and dealings with Quebec bureaucrats for an immigrant will be “unfriendly”.
You should incorporate federally. It’s slightly more expensive but easier and safer. What is often done is to incorpoarte a federal entity with an Ontario address of convenience which you will operate from Quebec. This route is totally kosher.
There are no significant taxation ramifications with going this route, but speaking from the perspective of someone with decades of experience with numerous incorporations, this is the intelligent way to incorporate.
If you forsee billing customers or having employees in Quebec, you will still need to register for QC GST and payroll DAS registrations but that can be done with a federal charter domiciled in Ontario.
As for the details of getting registerred for local requirements, look at YESyul which has a number of inexpensive, or free, on line seminars covering registration procedures. Calendar - YES Employment and Entrepreneurship
If you need any further pointers on the process, feel free to contact me.
Hey @hslawd, thanks for all the details. That helps a lot. I am responding publicly since this info may be helpful to others later.
I quite liked the idea you suggested, that is, only Federal incorporation via a Toronto address while continuing living in Montreal for sometime.
Can I use a virtual or a Canada-Post physical mailbox address in Toronto to incorporate both Federally and in ON (if needed)? PO box addresses are typically frowned upon. And I have only one personal address that is in Montreal.
What about taxes? I will be a QC tax resident for the year although the company will be based out of ON. Do you see taxation complications around this? I guess if I go for Federal only, would I personally be on the hook for filing an ON return as well?
And some context around my situation:
My startup is pretty nascent (idea stage) and I wish to live in Montreal for its low cost of living only until the point my startup gets funded or starts getting some revenue. At that point, I would be able to pay myself some basic maintenance salary and will move to Toronto right away. During my stay in Montreal, I don’t see myself making any or much money.
I understand that this is not a legal advice. Just looking to know your opinion.
You can’t use a P.O. Box address for incorporation purposes. You can however use most “private” designated addresses such as a UPS store, or a private address company, or the local address of someone you know well in Ontario. (Friend, relative, ??)
It has no impact on your personal return. Personal taxation is based upon your residential domicile as at December 31st of the year in question. If you’re resident in Quebec, you pay Quebec taxes regardless of where (In Canada) you earn. The corporation will pay corporate tax based on the province in which it is resident. If it has a significant amount of revenue from more than one province it will file returns in both provinces, but that should not be an issue for you at this early stage.
It might be worth reading this article and doing some more research on this topic , the article just popped up in my feed today ( I have no relation to Quebec whatsoever )
@abshk Thank you for opening this thread. I am based in Calgary - I will be setting up a startup soon - working on the prototype phase. If you are flexible in moving - Take Alberta into consideration- not sure what will be your business model but Alberta got 2 big cities: Calgary & Edmonton and folks are moving into the province at a rapid phase. Plus its proximity to BC. Alberta is highly affordable and the provincial government is supporting new small startups - good tax benefits, support from the provincial government in getting business data, you can read mode here:
Thanks @swamiom. That helps. Never been to Alberta but have heard great things. The turquoise water and snow peaks in Banff don’t hurt as well.
How do you reckon the local market for tech talent is in Calgary/Edmonton? A crucial factor in any tech startup’s success would be its ability to hire and retain engineers. I know that Toronto and Vancouver fare pretty well on this aspect.
Is there an existing startup ecosystem there, implying, are there meetups etc specifically for founders/VCs etc or is there any founder’s community or support system (may be, unofficial)?
Actually its not that bad - Have seen quality S/W engineers who works remote for FANG,
Nothing as of I know - in coming weeks will meeting with few of my old class mates and will update here but have seen craze for startups here in Calgary.
Abshk’s question related to where to incorporate a business and to corporate taxes. The article mentioned above “Authorities crack down on Quebecers using Ontario addresses to pay less in… ](Authorities crack down on Quebecers using Ontario addresses to pay less in taxes)” is interesting but it relates to Quebec personal income taxes on income earned in another province and is not necessarily germane to his/her point.
While I don’t have experience with this first hand, but explored it a lot. In addition to good talent, they have some very good incentives for startups and businesses.
If you live in suburbs of waterloo (northern), I’d guess it’d be a lot more affordable, while being a short drive to Toronto
Waterloo EDC has some good initiatives for startups
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