Ask HN: US/Canadian companies? | Hacker News Reader

Ask HN: US/Canadian companies?

9 pointscwp3 comments

A while back I read a blog post by a founder discussing how his company is structured. He's based in Québec (Montreal, I think), but set up the country in such a way that he could easily take on US-based investors. There's a Canadian company that employs the team, but the IP is all owned by a parent company registered in Delaware.

Does this ring a bell for anyone? I don't remember the name of the blogger or the company. Or do you have any other resources that discuss this kind of thing? I'm a dual US/Canadian citizen starting a company in Vancouver, and trying to navigate the legal minefield that results.

View on HN

I am not sure if there is a legal minefield to begin with. I had a startup incorporated in Vancouver few years ago, it got mentioned on TechCrunch in passing and this generated a torrent of calls from VCs, many of which were from States. None of them appeared to be a bit concerned about Canadian registration, and in the end the company got acquired by the US company and that too happened without much legal fuss.

What it is that you are trying to safeguard against? Perhaps you are overthnking the issue?

Oops, I guess my original question was a bit misleading. The blog post I was trying to dig up organized the company with a US parent in order to be friendly to US investors, but that's not the issue that concerns me.

The problem is that I'm a US citizen starting a Canadian company. The US has laws that are designed to prevent people from running all their income through foreign companies as a tax dodge. (See, for example, http://en.wikipedia.org/wiki/Passive_foreign_investment_comp... and http://en.wikipedia.org/wiki/Controlled_Foreign_Corporation). I say "minefield" because the application of these laws depends on subtleties of accounting and tax filings (not my strong suit), and the cost of screwing is are potentially quite high. (Eg, the IRS might decide that I should pay personal income tax on my company's gross revenue.)

Now, it's not completely untenable; I do know a couple of people with US citizenship that have started Canadian companies and haven't had any real problems. However, I'm thinking it might be easier and safer to have a US entity other than my personal self own the foreign corporation. Right now I'm trying to figure out what's involved in setting up such a structure and whether or not it will actually help.

Anyway, thanks for the response and congratulations on your success! What was the name of your company?

Might want to ask over there: https://www.facebook.com/NextMontreal

Reply on news.ycombinator.com