We're a global employer, and just employing people in different jurisdictions is kind of a nightmare (totally worth it, though). I can't imagine how much of a pain it must be to try to manage investment stakes in foreign corporations.
I worked at a place that expanded into Calgary and picked up a bunch of ML engineers with oil-and-gas backgrounds (who were eager for something outside the energy sector) and the government picked up half of the payroll tab for several years. There is also, of course, no health insurance benefits to worry about.
Uhh, we don't have universal coverage for everything health up here, we still have private benefits that our employers pay for as part of our compensation plans.
Life insurance, dental, vision, prescriptions, physio, mental health, critical illness etc..
It might be less than in the US, but it's not "no health insurance benefits to worry about".
The key issue is that the core of one's health insurance is not dependent on the employer or even being full-time employed. This provides tremendous flexibility. And I suspect not having things like pregnancy being seen as preexisting conditions is a big win for parents-to-be.
Age or low-income (I think) provide provincial or federal assistance independent of employment also. Medical expenses are also far easier to deduct on taxes in Canada vs. the US.
The standard move in this situation is that you form a US Delaware C Corp and make your HQ a subsidiary.
Other comments in this thread make it sound like an absolute nightmare. So which is it?
It's only a nightmare if you hate all taxes and labour rights. So, you know, YC
Since this is purely about ownership structure and equity governing law, I'm curious what the intersection you're seeing between these terms and "labour rights" are. We're a US company with employees in Europe (not even an HQ in Europe, just employees there), and I've learned more about European labor law idiosyncracies over the last few years than over the whole rest of my career, because I've had to.
Having a Canada-registered company is usually required to get government grants and loans from Canadian banks, although that's probably not very important to VC-backed companies. There are also some tax advantages to running a Canada-registered company if you're based out of Canada, plus it's much easier to find a local professionals (lawyers, accountants, etc.) familiar with Canadian corporations than US corporations.
None of these issues should cause too many problems, but if given a choice, as a Canadian I'd certainly prefer to run a Canada-registered company over a US-registered one.
Read the thread: clearly a lot of people are reading this as "you can't HQ in Canada, your team has to move".
But I think that it counts for a little bit more than just "details for your finance person", since the tax and grant eligibility implications could mean that some startups would be better off incorporating in Canada and not taking the Y Combinator money. But if you're taking the VC funding route (which most applicants to Y Combinator are), then I agree that none of this should really matter very much.
I don't think that's true. You can't have employees without a local subsidiary. If you're going through an EOR agency, they're contractors not employees.
It's complicated. In theory, US states have more rights and powers ("The powers not delegated to the United States [...] are reserved to the States" [0]), but in practice, the Commerce Clause lets the Federal government do essentially anything that it wants. Canada's provinces are only given control over a specific set of topics [1], but their powers are almost absolute in these areas, since the courts almost never let the Federal government interfere.
So for labour code specifically, US companies need to adhere to both Federal and state labour codes, while Canadian companies only need to follow a single provincial labour code. (There is a Canadian Federal labour code, but that only applies to Federally-regulated companies, and those companies don't need to follow the provincial labour codes)
[0]: https://en.wikipedia.org/wiki/Tenth_Amendment_to_the_United_...
[1]: https://en.wikipedia.org/wiki/Constitution_Act,_1867#Part_VI...
What founders in Europe (say, in the Netherland, where YC invested in Servo7 in the W26 batch) do to accept funding from YC is a "flipped structure": they create a new Delaware Corporation, which then acquires the original company and runs it as a subsidiary. The founders retain the same ownership of the new DE company as they would have had they been in the US. Literally nothing else changes about the operation of the company.
This structure is so standard that Canadian YC companies already tended to do it. You've got Dan in this thread talking about how he and Scott did it with Skysheets back in the mid-aughts. Whatever else YC is OK with, future priced-round investors want companies incorporated in the US.
I'm sorry, but you were wrong; your analysis of what this change meant was based on a wildly false premise. The prospects of founders in Canada have not changed; the only thing that's changed is how the paperwork is managed if they are invited to a batch and accept.
- prescription medicine
- dental
- vision
- mental health
- things like physiotherapy
I don't have to deal with this as we are a (very) small business but it's a major headache for larger small businesses. Basically, as an employer it simply isn't fun to be forced to be in the "providing access to healthcare" business when that's not your core business.
It is for most large employers as it helps depress salaries and reduce competition from startups. Employees will want to work for a large employer that lets them pay for health insurance with pre-tax dollars, among other tax advantaged benefits that having a well funded HR department can provide. And employees cannot easily compare compensation at other employers so they are more likely to stick around than shop around, reducing the need to increase pay to keep up with the market.
Employers can also tweak compensation by modifying deductibles/out of pocket maximums/healthcare provider networks, and most people's eyes will glaze over before they can figure out if they got an increase or decrease in their total compensation.
My US benefits were middling in terms of coverage and package when working for a large F500 and went about $16k USD on a 180k salary -- converted is about $19k CAD at todays rates. Including co-pays and fees it's like 10% of salary. At the time I was in a big city with great hospitals and doctors, but not noticeably better than Canada even at the higher price.