Eternity Law International News Registration of IT companies in Canada and the USA

Registration of IT companies in Canada and the USA

May 29, 2020

Registration of IT companies in Canada and the USA – an important point for young companies that are just starting their development path, are looking for possible ways to get to foreign markets worldwide.

To do this, they need large cash investments. If you look at the official statistics, the leaders among countries that provide strong support to start-up businesses are unconditionally Canada and the United States.

The Canadian government has long passed laws that simplify the visa process for the founders of a young firm.

If we take California for comparison, there are rather high prices for rental housing, real estate, food and accommodation.

In Canada, it’s all at times cheaper and more affordable. They have the same high standard of living as in California, only everything is much cheaper.

Nevertheless, if we compare Canada and the United States of America, the latter have a greater number of investors.

They are ready to invest their capital in the development of any successful projects. And in America, more large companies are concentrated that are considering options for mergers and mergers with other companies.


Currently, the situation is such that investors from the United States of America began to directly invest in start-up projects that went through the registration process in Canada.

This is an undeniable priority for leaders of new companies, as they enjoy both tax benefits and benefits for the purchase and rental of housing.

But the unresolved question remains: the company that registered in Canada, whether it will be affected by the influence of a private corporation – SSRS.


CCRS is a large corporation that has been registered in Canada and is not subject to the control and management of Canadian non-residents or state-level corporations. Control and management implies the following points.

If the new project is registered in Canada, this will provide many advantages: the Canadian government promotes the creation of new jobs, therefore, it created separate tax benefits – ITC.

They are provided subject to the terms of the Experimental Research and Development Program – SR & ED. Tax incentives are used to reduce the amount of money that a firm must contribute to the government budget.

At some points, if the company has no debt, part of the tax money is returned by the government. This is an added bonus for timely payments.

Up to 35% is allocated to the experimental research program for private companies registered in Canada, and about 15% for all other companies. 35% – the cost of various scientific research.

The principle is as follows: 3 million Canadian dollars – CAD, which are spent during the year, are returned back to the company. All that is spent over 3 million is returned in the amount of 20% of the total.


Delaware, Florida, Wyoming, South Dakota – states in which the tax rate is significantly reduced if you register a company in these states. But there are two important nuances.

1) If registration occurs in these states, it will be necessary to prove that the business operates here, and not elsewhere. This entails some costs.

Often there are times when the processing lines are located elsewhere. Then the proof is impossible.

Not all managers and employees agree to live in these states, away from major cities and with poor climates.

2) In the first time, after the registration of the company, there is an active process of recruiting highly qualified employees, advertising your product, attracting new investments.

If the company is developing rapidly, taxes are paid from the first revenues. That is, profit is only earned and is already spent on taxes.

Such nuances relate to firms that are registered in New York, Seattle or California.

The accounting department of the company must compile quarterly, annual financial reports and provide declarations to the tax service. Contact us for more information.

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