Accountant for Ottawa tech startups

If the company began as a one-person contract practice, the Ottawa consultant page covers the personal services business side, and the Ottawa accountant page sets out the wider Ontario compliance picture.

SR&ED is a claim you build all year

The Scientific Research and Experimental Development program is the largest tax incentive most Ottawa software and hardware companies will ever see. It is claimed on Form T661 with the corporate return, and it rewards work that set out to resolve a technological uncertainty through systematic investigation. Shipping features with well-known techniques, however demanding, usually does not qualify.

Most of the value is won or lost in the records. The CRA wants to see what was uncertain, what the team tried, and what it learned, tied to the people and hours involved. Commit history, tickets and sprint notes can carry that evidence if someone links them to the claim while the work is fresh. We set up time tracking and cost coding at the start of the year, so the claim is assembled from records rather than recollection, and we tell you plainly which projects look eligible and which do not. Ontario adds its own research credits on top of the federal program, claimed through the same T2. The SR&ED expenditure limit update covers the recent federal changes.

CCPC status, the refundable credit and your next round

A Canadian-controlled private corporation can earn an enhanced refundable SR&ED credit, which means the credit can come back as cash even in a year with no taxable income. For a pre-revenue company, that refund often matters more than any deduction on the return.

Status can be lost. A priced round led by a foreign fund, or terms that hand non-residents or a public company control in law or in fact, can end CCPC status and change both the credit and the rate on future profit. Setting up a US parent to suit American investors usually has the same effect. Look at the tax side of the cap table before the term sheet is signed, not after the money lands. The guide to associated corporations explains a related trap when founders hold other companies.

Grants reduce the SR&ED base

Ottawa founders often stack funding: a federal research contribution, a provincial program, a hiring subsidy for a co-op student. Government assistance and most grants reduce the expenditures on which SR&ED is calculated, so the same dollar is not counted twice. The answer is careful bookkeeping rather than cleverness. Record each grant against the project and the costs it paid for, and the T661 reflects the net base correctly.

Contract work for a federal department is a separate question. Where a customer pays for the development and takes the results, the claim may belong to the customer rather than to you. We map each funding source and contract to its project as the money arrives, which keeps the monthly bookkeeping and the year-end claim in step.

Founders’ pay: why dividends do not count for SR&ED

Early-stage founders often take nothing, then dividends, then a salary once revenue arrives. Each choice has a cost beyond the founder’s own return. Salary paid to someone doing qualifying work can count as an SR&ED expenditure; dividends cannot. Salary also creates RRSP room and CPP contributions, and it needs a payroll account with source deductions remitted from the first payment.

For many Ottawa startups the sensible answer is a modest salary to the technical founders and nothing further until the credit and the burn rate are clear. The salary versus dividends calculator is a starting point, and payroll in Ottawa covers remittances and T4s, which are due by the last day of February.

Stock options, first hires and customers in Quebec

Options granted by a CCPC are taxed differently from options in a public company. Generally the employee is not taxed when a CCPC option is exercised; the benefit waits until the shares are sold, and a deduction may reduce the taxable amount where the conditions are met. That makes options a practical way to hire engineers the company cannot yet pay at market rates, but only if the paperwork exists: an option plan, board approval, grant dates and a supportable share value at each grant. Contractors who receive options fall outside these rules.

Sales tax has an Ottawa twist. The company charges 13% HST to Ontario customers, but a customer in Gatineau is a Quebec customer. GST applies rather than HST, and the business may need to register for Quebec sales tax at 9.975% depending on what it sells and to whom. Subscription software sold to Quebec consumers is the usual trigger. The Quebec accounting page covers that province, and GST/HST filing in Ottawa covers the return itself.

What EverStone handles for you

One CPA, one fixed fee agreed up front:

• T2 corporate return and year-end financial statements
• SR&ED claim on Form T661, built from project records
• CCPC status reviewed before a financing round closes
• Grants and assistance mapped to the projects they fund
• Founder salary, payroll remittances and T4s
• Option records kept so the tax treatment holds
• HST filings and, where needed, QST registration

Fixed fees, fully online

EverStone is a CPA firm in Abbotsford serving Ottawa startups remotely. We are three hours behind you, so a question sent at the end of your day is usually answered before your next stand-up. Monthly bookkeeping starts from $300 a month with HST filing included, and a fractional CFO for fundraising and board reporting starts from $2,500 a month. The T2 and SR&ED work are quoted after a free consultation and fixed in writing before anything starts. See what it costs.

Investors will ask for statements a lender or board can rely on. See financial statements for Ottawa businesses.

Remote accounting for tech startups from Abbotsford

EverStone is a sole practitioner CPA firm at 32615 South Fraser Way in Abbotsford, serving Ottawa businesses entirely online. There is no Ottawa office and no local staff. Meetings are held by video or phone, documents are exchanged securely by email, e-signature and a secure upload link, and no visit is required at any point. SR&ED records, cap-table questions and payroll are handled from the tools your team already uses.