Tech startup accountant in Richmond Hill

For a one-owner Richmond Hill tech startup, monthly bookkeeping, payroll and the year-end T2 with statements usually cost from $450 to $650 a month all-in.

If you are still deciding whether to incorporate, start with should I incorporate. If the company exists and has a first year-end coming, the just-incorporated checklist lists what to set up before the first return.

Richmond Hill’s technology base

The City of Richmond Hill highlights its high-tech sector and a cluster of life-sciences and medical-technology companies, and its business profiles feature software developers, electronics firms, robotics companies and advanced manufacturers. The City hosts an annual life-sciences business summit, MedEdge, each June, and its Small Business Enterprise Centre runs seminars and support services for founders. For a startup that means good company and plenty of people who have been through the same questions. It also means the accounting problems are well known: development records for SR&ED, grants layered on top, founders paid unevenly, options promised to early hires, and sales to customers well beyond Ontario.

SR&ED starts in the bookkeeping, not the claim

The Scientific Research and Experimental Development program is claimed on Form T661 with the corporate return. The claim describes the technological uncertainty and the systematic work done to resolve it, and it puts a number on the salaries, contractor costs and materials behind that work. The second half is where startups lose money.

If developers and engineers log time against features, prototypes and experiments during the year, the eligible wages can be traced. If nobody does, the claim is rebuilt from memory long after the year-end and trimmed to what can be defended. A CCPC can earn an enhanced refundable credit, which means cash back even in a year with no taxable profit — often the most valuable line on a young company’s T2. Ontario layers its own research credits on the same work, so one clean set of records supports both. For hardware and medtech companies, materials consumed or transformed in experimental work can also qualify, which makes tracking prototype parts separately from production inventory worthwhile. See the SR&ED expenditure limit update.

Grants, the SR&ED base and the order of operations

Founders often stack funding: a government grant, an accelerator award, a research partnership and then SR&ED on top. The rule to know is simple. Government and non-government assistance for the same work generally reduces the expenditures the SR&ED credit is calculated on. A grant does not disqualify the project, but it shrinks the base.

So each grant needs its own account in the books, tied to the project and period it paid for. Record it as general revenue and the claim overstates the base. Leave it off and a reviewer finds it. Both mistakes are avoided by coding assistance when the money arrives.

Founders’ pay while the company has no profit

Early on, founders often pay themselves nothing and lend the company money instead. Later they draw salary, dividends or a mix. The choice matters more in a research company than elsewhere. Salary paid to a founder who works on qualifying development can count as an SR&ED wage; a dividend cannot. Salary also creates RRSP room and CPP, and runs through payroll with remittances and a T4 due by the last day of February.

Money moving the other way needs care too. A shareholder loan that is not repaid within one year after the corporation’s year-end is generally taxed as the owner’s income. Track every advance and reimbursement on a shareholder loan schedule. The salary-versus-dividends calculator is a useful first pass, and salary versus dividends explains the trade-off.

Stock options in a CCPC

Equity is how a startup competes for engineers before it can compete on salary. For a Canadian-controlled private corporation, the tax on an employee stock option benefit is generally deferred until the shares are sold, not triggered at exercise. That is friendlier than the public-company rule, but it still needs paperwork: grants, vesting, exercises and the price paid have to be recorded, and the benefit reported on the T4 in the year of sale.

Option plans also interact with the SR&ED claim. The option benefit is not a cash wage and is not treated as one in the claim. Keep the cap table and the payroll records reconciled, because an investor or acquirer will ask for both.

Hardware, inventory and equipment

Electronics, robotics and device companies carry costs a pure software company does not: components, prototypes, test equipment and finished stock. Production inventory is valued at the lower of cost and net realisable value, and obsolete parts are written down. Test and lab equipment is capitalised and depreciated through CCA. Keeping prototype materials, production inventory and capital equipment in separate accounts from the start makes both the SR&ED claim and the year-end statements far easier. Year-end statements in Richmond Hill covers presentation.

HST on software and devices sold from Richmond Hill

Ontario charges a single 13% HST. For a startup the harder question is who the customer is. Subscriptions and services sold to Ontario customers carry 13%; sales to customers in other provinces follow their rate; services and intangibles supplied to non-residents are often zero-rated. A company selling through a payment platform to customers in many countries needs its billing system set up to show where each customer is. Registration is mandatory once taxable sales pass $30,000 in four consecutive quarters, and many startups register earlier because recovering HST on development spending helps cash while revenue is small. See GST/HST filing in Richmond Hill.

What EverStone handles for you

One CPA, one fixed fee agreed up front:

• T2 corporate return with the SR&ED schedules and Form T661
• Development time and cost tracking set up in the books
• Grant and assistance tracking by project
• Founder salary, dividend and shareholder loan planning
• Stock option records and T4 reporting on sale
• HST registration, place-of-supply and filings
• Inventory and equipment records for hardware companies
• Board and investor reporting from the monthly close

Fixed fees, fully online

EverStone serves Richmond Hill founders entirely online: video calls, a secure upload link and e-signature. Monthly bookkeeping starts from $300 a month with HST filing included, and a fractional CFO engagement starts from $2,500 a month once the company is raising; see CFO services in Richmond Hill. The T2 and SR&ED work are quoted after we review your enquiry. See what it costs.

Remote startup accounting

EverStone serves Richmond Hill founders entirely online. There is no Richmond Hill office and no local staff. Meetings are held by video or phone, documents come in through a secure upload link and are signed by e-signature, and no visit is required at any point. Development time, grant records and cap-table changes are kept in the same monthly file, because the SR&ED claim depends on all three.