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E-Commerce Laws (2 posts)
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User is offline Sep 29 2009 02:58 PM
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    29 Nov 2009 - 16:38
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  1. In Topic: How to start an online business in Canada

    Posted 29 Sep 2009

    thanks for your prompt response cannuck!

    I should've probably mentioned that we're going to be a small business start-up, so we're hoping to keep our start-up costs as low as possible.

    Quote

    1) Is there an equivalent to an LLC in Canada? (I would like to limit both my liability and my tax file returns!). If not, whats the next best thing and how much does it averagely cost to setup?
    Yes, there are both provincial and federal incorporations, both will limit your liability and tax base, but generally the tax base will not save you anything until you start making over $30K in profit. Speak to a lawyer and accountant if you want more information or the BDC.

    It'll take us a few years until we're making $30k in profit a month. I think a reasonable profit to expect for the first year is between $1000 to $3000 per month. And thats just being extremely realistic and non inflammatory with the numbers. Also at this point I should mention that my business model is based on drop-shipping, so the financial risks are quite low. So my new question is, do you think we should incorporate at all? If yes, what is our best legal option that will not eat up our start-up costs?

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    2) I know that Google Store and Checkout only work with American or UK based companies at the moment. Do you know if I can start a Yahoo Online Store? If not, whats the next best online store/shopping cart solution that you have worked with in Canada?
    Well, come to the osCommerce forums you will get the answer that osCommerce is the perferred cart system to work with :)

    sounds good! I'll give that a thorough research :)

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    3) Some of our products are manufactured in Canada, and some are manufactured overseas. What kind of taxes and fees apply to selling the first option, and importing/selling the second option?
    The importation fees associated with your products will vary, this is something you will need to contact Customs Canada on. As for the selling, GST, HST and or provincial sales tax will apply to sales made in Canada and your province, outside of Canada sales are tax exempt for most products that I can think of.

    I see. So there are import taxes, but no export taxes. In regards to sales, I would like to make it easier for my customers by stamping the product with one price that includes all possible taxes. So for example when they go on our website, our product will be sold for $100 + Shipping/Handling. Is it legal to do that?

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    4) How can I find out if my imported products are exempt from certain taxes?
    Contact Customs Canada and the CRA

    Will do.

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    6) What is considered Duty Free?
    Usually referred to products IMPORTED, not exported.

    I'm confused. I thought Duty Free means no taxes. How are Imported products Duty Free?

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    7) What is the procedure to export and ship products to our US clients?
    Generally all shipping leaves the customer purchasing the item to pay importation duties etc. Shipping to the USA is simple using any of the various shipping companies, including UPS, Canada Post Fedex etc...

    I heard the exporting paperwork we have to fill for each product sold to a US customer is daunting, is that true? Also, how can I find out how much will my US customer have to pay for importing our products?

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    8) What is the best/cheapest shipping companies to consider for our Canadian customers, and for our US or international customers?
    Do research on this rates vary depending on quantity, size ship to location etc.

    Will do. But how are some companies able to ship a product anywhere within Canada for a fixed standard fee of $9 for example?

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    9) Which bank provides the best online merchant account? What documents are required and how much does it cost to setup?
    You will need to contact your bank on this, there are many payment methods available though other means not just the banks.

    We'd like to be able to receive credit card payments into our bank account. I heard you can only do that through a merchant account. True? What are some of the other payment methods that you refer to?

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    cheers and hope this helps you in your endevour.....

    Thank you very much. I hope this thread will help many online entrepreneurs understand the legalities and the process of starting an online business in Canada. Hopefully the more online businesses there are, the more the government will make it easier for us to start them!

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Jay Ghader
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