Selling in Canada and FX or separate entity
Rick Bigelow (CFO)
| Aug 17, 2010
Our company is in the process of enterting the Canadian marketplace. Being a small company (sub $5m in revenue) and not sure how much traction we will get in the Canadian marketplace, I am looking for recommendations in setting up the accounting for Canadian sales. We will continue to sell as we do, via web, tele-marketing, trade shows, etc, so not additional build out is anticipated. I envision simply billing in Canadian dollars via a separate entitiy and doing a FX accounting.
Any recommendations and advice will be greatly appreciated.
Rick
Topics:
Answers
Company: Rexanto
Canada and the US are closely linked enough that for our company ($13m in sales....maybe $1M in Canada) it wasn't necessary to have a Canadian entity nor to transact in $C; Canadian companies (and their banks) are quite adept at the "send USD" thing. Very, very different from Japan, for example.
It does depend entirely on your product. Big one time purchases of $50K plus, I wouldn't bother with the new entity. Smaller purchases (from individuals or smaller entities) could be more effectively approached using $C. Also, if you're going to be dealing with VAT/tax issues (we didn't need to), a new entity and $C makes sense.
The big caveat I see is the FX consolidations. Will your GL cope with that? It is painful if you don't have a good system to handle multiple companies...we kept on with Excel, but were slowly migrating to Microsoft Dynamics NAV (formerly Navision), which is reasonably affordable.