LLC – incorporated in the US, located in Canada

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akaltche
Posts: 2
Joined: Sat Feb 05, 2005 8:06 pm

LLC – incorporated in the US, located in Canada

Post by akaltche » Sat Feb 05, 2005 8:07 pm

I am a Canadian citizen and an Ontario resident. I am thinking about starting a small business (LLC) in buying some goods from US companies and re-selling (exporting) them to Eastern Europe. The goods will not be traveling to Canada; they will be shipped from the US directly to Eastern Europe.

Is it ok that my company will be incorporated in the US while physically located in Ontario? Is it ok to online incorporate my LLC in Delaware? Any suggestions on which online incorporation service to use? Alternatively, I can easily drive to Buffalo, NY and do it in person. Any tax complications? Will appreciate any advice and pointers to information to begin with.

Carson
Posts: 182
Joined: Wed Oct 27, 2004 1:00 pm
Location: Toronto

Post by Carson » Mon Feb 07, 2005 10:52 am

Using an LLC is NOT a good idea because LLC's are considered by Canada to not qualify for Treaty benefits. Amongst other problems, this means that because "mind and management" are located in Canada (ie. you), the LLC will be considered to be resident in Canada for tax purposes, while also being resident in the US under US rules.

I would suggest either a regular C corp in the US or just a Canadian corporation. You can minimize any additional US corporate taxes on a C corp by reducing US net income with fees paid to you in Canada for services rendered, though you have to be reasonable. A Canadian corp would not even be considered resident in the US, the way you describe it. So, unless using a US entity is important for business reasons, why not just use a Canadian corp?


<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote"><i>Originally posted by akaltche</i>

I am a Canadian citizen and an Ontario resident. I am thinking about starting a small business (LLC) in buying some goods from US companies and re-selling (exporting) them to Eastern Europe. The goods will not be traveling to Canada; they will be shipped from the US directly to Eastern Europe.

Is it ok that my company will be incorporated in the US while physically located in Ontario? Is it ok to online incorporate my LLC in Delaware? Any suggestions on which online incorporation service to use? Alternatively, I can easily drive to Buffalo, NY and do it in person. Any tax complications? Will appreciate any advice and pointers to information to begin with.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

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Regards,

Carson Hirner

Moving2Canada
Posts: 15
Joined: Thu Jun 25, 2015 12:58 pm

Re: LLC – incorporated in the US, located in Canada

Post by Moving2Canada » Thu Mar 14, 2019 11:27 am

Found this older thread, which is similar to my situation but also different...

Looking at opening a Canadian business (owned and operated in Canada), which would provide services to US clients. These are my options for seting up the business:

1) Set up a Canadian Sole Proprietorship

2) Set up a Canadian Limited Corporation

3) Set up a US LLC (operated in Canada - from the thread, it doesn't seem this is necessary)

Aside from the limitation of liability, which offers the best tax advantages in Canada and does it avoid double taxation?

Thank you!

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