Best corporate structure - performing U.S. personal services

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WiseGuy
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Best corporate structure - performing U.S. personal services

Post by WiseGuy » Wed Jun 14, 2006 4:40 pm

What's considered the best corporate structure (income tax wise) for a Canadian resident performing personal services in the U.S.:

1. Canadian corporation doing business in U.S.
2. U.S. personal services corporation (C corporation?)
3. Self-employed Canadian working in U.S.

Which of 1, 2, or 3 would provide the lowest total combined (U.S. plus Canadian) tax rate?

Thanks.

nelsona
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Post by nelsona » Wed Jun 14, 2006 4:52 pm

Putting liability issues aside, I would think (3) self-employed residing in canada.

By residing in canada, you avoid 15% SE tax in US and maintain your health coverage.

You will pay no US fed tax. You might pay state, which would be creditable in canada of course.

others may have a different opinion.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

Mark T Serbinski CA CPA
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Post by Mark T Serbinski CA CPA » Thu Jun 15, 2006 12:03 pm

I agree... but many companies in the U.S. are reluctant to pay an individual, for fear of having you classified as an employee. Since this would subject them to possible penalties, most require that you use a coproration.

The choice of corporation would depend upon your residential status in Canada.. ie. if you will give up Canadian residential status, then a U.S. S corp may make sense.

Using a Canadian corporation also dovetails well with your visa status if you are going down on a TN... since you are required to show your intent to return to Canada after your engagement, and the Canadian corp does help to show that.
Mark

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