American Moving To Canada - *Web Design LLC* Questions

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treelifedesigns
Posts: 5
Joined: Wed Jul 25, 2012 3:34 pm
Location: Atlanta

American Moving To Canada - *Web Design LLC* Questions

Post by treelifedesigns »

Hey Guys,

Here is my situation. My wife is Canadian and I am American and we are moving to Canada. She is going to sponsor me as a Permanent Resident and that is all taken care of. My main concern is with my business.

I am the owner of a web design company in America and it is setup as an LLC. I get clients from all over the world and make a nice little living on what I do. Living in Canada do I pay Canadian taxes or American taxes on my profits . I imagine I won't be double taxed, but how do I handle it.

Do i need to do any paperwork or registering my business in Canada or can I do business as usual and keep filing my american taxes for my business, since I am just living in canada?

Let me know if you need any more information

Thanks in advance, Nate
c_farah
Posts: 8
Joined: Wed Jun 27, 2012 4:18 pm

Post by c_farah »

I'm sure somebody will add more specifics to my post, but I can definitely tell you that if you're going to be a resident of Canada, you will be taxed on your [u]worldwide[/u] income. You file under both US and Canada, then taxes you pay in the US become a credit on your Canadian taxes.



I'm not sure about the legality of the business side (although I can't think of a reason why you would need to register in Canada if you already have it set up in the US), but from a tax perspective, there may be some advantages to moving your headquarters here and becoming a CCPC (see a tax accountant for more details).

G'luck with the move!
treelifedesigns
Posts: 5
Joined: Wed Jul 25, 2012 3:34 pm
Location: Atlanta

Post by treelifedesigns »

okay so I am taxed on my world wide income. So if I understand you correctly if I am only taxed 20% in the US and I pay that come tax time and then Canada says I owe 30% then I technically would only need to pay 10% to Canada since the 20 would of been applied to the states?

This is a probably a terrible comparison, but trying to get a grasp of what will happen.
c_farah
Posts: 8
Joined: Wed Jun 27, 2012 4:18 pm

Post by c_farah »

In a nutshell, yes (although it will never be a 1:1 reduction of your taxes)

The US / Canada treaty does protect you from being double-taxed
JGCA
Posts: 754
Joined: Thu Nov 18, 2010 3:05 pm
Location: Montreal, QC Canada

Post by JGCA »

Be carefull with LLC being afforded tax treaty benefits by the CRA for USC living in Canada, the recent amendments have nit really changed the attitude of the CRA to extend tax credits for tax paid in the US . In the past unless you checked off to be treated as a corp the CRA did not extend tax treaty benefits, now they do in limited circustances.

You live in Canada do not incorporate in Canada in the US you were taxed as a partnership do teh same in Canada if you incorporate hewre the reporting to the IRS is greaty increased and you will be subject to accumulatred profit tax along with many other formalities, keep it simple in Canada and register a company to earn the notinal income you spoke about incorp should only be considewred if teh number warrant it. Remebmber in Canada you still have to register fr GST/HST and or TVQ even if the income is from outside and is zero rated.
JG
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