Tax Help! Canadian LLC owner

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bizop
Posts: 1
Joined: Fri Oct 14, 2011 2:46 pm

Tax Help! Canadian LLC owner

Post by bizop »

Hi, I am new so my apologies if this topic was already posted, although I can't seem to find anything at the moment.

I need some advice on taxation for an LLC I set up in the USA.

I am a Canadian, living in Canada but recently set up a Single Member LLC in the States. I have an online business and it was easier to pay my contractors with an American bank account since they are all American. I have no Canadian employees at this time, so I was advised to set up the LLC.

My question is this - if I live in Canada, work in Canada (since it is an online business there is technically no set office in Canada or the US), but my income is coming from my LLC's American bank account, how do I go about paying myself and claiming taxes without paying twice in both countries? Am I considered Self Employed in Canada even though I own the company? Since the business is brand new (established 2 months ago) I am not sure my gross income, but I would ballpark it at around $100,000/year.

Furthermore, is it necessary to create an affiliate company here in Canada to avoid legal and tax issues?

Many thanks!
JGCA
Posts: 754
Joined: Thu Nov 18, 2010 3:05 pm
Location: Montreal, QC Canada

Post by JGCA »

A US LLC such as teh one you describe owned by you is classified as a single member LLC for US purposes and you to report this on Sch C on a 1040 return, a multiple member LLC reports teh income in the US as part of a parnership in essence the same business income treatment in US.

In US you can check off teh box to treat it as income by a corporation S or C corp, in your case as a CND S corp is not available.

In Canada the Fed ITA will not receognize teh LLC as a partnership it will tax any profits to you as dividend income as the business is considered a coprpration, so in Canada you must file teh income you receive as corporate and your subject to dividend income treatment. The business is considered as being carried out in Canada and is subject to CND corp tax treatment. Since you are doing over $100K you beter register also for GST/HST whtther or not you charge sales tax you still must be registered.
JG
qweryt
Posts: 33
Joined: Mon Aug 01, 2011 8:11 pm

Post by qweryt »

From what you have said I failed to see any links between having a US bank account and setting up an LLC. All you had to do was to open up a bank account in US that will make it easier for you to your contractors.

Now that you have an LLC you're subject to extra reporting with IRS which is IMHO unnessecary since you're not a US citizen and do not physically work in US.
JGCA
Posts: 754
Joined: Thu Nov 18, 2010 3:05 pm
Location: Montreal, QC Canada

Post by JGCA »

As soon as you pariate income to yourself in Canada you do so as dividend income so its treated as coporate income here
JG
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