Author Topic: Canadian National  (Read 430 times)

martinerlic

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Canadian National
« on: November 28, 2018, 05:26:53 AM »
I am considering opening a US LLC to conduct business the States. My business is currently Incorporated in BC. My business partner is a US National. What are the cross-border tax implications for me as a Canadian National if I were to operate under the LLC instead? I will not be moving to the US.

I have been doing a lot to research in this area and it seems as though there is a possibility of double taxation for both my personal income and dividends. I would like to consult with somebody in Victoria as soon as possible.
« Last Edit: November 28, 2018, 05:30:25 AM by martinerlic »

Phil Hogan, CPA, CA, CPA (Colorado)

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Re: Canadian National
« Reply #1 on: December 01, 2018, 10:58:57 AM »
Hi Martin

The use of LLCs in the US are common and they can work really well for US residents. However they are much less beneficial for Canadian residents and carry significant risks.

In most cases, for US purposes LLCs are considered partnerships. The income from the LLC flow through to the members or shareholders automatically. For Canadian purposes the LLC is considered a corporation. This difference in treatment can significantly affect Canadian taxpayers and often can result in double taxation.

Would your US partner be ok with using a US limited partnership instead of an LLC. Also, now that the US tax rates have dropped to 21% the use of a C-corp in the US (assuming you have a Canadian corporation) may be a good option as well.

Phil
Phil Hogan, CPA, CA, CPA (Colorado)
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Hutcheson.ca
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