Canadian company expanding to the US — LLCs and global taxes: can I handle this myself?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: each route trades tax cost against protection and administration: a branch exposes the Canadian company to US filing and possible branch-level charges, a subsidiary ring-fences but adds withholding on profits coming home, and selling in without an entity works only while there is no taxable presence.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
Branch or subsidiary for a Canadian company's first US customers?
The trade-off is the same one every time: cost against protection and administration. A branch keeps everything inside the Canadian company, which exposes that company to US filing and to charges that apply at the branch level. A subsidiary ring-fences the US activity, but profit coming home is a distribution, and a distribution attracts withholding. Selling in with no US entity carries the least administration and works only while there is no taxable presence. Which one fits depends on where you expect the presence to arise and how soon you want cash back in Canada.
Can we sell into the US without setting up a US company?
For a period, usually yes. No entity is needed to make a sale. What creates the obligation is a taxable presence, and that is a question about where your people and your property are rather than about where the customer is. The risk is that the arrangement drifts: a salesperson starts travelling regularly, stock is held in a warehouse, someone is hired, or a contractor begins working for you from their own premises. Each of those can change the answer without anyone deciding anything, so agree in advance which of them triggers a review.
Should a Canadian company use a US LLC?
Check the classification in both countries before adopting one. An LLC is flexible in the United States, but the two countries do not necessarily look at the same entity in the same way, and where they differ the income can be recognised at different times or in different hands on the two returns. That is what breaks the credit for tax already paid: not the rate, the matching. The practical consequence is tax paid in one country with no relief in the other. Settle it at formation, because changing an entity's form later is itself an event with consequences.
How do we get US profits back to Canada without paying tax twice?
Plan the route at the point the US entity is funded, not when the cash has accumulated. How profit comes home determines what happens to it. A distribution is one treatment, interest on a documented loan another, and a fee for services genuinely performed a third, each carrying its own withholding and its own deductibility in the paying company. Relief in Canada depends on the character of what arrives and on the tax actually paid in the United States. Getting the funding structure right early is far cheaper than rearranging it around a balance already sitting there.
Do we have to deal with state taxes as well as federal?
Yes, and separately. States set their own rules for when a business has enough connection to be taxable there, and those rules do not follow the federal analysis or the treaty. A company can have no federal taxable presence and still owe registration, filing and sales tax collection in a state, commonly because of where employees work, where stock sits, or the volume of sales made into that state. Treat each state you sell into as its own question, and review it whenever the pattern of sales or of people changes.
When does a Canadian company get a taxable presence in the US?
When the activity stops being sales into the country and becomes activity in it. The tests look at a fixed place of business at your disposal, and at people who act for you there, particularly anyone who habitually plays the principal role leading to the conclusion of contracts. Property counts too: equipment and stock held in the country are facts in the analysis. None of it depends on incorporating anything, which is why companies often cross the line while still believing the structure question is somewhere ahead of them.
Why do global structures so often stall on a US LLC?
Because the two countries do not agree on what an LLC is. The United States generally looks through it to its members; Canada generally treats it as a corporation. The result is income taxed in one country in a year when the other does not recognise it as having arisen, and a credit claim that fails on timing rather than on merit. The treaty contains relief for exactly this mismatch, but it is conditional, so the entity choice is settled before registration rather than after the first global tax filing.
What is GILTI?
A US rule that taxes shareholders of controlled foreign corporations currently on the corporation's income above a routine return on its tangible assets, rather than waiting for a dividend. The target was profit — especially from intangibles — parked in low-tax jurisdictions. The name, the deduction and the asset-based reduction are the parts Congress has revisited, so we compute it from the rules in force for the filing year instead of a remembered percentage. See the GILTI inclusion and Form 8992.
