Can Canadians Open Businesses in the USA?
The United States is a vast market with many potential customers. Although there is no explicit law prohibiting Canadians from owning a business in the United States, there are numerous challenges you will face.
Here's all you need to know about what Canadian business owners have to do in an attempt to establish a business in the United States.
What kind of visa do you need?
If you ever want to buy or start a business in the United States, you should know what type of visa you need. For Canadians, you have two options for starting or acquiring a business in the United States. These are the E-2 treaty investor visa and the EB-5 green card. Which one of these two you apply for is determined by your personal needs, assets, and circumstances.
E-2 Treaty Investor Visa
If you want to launch your own business and manage day-to-day operations, an E-2 treaty investor visa is perfect. It is renewable every five (5) years if the business operates. In addition, it has a lower investment requirement than the EB-5 green card.
However, your investment must be spent or "at-risk" at the time of the application. Because the E-2 visa expires upon the discontinuation of the business, you'll have no clear path to permanent resident status.
And, even though you have already put the investment at risk, you will be unable to conduct business until the E-2 visa is approved.
EB-5 Green Card
With an EB-5 green card, you will have immediate residency in the United States. Your spouse and children (under 21) will be granted residency based on the primary applicant's investment. You can freely reside, take a job, invest, travel, and study in the United States. The best part is that residency is permanent and does not expire!
We mentioned earlier that this option is much more expensive than the E-2 treaty investor visa. In July 2019, the Department of Homeland Security officially confirmed that from November 21, 2019, onwards, the EB-5 investment amounts for TEA or regional center investments will increase from $500,000 to $900,000 and for all other investments from $1 to $1.8 million.
You can also check the Advantages of a Business Bank Account
Steps to Starting or Expanding A Business in the United States
Registering your business differs by state, but the basic steps are about the same. These eight steps will help you with what to do to conduct business in the US.
Choose the state where you want to start your business
Choosing which state to register your business in is a critical judgment. It's an easy decision if your clients are in the same state. However, if you serve clients all over the country, we suggest registering your business in a lower-tax state.
Nevada and Delaware, for example, have some of the lowest rates of taxation and the most straightforward registration processes. Choose a business name and register it in each state where you intend to do business.
If you want to safeguard your company's name across the country, register it as a trademark with the US Patent and Trademark Office.
Decide whether you want your company to be a limited liability company (LLC) or a corporation.
The LLC business structure is unique to the United States. LLCs shield their owners, known as "members," from personal liability. LLCs are pass-through for federal income tax purposes, implying that LLCs' income is taxed at the individual member level rather than the LLC level.
Non-US residents, on the other hand, should form a corporation, particularly a C-Corporation. C-Corporations are comparable to Canadian corporations in that they protect stockholders from liability while also being taxed separately. This ensures that the US government will tax your business first, rather than you as a stakeholder.
Prepare Your Document Charter
A document charter is an official legal document that affirms the registration and establishment of a company in a specific state or region.
You must draw up and file an Article of Organization for an LLC. For C-Corporations, you must prepare and file Certificates of Incorporation.
Obtain an Employer Identification Number (EIN).
Your EIN is a type of Tax ID acquired by applying to the IRS through a US third-party designee. You'll need an EIN for the following purposes:
- Setting up a bank account
- Receiving a US credit card
- Filing US tax returns
- Hiring employees
- Applying for licenses and permits
- Gaining US accounts with companies such as Amazon, Google AdSense, or Stripe
Fill out and submit your Statement of Information (LLC) or Incorporation Report (C Corporation)
These documents provide non-tax information concerning your business to your state and must be filed separately from any tax filings.
LLCs have to file their statement of information every two years. Depending on the state, corporations must file every one to two years.
Determine whether you'll require a "doing business as" or DBA name.
A DBA is a filing made by an LLC or corporation with the government to notify the government that the entity is doing business using a name other than its legal name. Some banks will not work with you if you do not have a DBA.
Obtain all of the required business licenses, registrations, and permits Business licensing specifications vary greatly depending on the regulatory authority and the nature of your business.
Key Takeaways
Canadian entrepreneurs who want to start or acquire a business in the United States should consider whether they need a visa or a green card. If you qualify for a visa or a green card, you can start a business and live in the United States.
And once you've followed and completed the eight steps outlined above and any added prerequisites in your target state, you're ready to start your US business operations.
If you're a Canadian doing business in the US, you might also need currency exchange services. And if you need a provider that can help you exchange CAD for USD, and vice versa you can use RemitBee. RemitBee is a leading provider of currency exchange services and is trusted by businesses and individuals alike.
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