Growing a company beyond Canada’s borders is a goal for many business owners and entrepreneurs. Whether you’re considering expanding your operations into new markets or relocating the company altogether, it’s critical that you choose a country that can foster your business growth.
The United States of America is certainly an attractive option for Canadian business owners. With 13 states lining the Canadian border, many companies already residing in the southernmost part of their provinces may already have suppliers, clients, or partners residing across the border. For companies based farther north, the thought of engaging the approximately 330 million citizens of the United States is tempting — and profitable, if successful.
Moving a business to the United States is not as simple as driving across the border with a truckload of inventory, but that shouldn’t discourage business owners and entrepreneurs from considering the pathway to running a company based in the United States. A number of advantages include tax incentives, coupled with easy-to-follow directions on how to relocate, which means that moving your business to the U.S. is not only possible, but also highly practical.
Understanding the Different Types of Businesses in the United States
The Internal Revenue Service lists the five most common types of businesses in the United States as:
Sole Proprietorships: An unincorporated business owned by a single individual.
Partnerships: A business involving two or more people sharing the profits and losses.
Corporations: A company issuing capital stock to shareholders in exchange for money.
S Corporations: A company that passes its profits and losses to its shareholders.
Limited Liability Corporations (LLCs): A specific business structure permitted by state statutes.
The type of business that you operate in the United States directly impacts the income tax you’ll pay. For example, an individual running a sole proprietorship will pay income taxes via their individual annual tax return. Partnerships, as an entity, will need to pay specific taxes, while each individual in the partnership may need to pay separate income taxes.
Steps to Move Your Business from Canada to the U.S.
- Determine the type of business you wish to register by investigating the tax responsibilities associated with each. Keep in mind that certain factors (like the number of employees you hire and whether or not you choose to offer stock options) will impact your decision.
- Choose where your business will be established in the United States. Regardless of if you’re launching a virtual company or investing in a physical location, you’ll need to familiarize yourself with all local and state laws. This includes unique tax laws (like state tax, for example) that aren’t required in all states.
- Identify which visas you’ll need in order to work while in the United States. Though Canadian business owners likely don’t need a visa for most business-oriented visits, you’ll need to make sure that you’re permitted to conduct business in the United States prior to your arrival. In the event that you do need a visa, you will need to secure it in advance of your visit.
- Consider what requirements you’ll have to fulfill if you’re interested in obtaining citizenship. The pathway to citizenship can be a long process during which you must meet specific requirements. Thankfully, there are multiple ways for business owners to earn permanent residence. For example, visas and employment-based green cards are available for Canadians who are immigrating to the United States specifically to start a business, or to those who start a business and are willing to invest a high-dollar amount in a specific area of the country.
Frequently Asked Questions
Do I need a visa to conduct business in the United States?
It depends. The U.S. Department of State states that most Canadians do not need visas to conduct temporary business in the United States. You do not need a visa to manage a business in the United States from abroad. There are a variety of visas available that are applicable for other situations, such as the EB-5 Visa if you’re hoping to become a permanent resident, or an E-2 Visa if you’re starting a new business in the US without intending to reside there.
Do I need to be a US citizen to own a business in the United States?
No. In fact, it’s legal for non-residents to start, own, and operate a business in the United States without being a citizen or holding a green card. For example, most types of businesses can be opened as LLCs and operate from outside of the country, provided that the owner follows all applicable laws and tax regulations.
Although options like starting an LLC are relatively accessible for a number of small businesses and entrepreneurs, you must weigh your options with the same serious consideration that you apply to all other elements of your business. Tax burdens aren’t the only responsibility that comes with business ownership. You must also be aware of all federal, state, and local laws impacting the way you conduct your business, how you hire or terminate employees, and the products that you import, export, and sell within the country.
Many of the rules and regulations you’re required to follow in the United States are similar to those that corporations, small businesses, and entrepreneurs must abide by in Canada. With careful planning and a little research, you can move your business from Canada to the United States in a way that maximizes tax incentives, minimizes extraneous expenditures, and positions your company for success.
Nick Dauk | Contributing Writer