General Accounting

Canadian selling in the US

I’m a Canadian who wants to sell a physical product in the USA. What do I need to watch out for? Do I need to register for an American company? Where can I find more information?

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  1. 28 Answers

    There are Canadian companies that sell physical product in the USA and are not a U.S. registered company. Being a foreign seller does not mean that you must pay income taxes. Taxes can be avoided ONLY if you are NOT ETBUS under “Engaged in Foreign Trade or Business in the US”. ETBUS requires that you have at least one U.S. dependent agent that are employees are companies near-exclusively work for you, the dependent agent substantially grows your business in the US (non-administrative), and you engaged in “Considerable, continuous, and regular” business in US.

    Let’s say you are selling on Amazon, which engages in direct read of the US Tax code, then establishing your business entity as an LLC in the US may come with risks. If the IRS decides to enforce the tax code aggressively, they have a right to reject the corporation of your business as an ETBUS.

    The alternative would be to setup your business as a US C corporation. This filing type is not tax free but has tax efficiencies such as paying tax on net income AFTER expenses, a lower US tax rate, often zero applies since the expense include the management fee that owner pays to themselves. You could

    If you are shipping product with a value over $2,500US you will require a EIN, W-EIN, Social Insurance Number, or a Customs Assigned Number. If you are using a customer broker, they will obtain the assigned number on your behalf. This may or may not come at a cost. Also, the completion of this form is necessary for importing record to the U.S. Customs and Border Protection Department.

    https://globalisationguide.org/us-llc-non-resident/

    http://www.law.uh.edu/faculty/wstreng/InternationalTax2015/3.htm

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