Hi Madan, I am canadian and planning to setup an online e-commerce business in USA. is it better to do Business in US with USA entity or with Ontario based corporation? which is more tax efficient?If I go with US C-COrp I Wont have any physical presence in US, so will I pay federal sales tax and Income tax in USA as Canadian?What is your Advice regarding which is most tax Efficient way?

Question

2229 viewsSeptember 2, 2020Cross Border Tax

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Abrar (anonymous) Posted August 30, 2020

Hi Madan,
Thanks for the helpful website. I am a Canadian and planning to set up an E-Commerce(on-line) business in the USA.
-Is it better to do online business in the USA with USA entity Or with Ontario based Corporation? Which is more tax-efficient?
– If I go With US C-COrp I won’t have any physical presence in the US, So will I pay federal sales tax and income tax in the USA as Canadian?
-Should I first register my Corp in Ontario and make another C-corp in the US later?
-Does your firm handle all the cross border tax filling and related issues of US C-Corp?
What is your advice? Would really appreciate your response

Thanks

1 Answer

score 0 · Answer 1 · 2020-09-02T19:45:48+00:00

If your business does not have a permanent establishment in the US, then I recommend that you operate your business through a Canadian Corporation (CCPC). In this case, your Canadian corporation can benefit from a low small business tax rate of only 12.5% on the first $500,000 of annual profits, and will not be liable for US income tax on sales made to the US. Furthermore, sales tax requirements vary by state. The following factors determine whether sales tax must be collected from customers in a particular state (a) physical presence (b) number of sales transactions (c) total dollar amount of sales transactions.

We can help you with incorporating a company in the US and Canada, as well as filing tax returns in both the US and Canada.

1 Answer

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