Guide on How a Canadian Entrepreneur Can Open a Business in USA

Setting up a new business in the United States can seem challenging for foreigners, but it’s not when one follows the legal procedures. As a Canadian entrepreneur planning to open a business in the U.S., you must first establish the company’s structure and plan. 

How to Open a Business in the United States as a Canadian

Establishing businesses in the United States has become easy for Canadians especially that both countries are parties to the North American Free Trade Agreement. However, Canadians must adhere to the terms of trade set by the U.S. for foreigners.

Here are the steps to follow when starting up a company in the United States successfully.

 

  • Choose the Right Corporate Entity for Your Business

 

You can select a corporate entity that will suit your company structure and business goals. As a Canadian citizen, you can open either a limited liability company (LLC) or a corporation (C-Corp). Only the U.S. permanent residents or citizens can open an S-corporation.

With LLCs, company members or employees are not liable for any losses resulting from the business actions. If the company becomes bankrupt, members won’t use their assets to reinstate it. Also, the members can freely share profits without restrictions.

However, most new businesses prefer the C-corporation entity since they offer unlimited stock and can expand. C-Corp entities also protect foreign companies from close internal revenue service involvement. Unfortunately, this feature will result in double taxation.

How a Canadian Entrepreneur Can Open a Business in USA, Canadian Entrepreneur

 

  • Get a Visa for Your Company

 

Most Canadians get visas to start up business in the United States. However, it may not be necessary sometimes. There are many visa options for foreigners seeking to establish their businesses, with E-2 as the most popular option.

While E-2 visas don’t lawfully guarantee permanent residence, foreign investors can stay for longer to manage their businesses provided they renew the visas consistently. To qualify for an E-2 visa, one must meet all the requirements for foreign companies.

Here are the qualifications for an E-2 Visa:

  • You must be seeking to invest a significant amount of money in your U.S. business. If you already own a well-established company in the United States, it would be an added advantage when opening a new business.
  • Your country of citizenship must be a party to a treaty of commerce or friendship with the United States. Canada is a member state of the North American Free Trade Agreement.
  • You must own at least 50 percent of the company’s shares. For that reason, you will have to provide proof of business ownership.

Other visa options for foreign business include the L-1 visa, F-1 Optional Practical Training Visa, H-1BSpecialty Occupation Visa, and the O-1A Extraordinary Ability and Achievement Visa. You can find more information about these visas here.

 

  • Register Your Company

 

You need to select the region where you will operate your business before registering it. In most cases, foreign investors prefer setting up companies in states with minimal tax burdens. States like Nevada and Delaware are one of the best places to start a business.

Among the two, Delaware incorporation is the most popular. That’s because its corporate laws are highly ‘flexible’ and protect directors and shareholders significantly. Besides, the incorporation fees are minimal, and one can register a company within a day. 

How to Register Your Company in Delaware

The procedures for company registration might be slightly different in each state. But in Delaware, the registration process is simple. 

In a nutshell, let’s look at the steps to follow to incorporate your business in Delaware.

  • Choose a business name that is unique and has never been registered in the U.S. The trademark database can help you find the names already registered.
  • If not able to collect the legal documents for your company, name a registered agent do that on your behalf.
  • Fill out the certificate of incorporation, indicating the name of your company and details of the registered agent.
  • After incorporating your business, file the incorporation report. It’s in this stage that you will start paying a franchise tax of about $175 every year.

 

  • Get an Employer Identification Number (EIN)

 

If you’re planning to hire employees in your company, an employer identification number will be of crucial relevance. You will also need this number when opening a bank account, filing tax returns, and obtaining a license for your business.

Final Words

As you plan to start a new business in the United States, it’s important to consult experts who can help you figure out the legal requirements, including tax laws. Also, if seeking to fund your company start-up from Canada, you can get free international money transfer services at Knightsbridge FX.

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