How to Open an LLC in the US From Canada (2026 Guide)

Canada and the United States share the world’s longest undefended border and one of the most integrated economies. It’s no surprise that more Canadian entrepreneurs are exploring ways to form an LLC in the US. 

An LLC (limited liability company) is a popular structure because it blends the flexibility of a partnership with the liability protection of a corporation. For Canadians, setting up an LLC in the US from Canada allows access to the huge American market, protects personal assets, and, in many states, offers tax advantages.

This comprehensive guide will show you how to register an LLC in the US from Canada. Whether you run an e‑commerce business, consultancy or technology start‑up, understanding these steps can save you time and money.

What Is an LLC and Why Choose One?

An LLC is a legal entity created under state law. It exists separately from its owners and protects their personal assets from business liabilities. Here’s why it appeals to Canadian business owners:

• Liability protection: LLC members are generally not personally responsible for company debts; their risk is usually limited to the capital they invest.
  
• Flexible management: LLCs can be managed by all members (member‑managed) or by selected managers (manager‑managed). In member‑managed companies every member participates in decision‑making, while manager‑managed LLCs delegate control to one or more appointed managers.
  
• Pass‑through taxation: Profits and losses flow directly to the members, who report them on their personal returns. This avoids the double taxation faced by C‑corporations.
  
• Credibility in the U.S. market: A U.S. LLC demonstrates commitment to American customers and vendors, which can facilitate contracts and access to U.S. payment processors.

Comparison With Other Business Structures

To appreciate why an LLC is attractive, compare it with sole proprietorships, partnerships and C‑corporations:

Business Structure	Owner Liability	Tax Treatment	Complexity
Sole proprietorship	Owner is fully liable for business debts and lawsuits	Pass‑through taxation (profits declared on personal return)	Easy to set up but offers no asset protection
General partnership	Partners jointly liable for debts	Pass‑through taxation	Requires a partnership agreement and involves shared decision‑making
C‑corporation	Liability is generally limited to corporate assets	Double taxation: corporate income and dividends taxed separately	More expensive to establish; needs bylaws, shareholder meetings and stock records
LLC	Liability usually limited to members’ investment	Pass‑through taxation by default	Less formalities than a corporation; members decide management structure

Although corporations may be better suited to venture‑capital‑funded businesses, an LLC suits most small and medium‑sized entrepreneurs seeking a mix of protection and flexibility.

Picking the Right State – Wyoming, Delaware or New Mexico?

Each U.S. state has its own business rules, fees and tax environment. For Canadians opening an LLC without a physical U.S. office, a handful of states offer particularly attractive packages.

Wyoming – Low Fees, High Privacy

Wyoming pioneered the LLC concept and still champions small‑business owners. Benefits include:

• No state income tax: LLC members only pay federal tax on income connected to U.S. business; Wyoming charges no personal or corporate tax.
• Low formation fee: Filing the Articles of Organization with the Wyoming Secretary of State costs about US$100.
• Minimal annual taxes: The state’s annual report fee starts at US$60 for entities with assets under US$300,000.
• Strong privacy: Wyoming doesn’t require disclosure of members’ names in public filings, providing anonymity.
• Long history and legal stability: Being the first state to adopt LLC legislation brings decades of precedent.

Delaware – Robust Legal System and Flexibility

Delaware is the corporate home of over one million business entities. Key reasons for its popularity include:

• Business‑friendly laws: The state’s Court of Chancery specializes in corporate law, offering predictable outcomes for disputes.
• No state income tax on out‑of‑state operations: If your LLC operates entirely outside Delaware, you won’t owe Delaware income tax.
• Privacy: Member names aren’t publicly disclosed.
• Fees: As of 2025, the filing fee is about US$90 and the annual franchise tax is US$300.

While Delaware’s fees are higher than Wyoming’s, access to a highly respected court system makes it a common choice for companies anticipating investors or complex legal issues.

New Mexico – Low Cost and No Annual Reports

New Mexico is a lesser‑known but compelling option for foreign entrepreneurs:

• No annual reporting requirement: Unlike most states, New Mexico does not require LLCs to file annual reports. This reduces ongoing paperwork.
• Strong privacy: Members’ names are not part of the public record.
• Low fees: Formation costs are among the lowest nationwide (approximately US$50 as of 2025).
• Simple compliance: Few ongoing requirements make New Mexico attractive to small online businesses and Amazon sellers.

Choosing a state should reflect your business needs. Wyoming offers low costs and privacy, Delaware provides legal certainty for high‑growth ventures, and New Mexico minimizes annual obligations. For most e‑commerce or consulting businesses, Wyoming is a well‑balanced choice.

How to Register an LLC in the US From Canada: Step by Step Guide

1: Confirm Eligibility and Business Planning

Before forming a U.S. LLC, ensure your business model complies with both Canadian and U.S. regulations. Canadian law doesn’t prohibit owning a foreign company, but check whether your profession requires specific licences or whether Canada imposes additional reporting for offshore companies. Non‑U.S. residents can form LLCs in all 50 states, though you may need a U.S. visa if you intend to live or work in the United States.

2: Choose and Reserve Your LLC Name

Your business name must be unique within the chosen state and include “LLC,” “L.L.C.” or “Limited Liability Company.” States forbid names that could mislead the public by implying a government affiliation (e.g., “FBI” or “Treasury”).

Steps to secure your name:

1. Search the state’s database: Use the Secretary of State’s search tool to check availability.
2. Check domain availability: Secure a matching website domain.
3. Run a trademark search: Verify your name isn’t already protected through the U.S. Patent and Trademark Office.
4. Reserve if needed: States offer name reservations (for a small fee) if you’re not ready to file.
5. Translation: If your business name is non‑English, include an English translation in your filing.

3: Appoint a Registered Agent

Every LLC must designate a registered agent with a physical address in the state of formation. The agent receives legal notices, service of process and tax correspondence. For Canadians without U.S. residence, options include:

• Professional registered agent services: Typically US$100–US$300 per year. They provide a reliable address and notify you of compliance deadlines.
• Trusted U.S. friend or family member: Allowed if they maintain normal business hours, but their address becomes public and they must be available year‑round.
• LLC formation companies: Many include registered agent services in their package.
  

4: File Articles of Organization (Formation Documents)

The Articles of Organization are your company’s “birth certificate.” They list basic details about the LLC, such as:

• LLC name and state of formation.
• Registered agent’s name and address.
• Management structure (member‑managed or manager‑managed).
• Names and addresses of members/managers.
• Purpose (broad general business purpose is usually acceptable).
• Statement of limited liability.

Formation fees vary by state: approximately US$100 in Wyoming, US$90 in Delaware, and roughly US$50 in New Mexico. Filing can usually be done online in minutes.

5: Create an Operating Agreement

Although not always required by law, an Operating Agreement details how your LLC will run. It covers ownership percentages, roles and responsibilities, procedures for admitting or removing members, voting rules and procedures for dissolving the company. Banks and investors often ask to see this document because it demonstrates a professional management structure.

Why write one?

• Prevents disputes by defining member rights and duties.
• Helps prove the LLC is separate from its owners, reinforcing liability protection.
• Facilitates opening a U.S. business bank account.
  

6: Apply for an Employer Identification Number (EIN)

An EIN is the business equivalent of a social security number. It’s required to pay U.S. taxes, hire employees and open a bank account. Non‑U.S. residents cannot complete the online EIN application but can obtain an EIN by filing Form SS‑4 via mail, fax or telephone.

Steps for Canadians:

1. Wait until your Articles of Organization are approved; the EIN must match your exact legal name.
2. Complete Form SS‑4: Identify your LLC, responsible party and business activities.
3. Provide a U.S. address (optional but recommended): Including a U.S. mailing address can speed up processing.
4. Send supporting documents: Attach your Certificate of Formation if available.
5. Submit via fax or mail. The IRS generally issues an EIN within four business days for faxed applications.

Do you need a Social Security Number? No. Foreign owners without an SSN still qualify. If the responsible party is a non‑resident, complete the SS‑4 using “Foreign” in the SSN field and fax or mail the form. The IRS may ask you to obtain an Individual Taxpayer Identification Number (ITIN) using Form W‑7 if you need to file personal tax returns.

7: File the Beneficial Ownership Information Report

Beginning 1 January 2024, the U.S. Corporate Transparency Act requires most LLCs to disclose information about individuals who own or control the company. You must file a Beneficial Ownership Information (BOI) report within 30 days of forming your LLC.

The report collects the names, addresses and passport or driver’s license details of beneficial owners. It’s filed online through FinCEN’s BOI reporting system. Penalties for non‑compliance can exceed US$500 per day, so mark this on your calendar.

8 – Open a U.S. Business Bank Account

Maintaining separate business and personal finances is critical for liability protection and clean bookkeeping. Canadian owners often find opening a U.S. bank account challenging due to strict “Know Your Customer” rules. You generally need:

• Passport and home‑country ID.
• EIN confirmation letter.
• Articles of Organization and Operating Agreement.
• Proof of U.S. address (your registered agent’s address may suffice).

Traditional banks may require you to appear in person. Fintech platforms like Mercury, Relay and Wise (formerly TransferWise) cater to non‑residents; they allow remote account opening and provide U.S. routing numbers.

9: Comply With Ongoing State and Federal Requirements

After formation, you must keep your LLC in “good standing” by fulfilling both state and federal obligations:

• Annual reports: Delaware requires an annual franchise tax report with a US$300 fee. Wyoming’s annual license tax starts at US$60, increasing if your Wyoming‑based assets exceed US$300,000. New Mexico does not require annual reports, but check for any local tax filings.
• Registered agent maintenance: Ensure your registered agent’s address and contact details remain current.
• State taxes: Delaware and Nevada exempt out‑of‑state LLCs from income tax. Wyoming has no state income tax.
• Federal taxes: LLCs must file federal returns. Single‑member LLCs taxed as disregarded entities usually report income on Form 1040‑NR; multi‑member LLCs file partnership returns. Electing corporate tax treatment via Form 8832 or 2553 may offer advantages.
• Sales tax and employer taxes: If you sell physical products to U.S. customers, register for sales tax in states where you have nexus. Wyoming businesses must pay a $60 sales tax license fee and register with the Department of Workforce Services if they hire employees.

A U.S. accountant experienced in cross‑border issues can help keep you compliant and prevent costly penalties.

Taxation Considerations for Canadians

When a Canadian citizen owns a U.S. LLC, taxation becomes more complex. You’ll face obligations in both countries:

U.S. Federal Taxes

• Pass‑Through income: Most single‑member LLCs treat profits as personal income. Non‑residents must file Form 1040‑NR to report income effectively connected to a U.S. trade or business.
• Withholding: Certain types of passive U.S.-source income (for example, dividends and some interest) paid to a non-resident are subject to 30% withholding unless reduced by the Canada–U.S. tax treaty.
• Multi‑member LLCs: Partnerships file Form 1065 and issue Schedule K‑1 statements for each member’s share of income. Each foreign member must then file Form 1040‑NR.
• Corporate election: You can file Form 8832 to be taxed as a corporation. This may lower your effective tax rate if profits are reinvested, but corporate distributions are taxed again when paid out.
• Information returns: Foreign‑owned single‑member LLCs must file Form 5472 along with a pro‑forma Form 1120 if they have transactions with foreign owners or affiliates. Failing to file can result in penalties up to US$25 000.
• Tax treaties: The Canada–U.S. tax treaty may reduce or eliminate withholding on certain types of income. Filing Form 8833 declares your treaty position.

Canadian Taxes

Canadian residents are taxed on their worldwide income. You must report your share of LLC income on your Canadian return. To avoid double taxation, claim a foreign tax credit for taxes paid to the U.S. Keep meticulous records and consult a cross‑border tax professional; some provinces treat foreign LLCs differently than corporations or partnerships.

Provincial Sales Taxes and GST/HST

Even though your LLC operates in the U.S., if you sell to Canadian customers you may have to charge GST/HST and file returns. The place of supply rules determine whether Canadian consumption taxes apply. Speak to your Canadian accountant to ensure compliance.

Advantages and Disadvantages of Forming a U.S. LLC From Canada

Advantages

• Access to the world’s largest consumer market: The U.S. market offers abundant opportunities and customers.
• Limited liability: Personal assets are protected from business debts.
• Flexible management and taxation options: Choose member‑managed or manager‑managed structures, and pick pass‑through or corporate taxation.
• Enhanced credibility: A U.S. LLC signals commitment to American clients and vendors.
• No physical presence required: You can run your business from Canada while appointing a registered agent in the U.S.

Disadvantages

• Complex tax compliance: Filing returns in two countries can be expensive and time‑consuming.
• Banking hurdles: Opening a U.S. bank account often requires additional documentation or a physical visit.
• Ongoing costs: Registered agent fees and annual franchise taxes (especially in Delaware) add overhead.
• Corporate Transparency Act: Mandatory Beneficial Ownership reporting introduces new filing obligations.

Pro Tips for Canadian Entrepreneurs

• Work with cross‑border professionals: A Canadian lawyer familiar with U.S. business law and a U.S. accountant are invaluable.
• Plan currency management: Choose banks offering competitive exchange rates and multi‑currency accounts. Platforms like Wise can reduce conversion costs and integrate with accounting software.
• Keep U.S. and Canadian finances separate: Use your U.S. bank account strictly for American revenue and expenses.
• Maintain documentation: Preserve formation documents, operating agreements and meeting minutes for at least seven years to avoid “piercing the corporate veil”.
• Stay current on changes: U.S. states periodically adjust their filing fees and tax rules, and new federal legislation (e.g., Corporate Transparency Act) can impose new requirements.

Need Help?

Setting up an LLC in the US from Canada requires planning but opens the door to North America’s biggest marketplace. If you’re ready to expand, our team at Bestax Accountants, of cross‑border business specialists and business setup consultants, can handle the paperwork, act as your registered agent and help you navigate tax compliance. Contact us today for a consultation and start your U.S. venture on the right foot.

Frequently Asked Questions (FAQs)

Disclaimer: The information provided in this blog is for general informational purposes only. For professional assistance and advice, please contact experts.