USA Company Setup for Canadian Residents and Canadian Corporations
Opening a US LLC or corporation is quick. Getting its Canadian tax treatment right takes planning. Bestax forms the company with you and handles the Canadian reporting it creates, so the structure works in both countries from the first year.
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Who Sets Up a US Company from Canada
A US company suits Canadians who sell to US customers, hold US assets or need a US presence for banks, platforms or partners. The right entity depends as much on Canadian tax as on US law, so we look at both before anything is filed.
- Canadian corporations opening a US subsidiary to sell, hire or contract in the United States.
- Canadian residents starting an online business that needs a US entity for payment processors or marketplaces.
- Owners who were advised to use an LLC and want to know how Canada will tax it.
- Investors holding US real estate or other US assets through a company.
- Founders raising money from US investors who expect a US corporation.
- Owners with an existing US company whose Canadian reporting has never been filed.
An LLC that is simple in the US is often not simple in Canada. The CRA generally treats a US LLC as a corporation, which changes how its profits are taxed in your hands.
Read our guide to opening a US LLC from Canada, or see our Cross-Border & International Tax service for ongoing filings in both countries.
What Our USA Company Setup Covers
Formation in the US and reporting in Canada are planned together, so the company is set up once and set up right.
- A review of LLC versus C corporation, and of the state, against how each is taxed in Canada and the US.
- State formation filings and a registered agent, arranged through our international business setup team.
- The company’s US Employer Identification Number (EIN) and support with opening a US business bank account.
- Canadian reporting for the company: Form T1134 for a foreign affiliate and Form T1135 where it applies.
- FAPI and foreign tax credit planning, so income is not taxed twice or earlier than expected.
- Coordination of the US federal and state filings with our cross-border tax team each year.
How Canada Taxes a US Company You Own
Canadian residents are taxed on their worldwide income, and owning a US company adds Canadian reporting on top of the US filings. The CRA generally treats a US LLC as a corporation, even when the US treats it as a disregarded or flow-through entity.
That mismatch matters. US tax may be charged to you personally on the LLC’s profit, while Canada taxes you only when the LLC pays you, so the foreign tax credit may not line up and the same income can be taxed twice. A C corporation, or a different structure, can avoid this when it is planned in advance.
A Canadian resident or corporation with a foreign affiliate generally files Form T1134 each year for it.
Form T1135 applies when specified foreign property costs more than $100,000 at any time in the year; shares of a foreign affiliate are reported on the T1134 instead.
Passive income of a controlled foreign affiliate, such as interest, rent or royalties, can be taxed in Canada each year as FAPI.
Late or missing T1134 and T1135 forms carry penalties of their own, even when no tax is owing.
Active business profits of a US subsidiary are generally taxed in the US, and the surplus rules can let dividends return to a Canadian corporation without further Canadian corporate tax. We confirm the position for your structure before you form the company.
Choosing Between an LLC and a C Corporation
Both can be formed from Canada without US residency. They are taxed very differently once a Canadian owns them.
| Point of comparison | US LLC | When it matters | US C corporation |
|---|---|---|---|
| US tax | Often taxed at the owner level, so the Canadian owner files US returns personally | Every year the company earns US income | Taxed as a company, with the company filing its own US return |
| Canadian treatment | Generally a corporation, so profits are taxed in Canada when paid out | When profits are distributed | A corporation, matching its US treatment |
| Risk of double tax | Higher, because US and Canadian tax may fall in different hands or years | At year-end and on each distribution | Lower, with treaty withholding rates and foreign tax credits on dividends |
| Canadian reporting | Form T1134 as a foreign affiliate, with FAPI reviewed | Each year after the company’s year-end | Form T1134 as a foreign affiliate, with FAPI reviewed |
A foreign-owned US company also has US information returns, such as Form 5472. We coordinate them with our cross-border tax team so both countries’ filings use the same figures.
What We Need to Set Up Your US Company
The formation itself needs only a few details. The planning needs a clear picture of who owns what and how the US company will earn its money.
If you already have a US company, bring what you have. We review it first and catch up any Canadian reporting that was missed.
- The proposed company name and the state you have in mind, if any.
- Identification for each owner and director, and their addresses.
- Who will own the company: you personally, your Canadian corporation or a holding company.
- A short description of the US business and where its customers and staff will be.
- For an existing company: its formation documents, EIN letter and past US returns.
- Your Canadian corporation’s latest financial statements and T2 return, if it will be the owner.
Our USA Company Setup Process
Plan the structure
We review who should own the company and whether an LLC or a C corporation fits, in both countries.
Choose the state
We help you choose a state based on where the business operates, its filings and its ongoing costs.
Form the company
Our international business setup team files the formation documents and arranges the registered agent.
EIN and banking
We obtain the EIN and support the US business bank account application with the documents banks ask for.
Set up Canadian reporting
We record the investment and set up the T1134, T1135 and FAPI review for the first year-end.
File every year
We prepare the Canadian filings and coordinate the US returns, so both stay on time.
Why Canadians Choose Bestax for a US Company
Canada first, not last
We plan the Canadian tax treatment before the company is formed, when it is still easy to change.
One team for both sides
Formation, Canadian reporting and US filings are coordinated by one firm, with one point of contact.
A presence in the USA
Bestax works with clients across Canada, the USA, the UAE and Panama.
Plain answers on LLCs
We explain how Canada will tax the entity you are considering, before you commit to it.
Lawyers where needed
We tell you when an operating agreement or shareholder agreement should be drafted by legal counsel.
Related Bestax Services
Cross-Border & International Tax for the yearly filings in Canada and the US once the company is running.
Foreign Tax Credits so US tax already paid is credited against Canadian tax on the same income.
T2 Corporate Tax Returns for the Canadian parent corporation that owns the US company.
Transfer Pricing when the Canadian and US companies charge each other for goods, services or loans.
What Our Clients Say
I had a wonderful experiance with bestax while setting up my company. They made everything so simple and took care of all the paper work. Very efficient team for company registration in Mississauga!
Google review 1 of 4: Jason Duffy
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Frequently Asked Questions
Yes. You do not need US citizenship or residency to form a US LLC or corporation. Our international business setup team handles the state filing and registered agent, and we obtain the EIN with you.
The CRA generally treats a US LLC as a corporation, not a flow-through. If the US taxes you personally on the LLC’s profit while Canada taxes you only when it pays you, the two taxes may not line up and double tax can result. See our guide to opening a US LLC from Canada for more detail.
For many Canadian owners a C corporation is easier to fit into the Canadian system, but it depends on who owns it, what it earns and your plans for the profits. We compare both for your situation before you form the company.
Usually Form T1134 for the foreign affiliate, filed by the Canadian owner each year. Form T1135 can apply to other foreign property you hold. Passive income in the US company can also be taxed in Canada each year as FAPI.
No. Bestax does not give legal advice. An operating agreement, shareholder agreement or contracts with US partners should be drafted or reviewed by legal counsel, and we work alongside your lawyer on the tax side.
Yes. We review how it was set up, check whether its Canadian reporting has been filed, and catch up any missing T1134 or T1135 forms before the CRA asks about them.