Canadians! US LLC Operation from Canada

[Tucker Bousquet]

Do any Canadians viewing this have any experience creating an LLC in the US and operating it from Canada. I've been seeing quite a bit in my research about "double taxation" and trying to see if that is accurate or not.

Figured I would attempt this first before going to a cross border RE lawyer.

Thanks!

[Chad U.]

Quote from @Henry Clark:

Google and read about Canada and US tax treaty.  Most countries have this type of agreement with other countries.  

Yes you will file tax returns in both countries on the same U.S. income.

Initially you will pay taxes in the country where the business was transacted.

The taxes you pay in that country will be credited against the tax impact in your home country.

Let’s say US tax is $2,000

Your Canadian tax is $2,200 on the same income.  Canada will let you offset the original $2,000

So $2,200 less $2,000.   You owe $200 in Canada. 

Talk with your tax accountant. 

Unfortunately LLCs are not recognized as a flow through entity in Canada, so you cannot apply the foreign tax credit on your personal taxes.  Many choose to use an LP for this reason.