Can a US LLC do business in Canada?
We have registered an LLC from New Jersey and now we have have got couple awesome projects from Canada. They are software projects. Can we do them from here (US)? How about the taxes? Can some please explain in detail? It would be a great help, thanks!
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General rule with services is that taxes are charged according to where the work is done. So if you do the work in New Jersey, any applicable New Jersey taxation would apply. If you did the work in Canada, you would be charging the customer HST/GST assuming the annual cost was large enough. But please don't rely on advice here: ask your accountant. Working in a different country is a visa question. If you are doing the work in New Jersey but shipping software across the border, you aren't doing business in Canada (as I understand it). – Mike 12 years ago
2 Answers
Yes, you can do this.
I think you pay taxes the same way as for your US customers, but hopefully someone else can confirm.
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Yes this is correct. If you are doing remote work, then the income is coming to you here in the US you wouldn't be paying any Canada taxes or anything like that. – Ryan Doom 12 years ago
Yes, an LLC can do business in Canada. You should probably be aware of the major taxes that you might need to pay, namely the GST/HST and the income tax. Read CRA's exposition for non-resident businesses.
The GST/HST is a value-added tax on goods and services. You might need to collect and remit this tax to the Canada Revenue Agency, depending on the type of goods/services provided, how much work is actually done in Canada, and whether your annual revenue exceeds $30000. The GST/HST is not LLC-specific.
Your LLC may be subject to Canadian income tax, depending on how much work is actually done in Canada. Even if you elect to treat the LLC as a flow-through entity for income tax purposes, Canada still treats the LLC as a corporation, and the LLC may need to file a Canadian income tax return as a non-resident corporation.
