First time poster here. Am a Canadian looking to get into virtual wholesaling in the US. Was advised to form an LLC - now I'm not overly sure as to which state I should go about doing that in.
If anyone could provide any advice/input it would be very much appreciated.
I'll preface my comments by saying that everyone's tax situation is different so you should contact an accountant that specializes in cross border taxation issues and have a conversation with them about your specific needs. I sent you a PM with some additional info.
As Canadian residents, you and I have pay taxes on our income worldwide. Canada and the US have a reciprocal tax treaty that allows individuals to pay their taxes in the US and have it offset against the taxes owed on the Canadian side, provided that you respect the provisions of the legislation. An LLC is not recognized by the CRA as a "flow through" entity. As a result you would have to pay taxes to both the IRS and CRA on the same income. Double taxation. There may be instances where this is still preferable. Depends on your situation so speak to an accountant.
If you are looking to protect your personal assets and avoid double taxation, you can set up an LP, which the CRA, at least today, recognizes as a flow through entity. If you create a Canadian corp and they can be the general partner (1%) and you can be the limited partner (99%). Again, speak to a cross border accountant specializing in these issues. They can tailor something to your specific needs.
I've done three LLC's thus far but I never formed a partnership with someone outside of the USA so take my information lightly. I had all my LLC's in Montana but I would highly suggest looking for a state that would benefit you being from another country the most.
Here's a link to some LLC friendly states pertaining to real estate investment. I'm not saying do an LLC in any of these states necessarily, I'm saying look at what I mean on how each state can be different.
Hi Corey - really appreciate the response thanks. Yeah I've done enough research re LLC friendly states. Ideally looking for someone who can advise re being a foreigner opening an LLC as my friend google hasn't provided me with that info.
Funny enough it's legalzoom that i will be using for this so thanks!
I am not a CPA nor a lawyer, but I believe remembering that in Canada, US LLC disregarded status is not recognized and you will be taxed as a corp. Also there are tax issues with foreign ownership in the US and a corporation is often more appropriate for foreign investor.
I would encourage you to discuss with a tax professional who is used to deal with Canadian investor to get proper advice.
LLC are bad for canadian invester. It will end up in double taxation. The LP structure is more convenient for canadian. It's a flow thru, you pay US taxes and then only the remaining as a canadian. Research the web for LP structure for canadian investing in US. Then ask a CPA to clarify evrything. Depending on your goal the LP may not be your best option either. Good luck
I'll preface my comments by saying that everyone's tax situation is different so you should contact an accountant that specializes in cross border taxation issues and have a conversation with them about your specific needs. I sent you a PM with some additional info.
As Canadian residents, you and I have pay taxes on our income worldwide. Canada and the US have a reciprocal tax treaty that allows individuals to pay their taxes in the US and have it offset against the taxes owed on the Canadian side, provided that you respect the provisions of the legislation. An LLC is not recognized by the CRA as a "flow through" entity. As a result you would have to pay taxes to both the IRS and CRA on the same income. Double taxation. There may be instances where this is still preferable. Depends on your situation so speak to an accountant.
If you are looking to protect your personal assets and avoid double taxation, you can set up an LP, which the CRA, at least today, recognizes as a flow through entity. If you create a Canadian corp and they can be the general partner (1%) and you can be the limited partner (99%). Again, speak to a cross border accountant specializing in these issues. They can tailor something to your specific needs.