HALP PLEASE - Canadian Forming LLC to Wholesale In the US

[Jagger Babwin]

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.

Thanks!

[Stephen Fryer]

Hi @Jagger Babwin.

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.   

Hope that helps.