Incorporating in Canada?

[Ryan]

I own a small business in the states and recently began bidding for some training work in Ontario. The guys I'd be working with like my material, etc. but tell me that the firm has a strict rule of only doing business with companies that have a corporate presence in Canada (funny because their parent corp is based in Ohio).

After getting friendly with one of the accountants it appears that all they really give a damn about is that the checks go to a Canadian address and are deposited into a Canadian bank.

This is a nice piece of business that I'd hate to pass up. Can one of the many businessmen/women terbites give me a direction as to my options?

Thank you - Ryan

 

[papasmerf]

The last time I checked with the feds. If you are not living in Canada and or a citizen they will tax the hair off your balls.

 

[foolnarnd]

Get ready to be more married than you've ever felt before if you do. To Revenue Canada that is. If you thought your significant other can nag, you haven't seen the professionals work you.

My advice is to partner up with an existing Canadian firm that can give you a presence and take a simple cut. You'll be miles ahead in the long run. A simple contract between you is all you need to rock and roll. They handle the issues they are already dealing with. You simply bill them and they add an agreeable markup and bill your end client.

 

[C Dick]

I didn't think you had to withhold taxes on payments to US suppliers, because of the tax treaty between Canada and US? I know lots of Canadian companies that pay US suppliers, do not withhold and face no consequences in audits or anything.

I agree, best to partner with a Canadian company who add a small markup.

 

[K Douglas]

Options:

1) Incorporate in Ontario pay about 18% in income tax (under $300,000 net income), GST @7% and maybe PST @8%.

2) Sell from you business in the States and pay non resident withholding tax on business income. You should be able to get a credit for that when you file your US tax return (much better option than 1)

3) Set up a bank account and post office box address in Canada under your current company's name. There's a good chance you will still have to pay the tax mentioned in 2, unless you're crafty. I'd seek legal advice here.

Good luck!

 

[seymore]

I may be wrong here but it seems to me that it doesn't matter unless you are being treated as an employee. If your US company is contracted to provide services to the Canadian company, you should be able to invoice them for services rendered, and the company simply cuts a cheque to you. Under "contract" there are no source dedution issues as everything is measured as gross. Factor exchange in and you should be good. You can always open up an account with a Canadian bank in your company's name so that the client can remit to you in Canadian funds. Just transfer the funds at your discretion. You are responsible for your own coporate taxes, not the client. Their responsibility is to pay the invoice.

But, I've been wrong before. Have your accountant verify for appicable taxes. That's their job.

 

[Fuzzy Thumper]

1) Incorporate in Ontario pay about 18% in income tax (under $300,000 net income), GST @7% and maybe PST @8%.

Higher than that - his company won't be a CCPC....

 

[wrong hole]

Higher than that - his company won't be a CCPC....

true dat

 

[Juldet]

It is cheaper now...You can do an on-line incorporation with Cyberbaun for $350.00 (same price to go into the Provincial Office and do it there) you can also do a Federal Incorporation at the Industry Canada site. We are a NUANS search house and a NUANS only costs us less than $20.00 if you want a special name instead of just a numbered company should not cost you more than $50.00 bucks, internet is great huh?