Questions

Looking to start a skin care online business - most of my clientele will be US customers. I will sell in Canada as well. My marketing team is in Canada and the products for USA will be shipped from the USA. Canadian clients will be shipped from Canada.

There are a few parts to consider. Are you a U.S. tax resident and working from the U.S., or do you live and work from Canada? If you're a U.S. resident, you're generally subject to income taxes on your worldwide earnings, regardless of source. The U.S. revenue from sales to U.S. based customers are subject to federal income taxes and likely state income taxes.

Some of the more popular jurisdictions to form a U.S. entity are Delaware and Wyoming, because of the strong business laws, privacy protections and no state income taxes.

Your sales to Canadian customers may be subject to taxes in Canada. You'll need to assess whether you can leverage treaty benefits under the U.S.-Canada tax treaty. The treaty provides relief regarding what constitutes a permanent establishment in each country, and if you operate a Canadian corporation for your Canada business, the treaty provides reduced dividend withholding tax rates on repatriated profits.


Answered 2 months ago

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