This is our first FAQ of this series on taxes for Canadian businesses in the USA.
What taxes does a Canadian business pay in the USA?
When a Canadian business does business with people outside of Canada the tax rules are different. In this series, we take a detailed state by state look at the taxes a Canadian business will experience when doing business in the USA. There are strategies to either opt-in or opt-out of taxation in a non-Canadian location such as the USA. This series looks at the nature of taxes in each state (50+ blog posts over the next months).
Opting in and opting out of taxation in the USA will be examined at the end of this series. This is a discussion to be had after the business person understands what they are looking at in the nature of taxes in the target jurisdiction, which in this case is the USA.
On a top level, each state in the USA is a separate “State” with its own taxes; and also within the same nation of the “United States”. Thus, some taxation will be consistent from state to state, some will be inconsistent and some will be coordinated between states to ensure that businesses are not put at a disadvantage when engaging in a multistate transaction.
In this series we will discuss:
- Sales Tax
- Use Tax
- Unemployment Insurance (Payroll Tax)
- Withholding (Payroll Tax)
- Corporate Income Tax
- Excise Tax (Income Tax)
- Estimated tax (Income Tax)
- And other taxes unique to the United States as a whole and the individual States.
Availability of Treaty benefits:
The Canada-U.S. tax treaty can provide Canadian corporations with some relief from income taxation, but is generally not of much benefit when considering Sales and Payroll taxes. We discuss this further at the end of this series.
If you are considering doing business in the USA, please contact us and we can advise on the best structure to reduce or minimize the impact of the taxes.