How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Lane Your Own Question

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4373
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
1929974
Type Your Tax Question Here...
Lane is online now
A new question is answered every 9 seconds

I am a Canadian about to start an e-commerce store. Ill

Resolved Question:

I am a Canadian about to start an e-commerce store.

I'll be operating out of my apartment and shipping product to both the USA and Canada. I want to limit my liability but a canadian corporation seems expensive to set up and maintain. And I can't use a PO box as my address, unlike a LLC. I don't want my real address to be open to the world!

So I would like to create a LLC in the USA as a non-resident. I've heard good things about Delaware and Nevada since there are no state taxes. Does this sound like a good idea? I'm open to suggestions on this. Also open to suggestions on methodology.

Do you have any suggestions for how to set up the LLC? I know online services like legalzoom are cheap and quick, but can make some mistakes.

And when it comes time to do taxes, do you have any suggestions for a good accountant? Or what to look for in an accountant? For example, an accountant that specializes in both Canadian and US tax. Or are those hard to find.

Will my shipping location (Canada) or server location affect my taxes, or is it simply based on where my business is officially located?

And last question. I would like to travel to the US to escape the winter for a few months. Will this affect my taxes?

I know this is a lot but I really do appreciate all the help I can get. Online forums seem to be full of outdated and bad information.

Thank you!
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Lane :

Hi,

Lane :

I was totally with you until you said "I know online services like legalzoom are cheap and quick, but can make some mistakes"

Lane :

The Delaware LLC is definite an excellent idea

Lane :

Delaware has the largest body of corporate law in the US

Lane :

If it's been done, it's been one there

Lane :

they are best at keeping things private (as private as they can be) and nwill allow for growth .. as the underwriters from Wa;; street are very familiar

Lane :

NOW, on legal zoom (I have no association), they did MY LLC ... and I found them to be te nest compromise between sitting with an expensive lawyer adn still having real attorneys doing the work

Lane :

Honestly it's a happy medium between having attorneys doing the work and going it completely on your own

Customer:

I don't want to interupt. Keep going :)

Lane :

In terms of taxes, your trave COULD effect things ... the tests around residency (spending enough time in US) may require that you fule a US return

Lane :

K

Lane :

One more piece of the data dump...

Lane :

There iswa tax treaty between US and Canada .. and this will keep you from being taxed twixe.... it plays out in several ways

Lane :

A credit on your US taxes (if you have to file) OR using a W*-BEN form (to waive U.S. withholding) with whatever company in the US you are doing business with that may require withholding

Lane :

sorry for the typos ... that was W8-BEN Form W-8BEN to show NO withholding required

Customer:

OK. Great stuff so far. What I meant by legalzoom making mistakes was that they sometimes don't structure the company in the best way. I got that through reading a forum. They suggested using an atty. Do you think an ecommerce store would be simple enough for them to handle?

Lane :

Very quickly ... I have heard good things about these people, in terms of dealing with Canada/US cross border issues: http://www.freedmaxick.com/services/tax-services/international-tax-services/canadian-us-tax-services/

Lane :

ON Legal Zoom ... They really do NOT ( you're right ) do the best job of helping you CHOOSE your business entity

Lane :

Honestly, the LLC makes a lot of sense (the fastest growing legal entity in the US) ... a hybrid beterrn the partnership (very flexible) ad te ncorporation (protection from liabiitite - lawsuits- creditors, lie the corporation

Lane :

"... between" the partnership ... "and the corporation" ... essentally No one can come after your PERSONAL assets for business reasons, but you can design the business any way you want

Lane :

and Delaware does this well

Lane :

THe good thing about an ecommerce store is that you don't have a PRESENCE in the US (no sticks and bricks building) ... so this MAY not need to be taxable in US at all

Lane :

HOWEVER ... relative to your travel desires, once you have spent ENOUGH tme in US you them are treated as a resident and have certain filing requirements. See this: http://www.irs.gov/Individuals/International-Taxpayers/Introduction-to-Residency-Under-U.S.-Tax-Law

Lane :

Your turn :)

Lane :

Sorry condn't help myself ... here' the substantial present=ce test (What IRS will use to determine "residency")

Lane : Substantial Presence Test

You will be considered a U.S. resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States on at least:



  1. 31 days during the current year, and

  2. 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:

    • All the days you were present in the current year, and

    • 1/3 of the days you were present in the first year before the current year, and

    • 1/6 of the days you were present in the second year before the current year.




Example:


You were physically present in the United States on 120 days in each of the years 2007, 2008, and 2009. To determine if you meet the substantial presence test for 2009, count the full 120 days of presence in 2009, 40 days in 2008 (1/3 of 120), and 20 days in 2007 (1/6 of 120). Since the total for the 3-year period is 180 days, you are not considered a resident under the substantial presence test for 2009.


 

Customer:

Having some technical difficulties.. sorry lol

Customer:

That's some great information, I'll have to spend some time reading through those links

Customer:

And I guess I'll have to do some more research about using legalzoom, but you've given me some added confidence in using them

Lane :

sOK ... yes (from my ed it looks like you're going into and out of the chat) no worries ... I'm here

Customer:

And I guess just one last thing.... do you know if the location of my servers and the location that I ship products from will effect taxes....

Customer:

Like say I'm on vacation in the states and ship out an order from the states

Customer:

Assuming I have the correct business visa etc.

Lane :

Yes, If you DO use the US. LLC ( and choose Delaware) which I think makes some sense,. they will do it in such a way as to make sure all the legal i's are dotted and t's are crossed as we say here

Lane :

They WILL wok with on that issue

Lane :

the only thing you have to do is make the choice of business entity yourself

Lane :

and the LLC really does make sense for what you're tryring t do here I believe

Lane :

On te server location?

Customer:

OK ya I'm liking the LLC

Customer:

Ya server location... because that's physically where the transactions will occur

Customer:

And I have no control over the location of a hosted shopping cart like BigCommerce

Lane :

you should reall sonsider shipping products form Canade (from a tax perspective) HOWEVER, dont't let the "tax tail wag the dog" ... if you can do it more heaply from US (evern after paying taxes) then it is what it s

Lane :

Simply look look at after tax cost

Lane :

On the LLC?

Lane :

Be sure to look at some of the operating agreements out there

Lane :

The LLC is the most flexible business there is BUT you need to really think about Allthe possbilties when you write the op agmt

Lane :

It's very open ended BUT, you have to DELINEATE everything

Lane :

think forward...

Customer:

That's a lot of good info and stuff to think about, thank you

Customer:

I know that it will be cheaper and faster to ship from the states but the tax issue complicates things... something to work towards in the future

Customer:

So the op agreement is flexible as long as you disclose everything... like server location and shipping location

Customer:

I'll look into that some more, I didn't even know about op agreements before talking to you lol

Lane :

You've "nailed it." ... you need to to compare the trade-offs of tax cost with saving on operating expenses ... NET EVERYTHING OUT ...

Customer:

OK cool :) ONE last question and I promise you'll get an "excellent" rating... haha

Customer:

If I were to just get started with this business (since I've already ordered products from a wholesaler etc) will it be fairly easy to transfer all the assets to the LLC later? Or do you recommend waiting

Customer:

Like domain name, Trademarks etc

Lane :

YEs, the operating agreement for an LLC details everything ... For a corporation, everythig is paid out on % of ownership for ma partnership (for an LLC which is taxed as a partnership... it's all about the op agmt)

Lane :

Transferring is OK ... I would just make sure that you have ownership of these things ... so NO this is a FIRST THINGS FIRST issue ..get the trademarks, patents, service marks (whatever protects your ownership) first .... that becomes PROPERTY for you

Lane :

talk to an intellectual property atty if you need to .... this is YOUR property

Customer:

Do you know off hand if having certain intellectual proprty in my name, and some under the LLC, will "pierce the corporate veil"?

Lane :

I would recommend putting everything under the corpororate/LLC brand ... that's what the corporation/LLC entity is all about .. separation of your personal assets from any encroachment on personal assets by a liability .. lawsuit, business debts, etc.

Customer:

OK thanks Lane... lots to think about

Customer:

Can't believe it's been an hour.. money well spent

Customer:

Have a good night.. or day.. wherever you are

Lane :

sOK ....enjoy

Lane :

You too GA here

Lane :


If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better (excellent, is ideal)… That's the only way they will pay us here.


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.v

Lane :

Again, ,,,


If you'd like to work with ME again just say "For Lane only," at the beginning of your next question


 


OR set me up as your preferred expert on your home page.


 


Regardless, thanks again,


Lane

Customer:

OK no worries, it's late there.. I'd have to be be a crappy human being to not give you excellent. Have a good night

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4373
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 5 other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

What happens now?

If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.
Expert:  Lane replied 1 year ago.

Hi Brett,


Enjoyed working king with you ....


If you'd like to work with ME again just say "For Lane only," at the beginning of your next question

OR set me up as your preferred expert on your home page.

Expert:  Lane replied 1 year ago.

Thanks so much for the rating!

Talk to ya later.

Lane

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
 
 
 
Chat Now With A Tax Professional
Lane
Lane
Tax Professional
4373 Satisfied Customers
Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986