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Hello, I am a canadian resident & citizen wishing to partner with a non-canadian & non canadian resident individual to conduct e-commerce business. We were suggested to form an LLC partnership in Delaware. Assuming I would own 51% of the company:
- Can the LLC be considered a parnership or coporation in the eyes of the CRA (i know that this can be voted on in the US, but i am not sure in Canada)
- What are the tax implications in Canada? Will I have to pay taxes on 51% of the revenue or only on what i withdraw for personal use?
- I was told that in the US, i would only pay taxes on the sales generated in the US - is that true?
- Is there a potential double taxation that i should be aware of?
- Is there a better incorporation option to consider for this partnership to happen?
Do not do business in the US through a US LLC, because you will be double taxed. While a US LLC with multiple members is considered to be a partnership for US purposes, Canada treats a US LLC as a corporation, regardless of the number of members.
I recommend that you and your partner do business in the US through a US Limited Partnership, which is recognized as a follow-through entity by both the US and Canada.