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Hello! You have an excellent site with a lot of information that's been really helpful for my small business. I am a Canadian running a sole proprietor, service-based business. I'm considering taking on a contract from a US company that could be worth more than $100,000 USD. Most of that would have to be paid out to subcontractors in Canada, USA and Australia that I will have to hire to do the work. Will I need to pay the IRS? What's the best way to handle the Canadian taxes? Should I continue as a sole proprietorship? Are there any other tax implications that I should consider? Thank you!
Hi,
Incorporate a company in Canada to minimize your liability and to save tax. Hire subcontracts through your Canadian corporation. You will not have to pay US profits tax if your Canadian company does not have a fixed place of business in the US and you do not spend more than 6 months in the US in any 12 month period.