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I came across your site and articles on the internet and hope that I found someone that can help me.
We are in the process of launching our ecommerce site and will be drop shipping products within Canada and the US and recently been asked my one of my vendors for our federal I.D #.
We are new to this and thought we had everything we needed but I guess we don't. We are trying to learn what we can about cross border business and trying to get the financials also in order to accommodate this and hope everything lines up correctly.
Please let me know what you think
So long as your business does not have a physical presence in the US, it will not be liable for US income taxes. However, your business will need a US EIN to provide to your US customer (if they requested it). In addition, your US customer will likely ask for a completed form W8-BEN-E. If you do not provide your US customer with an EIN and completed form W8-BEN-E, they are supposed to hold back 30% taxes on payments made to your company. Our fee to get an EIN is $150 and to complete form W8-BEN-E is an additional $150. All prices are in Canadian dollars. Taxes and disbursements are extra.
Once your company has a US EIN, it must file a treaty-based corporate tax return each year with the IRS to claim an exemption from paying US corporate taxes. Our fee is $750 to prepare this return. Taxes and disbursements are extra.