Business immigration

Hi, I am seriously considering setting a business in the US It'd be a trading company with buying and selling construction parts. I have company setup in Canada but will like to establish it forma...

Canadian Expatriate and Travellers Forum Index -> Canadians in the USA -> US Visas and Immigration

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pipehippo
New Member

Joined: 19 Jun 2008
Posts: 4
Location: Edmonton

Posted: Thu Jun 19, 2008 7:16 am

Hi,
I am seriously considering setting a business in the US
It'd be a trading company with buying and selling construction parts.
I have company setup in Canada but will like to establish it formally in the US live there 6 months at a time.
What kind of visa would I need for this? I will be investing funds in renting a warehouse and yard, hire a couple of labourers and have a cash flow in a US account of around US$50K
What kind of visa do i need to set this up? I already own a property in the US but currently live in Canada.
I searched the internet extensively and only got more confused
Please help.
Thanks in advance
The PipeHippo

Steven
CanuckAbroad VIP

Joined: 28 Sep 2007
Posts: 1362
Location: Calgary

Posted: Thu Jun 19, 2008 10:33 am

If you intend on Canada being your principal residence then E-1, usually. If it's the US, then E-2. If you're not sure, then basically it boils down to where your tax home is, where you have a driver's licence from, etc.

This is not a simple visa to the do the application for, it is possible to do it yourself but getting hold of an immigration consultant who specialises in them might be worth the money. Advice I've seen on here before is to use the US Embassy in Toronto as they have the most experience dealing with these applications.
_________________
Steve.

pipehippo
New Member

Joined: 19 Jun 2008
Posts: 4
Location: Edmonton

Posted: Thu Jun 19, 2008 12:47 pm

Steven wrote: If you intend on Canada being your principal residence then E-1, usually. If it's the US, then E-2. If you're not sure, then basically it boils down to where your tax home is, where you have a driver's licence from, etc.

This is not a simple visa to the do the application for, it is possible to do it yourself but getting hold of an immigration consultant who specialises in them might be worth the money. Advice I've seen on here before is to use the US Embassy in Toronto as they have the most experience dealing with these applications.

Thank you! that is the answer i was looking for. i didn't know what type of visa to look for.

So, if i were to obtain the E1 visa, any chances of transitioning to residency (get a green card) over a number of years?
thanks for your input

Steven
CanuckAbroad VIP

Joined: 28 Sep 2007
Posts: 1362
Location: Calgary

Posted: Thu Jun 19, 2008 10:10 pm

I'm not sure about LPR from E-1, but you can from E-2, but it's an awkward path to take, you have to get so much money in before a certain amount of time has passed, something like 15 months and have established the business to a certain level. If you miss the deadline then it's quite hard to get it. This is why for this specific category it's worth talking to an immigration consultant because obviously every business is different and it depends on how the business is structured, how much business it does, etc. If you get hold of someone who has dealt with a hundred applications, obviously they're going to know all the nuances.

One thing I will warn you about is the tax situation is very complex, I've got a similar problem at the moment.

There are various threads on here about how personal income taxes affect you, but in this scenario you've got to worry about business taxation as well.

If you have a business in Canada that you own, or largely own, whether it be a corporation, self-employed, etc. and you leave and become a resident of the US, then you become subject to departure tax on the portion of the business that you own. Normally Canadians can avoid the tax by liquidating their assets, e.g. if you have money in a mutual fund you just sell it before you leave, or you can use a tax shelter like an RRSP which is exempt from it.

Obviously you cannot do that with an on-going business, not unless you've got someone you trust to own your whole share of it who is in Canada at any rate.

The other problem is that if it's a private CCPC corporation, if the majority stockholder leaves Canada, then you lose the CCPC exemption which makes the corporation subject to the full whack of corporate income tax.

So for example, the corporation goes from being taxed at I think 11.5% to 36% or something like that. The departure tax is 15% on the gain, so if you started the business from scratch, 15% of the balance sheet value of the business has to be paid to the CRA (you can do it in installments, you don't have to pay it all up front) - there are some things that are excluded, the main one being real estate.

And bear in mind corporation taxes in the US are higher than in Alberta, although you can use an S-corporation so the corporate income flows through your personal income taxes essentially, so it's only taxed once, but that makes it difficult to keep capital in the business if you plan on growing it.

You need to really think hard about how to structure it, for example, will the Canadian company own the US company, or vice versa, or will they be completely separate from one another? Will you move your principal residence to the US, or simply work there? Who will be the effective owner of each branch of it? Etc.

Once you've answered all the tax and structure questions, then you will know whether to go for E-1 or E-2.
_________________
Steve.

pipehippo
New Member

Joined: 19 Jun 2008
Posts: 4
Location: Edmonton

Posted: Wed Jun 25, 2008 10:52 am

Steven wrote: I'm not sure about LPR from E-1, but you can from E-2, but it's an awkward path to take, you have to get so much money in before a certain amount of time has passed, something like 15 months and have established the business to a certain level. If you miss the deadline then it's quite hard to get it. This is why for this specific category it's worth talking to an immigration consultant because obviously every business is different and it depends on how the business is structured, how much business it does, etc. If you get hold of someone who has dealt with a hundred applications, obviously they're going to know all the nuances.

One thing I will warn you about is the tax situation is very complex, I've got a similar problem at the moment.

There are various threads on here about how personal income taxes affect you, but in this scenario you've got to worry about business taxation as well.

If you have a business in Canada that you own, or largely own, whether it be a corporation, self-employed, etc. and you leave and become a resident of the US, then you become subject to departure tax on the portion of the business that you own. Normally Canadians can avoid the tax by liquidating their assets, e.g. if you have money in a mutual fund you just sell it before you leave, or you can use a tax shelter like an RRSP which is exempt from it.

Obviously you cannot do that with an on-going business, not unless you've got someone you trust to own your whole share of it who is in Canada at any rate.

The other problem is that if it's a private CCPC corporation, if the majority stockholder leaves Canada, then you lose the CCPC exemption which makes the corporation subject to the full whack of corporate income tax.

So for example, the corporation goes from being taxed at I think 11.5% to 36% or something like that. The departure tax is 15% on the gain, so if you started the business from scratch, 15% of the balance sheet value of the business has to be paid to the CRA (you can do it in installments, you don't have to pay it all up front) - there are some things that are excluded, the main one being real estate.

And bear in mind corporation taxes in the US are higher than in Alberta, although you can use an S-corporation so the corporate income flows through your personal income taxes essentially, so it's only taxed once, but that makes it difficult to keep capital in the business if you plan on growing it.

You need to really think hard about how to structure it, for example, will the Canadian company own the US company, or vice versa, or will they be completely separate from one another? Will you move your principal residence to the US, or simply work there? Who will be the effective owner of each branch of it? Etc.

Once you've answered all the tax and structure questions, then you will know whether to go for E-1 or E-2.

Thank you Steven!
great answers!