Keeping small business active in Canada while on TN Visa

I have a part-time software consulting company that I own and run from my home. I will be obtaining my TN Visa shortly to work for a US company and moving down there. I was wondering if I can still operate my consulting company and being taxed by Canada? At tax time can I file my taxes with Canada and report my income in the US under Foreign Income?

I have a part-time software consulting company that I own and run from my home. I will be obtaining my TN Visa shortly to work for a US company and moving down there. I was wondering if I can still operate my consulting company and being taxed by Canada? At tax time can I file my taxes with Canada and report my income in the US under Foreign Income?

You can't work in the US for any employer without authorization--not even remotely for a Canadian employer.

You can, however, have multiple TN's at one time, so if the work through your own company is covered by NAFTA, you can get multiple TN's--however, the part-time TN(s) would need to be sponsored by the US client(s), not your own Canadian one-person company.

You can continue to keep your tax home in Canada, yes, and file 1040NR in the US. The tax treatment of the income would depend on additional factors besides your immigration status.

Sorry just to clarify. The company that I will work for is a US company and I will be moving to the US to work for that company. I will not be doing remote work for a US company. I will be working for the US Company on US soil and I will have authorization to work in the US. Hope that makes sense.

My part time consulting company business that I run (doing software programming modifications for a canadian client), can i still operate that and file taxes for that company in Canada. And then file for foreign income tax when i do my US taxes?

My part time consulting company business that I run (doing software programming modifications for a canadian client), can i still operate that and file taxes for that company in Canada.

Unfortunately not, unless there is a way to do it I'm not aware of. There's a couple of issues. One is that only a US employer can sponsor TN status in the US. So your Canadian client can't sponsor you. So you can't work for them while in TN status in the US. Any work done for hire in the US--even if it is entirely Canadian in focus (Canadian employer, Canadian employee, paid in Canadian dollars)--requires a US work authorization--which you can't get since it is not a US employer. Catch-22, unfortunately.

Second issue is that computer programmers--which you've just identified yourself as being--aren't eligible. That might be remedied by defining the role differently but the problem of it being a Canadian employer seems difficult.

One possibility is to fly up to Canada every now and then and do occasional work for these folks while back in Canada and on Canadian soil.

Hi thanks for your responses but please separate the Full time job with my part time consulting company. The full time position is with a US Based Company and I am hired as a Systems Analyst which under the NAFTA occupation is qualified.

My part time company has nothing to do with the US Based employer. I do software programming for a friend's company and has nothing to do with the US employer whatsoever.

Hope that clarifyings things a bit.

My part time company has nothing to do with the US Based employer. I do software programming for a friend's company and has nothing to do with the US employer whatsoever.

But it does have "something to do" with the US employer because you are, in effect, proposing to move the physical location (albeit not the tax home) of your part time company from Canada to the US because of the job offer from the full time US employer. It should not be surprising that US law has something to say about that.

If your Canadian part time company retains an office in Canada and you only perform work for that Canadian part time company while physically on Canadian soil (eg commuting back to Canada on weekends, etc), then US law has nothing to say about it and what you are proposing to do will work fine.

Okay thanks. So that brings up a question then.Can I establish a sole-proprietor business in the US while on a TN Visa? I've read around the internet that non-resident aliens can start a business in the US. Is this then
the way to go to keep generating my part-time consulting income?

Thanks again for your help.

Well just did more digging and I guess on a TN visa is specific to the US employer and I can't run my own business nor can i work for anybody else other than the US employer specified on my TN.

I've read around the internet that non-resident aliens can start a business in the US.

A non-resident alien can always start a business in the USA. Where it gets tricky is what the non-resident alien can do for that business while in the USA. If you run the business from Canada, communicating with the USA office via telephone, fax, email, etc., you can do anything you want with the USA business. But if you are physically in the USA and own shares in a USA corporation, legally you are supposed to remain an entirely "silent partner" or have a valid visa to work for your own company.

It is my understanding that a one-person company cannot sponsor that one person for a visa. However--if you were serious you should check with a lawyer on this--if you and your Canadian software company friend were to incorporate together and establish offices in the USA and Canada, it might open doors to visa sponsorship. The question is whether it is worth doing so for the amount of revenue you expect to get.

I have a part-time software consulting company that I own and run from my home. I will be obtaining my TN Visa shortly to work for a US company and moving down there. I was wondering if I can still operate my consulting company and being taxed by Canada? At tax time can I file my taxes with Canada and report my income in the US under Foreign Income?

It depends on how your business is organised in Canada, whether you are self-employed or use a corporation etc. But yes you simply carry on filing the same way you always did, on your W-4 when you start work in the US you put down you are a non-resident alien as explained on page 24 of IRS publication 515. Then you file a 1040NR and an 8840 every year in the US.

Bear in mind if you move your tax home to the US this can create all kinds of problems if you have a Canadian business that's worth anything, because of the departure tax. The problem is if you file as non-resident in the US you will effectively pay Canadian taxes which are higher than US taxes - if you move your tax home to the US you may get hit with departure tax, so either way you end up paying some chunk of change to the CRA.

But worry about that one down the road perhaps. It really depends on how long you plan on staying in the US as to what the best strategy is. Start out filing as non-resident and then maybe move your tax home to the US once things are settled.

However the big snag in your plan is that you cannot operate your own business while you are in the US on TN-1, you can only work in the US for the employer who sponsored you for your TN-1 doing whatever job they sponsored you for.