
Ask HN: Does Stripe Atlas Make Sense for Canadians? - brilliantcode
Wondering what if any advantages there is using Stripe Atlas to incorporate a delaware company as a Canadian?<p>My main motive is to sell on AWS Marketplace after reading about the monetization blog post.
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edwinwee
Quite a few Canadian entrepreneurs are getting started with Atlas. You'll be
able to incorporate a U.S. company, get a U.S. bank account, and accept
payments with a U.S. Stripe account. This means you can charge in 139
different currencies, and if you plan on having a lot of U.S. sales, you might
see lower decline rates and cross-border fees. Card networks and U.S. banks
can be a bit finicky with cross-border transactions, so having a U.S. entity
could help for Candadian businesses. We're happy to help with any questions at
atlas@stripe.com.

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brilliantcode
I've gone ahead and made the $500 USD payment. Anxious to hear the next steps!
:)

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edwinwee
Mind shooting me an email with the email address you signed up with?
edwin.wee@stripe.com

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brilliantcode
cc'd you on an existing support email! thank you.

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soloadventurer
I will not speak of the business case associated with using Stripe Atlas.

There are some tax considerations. It is not generally a good idea for
Canadians to own US LLCs unless you know exactly what you're doing and why you
are doing so. The below analysis assumes "C" status, as "S" status is not
permitted for non-US person unit-holders.

In the United States, US LLCs are generally disregarded entities and profits
will be taxed in the hands of the unit-holders. From a US perspective, a non-
resident will thus receive the flow-through earnings from the US LLC and be
required to pay tax as a non-resident individual to the IRS. Note: You'll be
required to register the LLC and yourself with the IRS.

Canadian law does not recognize flow-through entities except in the case of
partnerships and certain trusts. The US LLC, therefore, will be considered a
non-resident corporation and the proceeds (the flow through income) will be
treated as a foreign dividend in Canada. You will pay Canadian personal income
tax on that.

Because the IRS tax profits in the year incurred, and Canada will tax in the
year distributed, frequently you will be unable to utilize a foreign tax
credit in Canada for the taxes paid in the United States. Historically, there
was also the issue with the tax credit being in the name of the corporate LLC,
and as it does not match your personal name, it cannot be utilized, but if I
remember correctly the latest Protocol may have addressed that.

The above deals with the general aspects of taxation in the US and Canada.
There's another important point and that is permanent establishment. The US
LLC will have a permanent establishment in Canada if you run and manage the
LLC from Canada. Canada's CRA will require the US LLC to submit a corporate
tax return in Canada as well and pay branch tax of 25% on profits (reduced to
5% under the US-CA tax treaty).

A few other issues:

\- Interest in foreign companies require form T1134 - Information Return
Relating To Controlled and Not-Controlled Foreign Affiliates [1] be filed each
year with the CRA. This tax form summarizes the balance sheet and income
statement and associated tax treatment in the foreign jurisdictions. It is
painful.

\- If you have a bank account with over CAD 100,000 in cash, you must also
file form T1135 Foreign Income Verification Statement [2].

\- You will not have access to the Canadian Small Business Deduction as the US
LLC is not considered a CCPC (Canadian-Controlled Private Corporation).

\- You will not have access to the $750,000 lifetime Capital Gains Deduction
on the sale of your business. (On a related note, sale of a LLC will require
tax filings in both countries.)

\- You will not have access to a dividend tax credit on dividends received
from the corporation. (Although, the combined tax paid in Canada in either
situation may be similar--some Excel magic is required to see the tax loss
under both scenarios.)

\- There are many US IRS forms to be filed too, but I'm not going to itemize
them here now.

In conclusion, US LLCs for Canadians are hideously complicated and require
careful thought and consideration as it will trigger an avalanche of forms and
filings and make the tax planning situation very difficult for your tax
adviser.

My personal opinion is that Canadians should stick to numbered provincial or
federal incorporation. The overall compliance burden will be much lower and I
suspect you can have access to whatever US LLCs have access to with a bit of
extra effort. A Canadian company can relatively easily get a US bank account
and I would presume merchant-related services, though I have not done that
myself.

Basis: I'm a Canadian international tax adviser.

[1] [http://www.cra-arc.gc.ca/E/pbg/tf/t1134/README.html](http://www.cra-
arc.gc.ca/E/pbg/tf/t1134/README.html) [2] [http://www.cra-
arc.gc.ca/E/pbg/tf/t1135/README.html](http://www.cra-
arc.gc.ca/E/pbg/tf/t1135/README.html)

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hackerboos
Can you run a US company from Canada? I'm pretty sure CRA are just going to
say "that's a Canadian company".

