Can a Canadian be self-employed in the US? -

Subject:        Can a Canadian be self-employed in the US?
Expert:         taxman@centa.com
Date:           Thursday April 10, 2008
Time:           02:09 AM -0000

QUESTION:

I am considering moving to the US however I would not easily qualify for a TN visa under NAFTA.  Would I be able to start up my own business/employment in the US by being self-employed?  Or would I start a company and operate through a company?  What are the tax reporting requirements?

-------------------------------
david ingram replies:

You can be self employed in the US under the terms of an E2 or an E5 visa.  The E5 is as very superior visa and gives you an instant green card but requires an investment of $500,000 US in places like Bellingham and Pocatello Idaho and $1,000,000 in Los Angeles or New York or Chicago.

This older answer will help you.  You cannot just go and start a business without a lot of paperwork and significant investment as you will see in this older reply.


QUESTION: Hi there,

I am a Canadian citizen. Currently, my husband is working overseas and we are living in Saudi Arabia as non-resident of Canada. Currently, I don't have any property in Canada.

I would like to purchase/invest in a business in US and would like to obtain an E-2 visa. What are the legal procedures and documentation that are required to obtain such visa? To apply for this, do I need to have a house in Canada or not.

I am looking forward to your quick response at your earliest convenience.

Sincerely,
---------------------------------------------------------------------------

david ingram replies:

An E2 visa is available to you whether you are in Canada or not. It depends upon your Nationality not where you are living.

If you go to www.centa.com, you will find (in the top left hand box) the January 1995 newsletter on E-2 Visa by Dennis Olsen, former US Consul in Vancouver and an issuer of E2 visas until they were moved to Toronto.  In January 2006, the processing of E2s was opened up in Vancouver again and can be processed through the US Consulate in Vancouver if you are from BC and / or the Yukon.  All other Canadians must go through the Toronto Consulate -
find more at http://www.amcits.com/evisa.asp

Start by reading the January 1995 newsletter.  It will give you the rules and it is my impression that the approval is a little easier than this newsletter states now.

You can start the process and maybe make it a little cheaper by filling out Form DS156 at  - https://evisaforms.state.gov/ds156.asp
Note that this is a fillable form

You will also need DS156E  - http://www.state.gov/documents/organization/79963.pdf

You might need DS157  - http://www.state.gov/documents/organization/79964.pdf

You should fill in DS158 for your contact information and work history  - http://www.state.gov/documents/organization/79965.pdf

You can also see basic instructions at  http://evisaforms.state.gov/default.asp

Note that with an E-2, your husband can obtain a work authorization to work somewhere else as a rule.

There will be a couple of more forms but this will get you off to a good start and you can do it yourself.  However, be careful if you look for outside help.

If you need legal help, and are from BC or the Yukon specifically (or anywhere else in Canada),  I could suggest

David Anderrson  LLB, AILA
200-1095 West Pender Street (same building as US Consulate)
Vancouver BC
V6E 2M6
(604) 608-0818 -

David just presented an excellent seminar in Vancouver on E-2 Visas and has an interesting proposal for an E-5 Visa which requires $500,000 US  but is a far superior visa than an E-2.

If you are from Quebec in particular,

Dan Cuppett, JD, AILA
57 Court Street
Plattsburgh, New York
USA 12901
(518) 566-6666
is an Immigration attorney who specializes in Canadians (particularly those from Quebec) to the USA.

Dennis Olsen, author of the Jan 1995 newsletter is no longer practicing law.

http://toronto.usconsulate.gov/content/visas/E-28_TI.pdf

If it is not in this format, Toronto will reject the whole application. 

Vancouver also has its own rules as in

U.S. CONSULATE GENERAL, VANCOUVER
1075 WEST PENDER STREET
VANCOUVER, BC V6E 2M6
Mandatory Formatting Instructions for Treaty Investor (E-2) Visa Submissions
Effective Date: 01 August 2006

Non-compliant submissions will be rejected as of: 01 September 2006

Effective immediately, the Consulate in Vancouver now requires all cases to be submitted in the following format. The E Visa Unit will not accept non compliant cases for processing as of 01 September 2006.

All submissions must be organized into the sections below. Submissions must be bound and the sections must be delineated by clear dividers with tabs that stick out from the edges of the page. Divider pages without tabs are not acceptable. If there are more than two documents under one of the numbered tabs, you must subdivide the numbered sections into lettered subsections with tabs.
Your submissions must be organized in such a way that the reviewer can locate all of the relevant facts to make an adjudication within 5-10 minutes.
Once your submission is prepared as indicated below, submit it to our office by mail or courier. Our addresses for various types of shipments may be found at:
http://www.usconsulatevancouver.ca/content/content.asp?section=visas8document=evisa
#submitting
Required format and contents:
The cover page and application forms must be loose (unbound to the rest of the package) and placed on top of the submission package.

Application Requirements (unbound underneath cover page and on top of the documents brief in the following order):
1. All DS-156, 156E, and 157 forms, filled out using the electronic visa application forms – link available on Toronto’s website (Please note: we require DS-157 forms for all applicants over the age of 16, without regard to age or gender); primary contact email address must be placed in block 23 on the DS-156; be certain to fill in EVERY block on all forms and sign and date; submit only signed original forms.
2. 2X2 passport-style photograph on plain white background taken within the last six months. One for each applicant. See photograph requirements on our website for further details.
3. Certified check or international money order payable to the U.S. Consulate General Vancouver in the amount of $100 US per applicant.
4. Dependents – provide copy of marriage certificate for spouse and copies of birth certificates for all children under the age of 21. Staple these to the DS-156 applications of the dependents applicants.
5. Attached to DS-156 for each applicant, include a signed statement of the applicant’s intentions regarding the temporary or permanent nature of their stay in the United States.

E-2 Requirements:
You must organize the tabbed exhibits following the number/letter outline below. You must submit all of the documents noted here, unless otherwise indicated.
1. Summary
a. Concise comprehensive brief of relevant facts
● Be brief, state exactly and precisely how the enterprise qualifies
● Do not waste space with lengthy citation of CFR or FAM texts
● Make specific reference to supporting documentation, for example:
“The Canadian parent company is owned 100% by the applicant.
See organizational documents showing the corporation is authorized to issue 250 shares (tab 3C(i), relevant portion highlighted), and the applicant’s stock subscription agreement and
share certificate for 250 shares (tab 3C(ii)).”
b. Comprehensive Index/Table of Contents

2. Nationality of the Individual Beneficiary
a. Photocopy of the passport biographic page for investor(s)/employee(s)
followed by copy for each dependent family member
b. Photocopy of landed immigrant card
3. Nationality of the Company/Evidence of Controlling Interest

If your company is an incorporated entity:
a. Chart of ownership of the enterprise
b. Articles of Incorporation and certificate of existence/registration from the state/province in which the company is incorporated.
c. Ownership:
● If privately held by a small group of shareholders, submit i)
evidence of the total number of shares outstanding, and who holds
each, and ii) evidence of the treaty country nationality of the
owners of at least 50% of the outstanding stock –OR-
● If publicly traded, submit i) notarized statement from a duly
authorized corporate officer stating all of the stock exchanges on
which the company is traded, ii) the volume of stock traded on
each exchange (see 9 FAM 41.51 N3.2), and iii) recently published stock quotations
● Please note, for either of the above, if the ownership is traced to
another corporate entity (such as a holding or parent company
rather than an individual), you must also trace the ownership of the
holding company (ies) all the way back to the beneficial individual
owners -OR- if your company is a partnership, Joint Venture, LLC, or similar:
a. Partnership or Joint Venture Agreement
b. Shares/stock certificates indicating total partnership units issued and outstanding, and to whom they are issued
c. Please note, for either of the above, if the ownership is traced to another corporate entity (such as a holding or parent company rather than an individual), you must also trace the ownership of the holding company (ies) all the way back to the beneficial individual owners
-OR- if your company is a sole proprietorship:
a. Business Registration
b. Proof of ownership of business assets (real property, etc.)
4. Source of Investment
a. Detailed statement by applicant explaining how funds used in the
investment were acquired or accumulated
b. Debit and credit services for personal and/or business account withdrawals
c. Documentation demonstrating how funds were acquired or accumulated:
● Transactions showing payment of sold property or business (proof of property ownership and promissory notes) and rental income (lease agreements); -AND/OR-
● Last three years of personal tax returns; -AND/OR-
● Statement from individual providing money to investor as a gift
5. Evidence of Investment
For an existing enterprise:
a. Purchase agreement
b. Proof of financing and funds transfer:
i. Copies of canceled checks or wire transfers from investor for all
deposits, partial-payments or transactions paid in full
ii. All loan, promissory or mortgage documents AND security
agreement; AND, copies of canceled checks or wire transfer
receipts from investor demonstrating consistent payment of
financial obligations. A letter from the financier stating all payments are current may also be accepted
iii. Escrow agreement, escrow account statement in the U.S., escrow receipt, if applicable
-OR- for a new enterprise:
a. Inventory listing: shipment invoices of inventory, equipment or business related property
b. Receipts for inventory purchases
c. Canceled checks or official payment receipts for expenditures
d. Canceled check for first month’s rent or full annual advance rent payment
e. Lease agreement
f. Purchase orders
g. Improvement expenses
h. Initial business account statements
6. Marginality
a. U.S. corporate tax returns
b. Latest audited financial statement or non-review statement
c. Payroll register
d. W2 and W4 tax forms
e. Business plan (including pro forma financials for the first five year of operations)
7. Real and Operating Commercial Enterprise
a. Occupational license, business license or business permits
b. Business transaction records, current/commercial account statements or invoices from suppliers
c. Advertising leaflets, business brochures or promotional literature
8. If the applicant is an employee of the U.S. enterprise (executive/managerial, and supervisory/essential skills):
a. Letter from Canadian company providing specific information on the applicant and the reasons for his/her assignment to the U.S. The letter must explain the employee’s role in the U.S. company (job title and duties), the applicant’s executive or supervisory responsibilities or, if not a supervisor, his/her specialist role, the level of education and knowledge required by the employee’s position, his/her employment experience,progression of promotion or high level training or special qualifications and the reasons why a U.S. citizen or legal permanent resident cannot fill the position (if the position is not managerial or supervisory)
b. Evidence of E-2 company owner’s nationality and immigration status in the U.S.
c. Organizational chart showing current staffing pattern at U.S. company
d. Applicant’s complete resume

You can see that there is a lot to do including a business plan (we can help here) to show that the enterprise will be a success.

Hope this helps -  when you need tax help with all this, you know where to turn.


On April 6. 2008, David Ingram wrote:

It is very unlikely that blind or unexpected email to me will be answered.  I receive anywhere from 100 to 700  unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients.  Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line and get answered first.  I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when I am out of town. 
e bankruptcy expert  US Canada Canadian American  Mexican Income Tax  service and help
However, I regularly search for the words"PAYING CUSTOMER" and always answer them first if they did not get spammed out. For the last two weeks, I have just found out that my own email notes to myself have been spammed out and as an example, as I wrote this on Dec 25, 2007 since June 16th, my 'spammed out' box has 47,941 unread messages, my deleted box has 16645 I have actually looked at and deleted and I have actually answered 1234 email questions for clients and strangers without sending a bill.  I have also put aside 847 messages that I am maybe going to try and answer because they look interesting. -e bankruptcy expert  US Canada Canadian American  Mexican Income Tax service and  help
Therefore, if an email is not answered in 24 to 48 hours, it is likely lost in space.  You can try and resend it but if important AND YOU TRULY WANT OR NEED AN ANSWER from 'me', you will have to phone to make an appointment.  Gillian Bryan generally accepts appointment requests for me between 10:30 AM and 4:00 PM Monday to Friday VANCOUVER (Seattle, Portland, Los Angeles) time at (604) 980-0321.  david ingram expert  US Canada Canadian American  Mexican Income Tax  service and help.
david ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
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My Home office is at:
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325

Calls welcomed from 10 AM to 9 PM 7 days a week  Vancouver (LA) time -  (please do not fax or phone outside of those hours as this is a home office) expert  US Canada Canadian American  Mexican Income Tax  service help.
 
Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation  in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included." e bankruptcy expert  US Canada Canadian American  Mexican Income Tax  service and help.
David Ingram gives expert income tax service & immigration help to non-resident Americans & Canadians from New York to California to Mexico  family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority - dual citizenship
 
Phone consultations are $450 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or is to be returned to Canada or a phone consultation is in Canada. ($472.50 with GST if in Canada) expert  US Canada Canadian American  Mexican Income Tax  service and help.
This is not intended to be definitive but in general I am quoting $900 to $3,000 for a dual country tax return.
$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
 
$1,200 would be the same with one rental
 
$1,300 would be the same with one business no rental
 
$1,300 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
 
$1,600 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,700 would be for two people with income from two countries

$3,000 would be all of the above and you moved in and out of the country.
 
This is just a guideline for US / Canadian returns
 
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $200.00 up.
 
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
 
A Business for $400 - Rental and business likely $550 to $700
 
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
 
Moving in or out of the country or part year earnings in the US will ALWAYS be $900 and up.
 
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
 
8891 forms are generally $50.00 to $100.00 each.
 
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
 
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.

Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.
 
This from "ask an income trusts tax service and immigration expert" from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram deals on a daily basis with expatriate tax returns with multi jurisdictional cross and trans border expatriate problems  for the United States, Canada, Mexico, Great Britain, United Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, and any of the 43 states with state tax returns, etc. Rockwall, Dallas, San Antonio Houston, Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and Immigration Tips, Income Tax  Immigration Wizard Antarctica Rwanda Guru  Consultant Specialist Section 216(4) 216(1) NR6 NR-6 NR 6 Non-Resident Real Estate tax specialist expert preparer expatriate anti money laundering money seasoning FINTRAC E677 E667 105 106 TDF-90 Reporting $10,000 cross border transactions Grand Cayman Aruba Zimbabwe South Africa Namibia help USA US Income Tax Convention. Advice on bankruptcy  e bankruptcy expert  US Canada Canadian American  Mexican Income Tax service and help .

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