How to incorporate a US business from Canada in eight simple steps
Are you a Canadian startup founder looking to incorporate your business in the US?
This can be a daunting process—one that requires navigating different legal systems, tax codes, and bureaucratic red tape.
In this post, we will guide you through the process of incorporating a US business from Canada with Firstbase in five easy steps.
First things first: why incorporate?
Incorporation is the process by which a business becomes a separate legal entity from its founders. This provides a layer of protection for your personal assets and can also offer tax advantages.
Additionally, incorporating in the US can open your business to the US market — the largest market in the world. That means more consumers, more investment opportunities, and greater credibility.
US incorporation requirements
First and foremost, you’ll need to have a registered agent, which can be a challenge for Canadian entrepreneurs.
A registered agent is a legally designated individual or entity assigned to receive vital government, regulatory, and legal documents on a company’s behalf.
You need a registered agent to incorporate either an LLC or C-corp. They must have an address in your state of incorporation, and they must be available at that address during business hours.
If you need a registered agent, you can get one instantly in any US state through Firstbase Agent. You’ll also receive automatic notifications whenever there’s an upcoming compliance deadline in a state where your business operates.
Additionally, you’ll need to choose a legal structure for your business, such as an LLC or C-corp. This process can be time-consuming and frustrating, especially for those unfamiliar with the US legal system.
LLCs come with fewer requirements, and they also aren’t subject to corporate taxes. On the other hand, C-corps offer more flexibility in terms of equity issuance and ownership structure. Take our LLC vs. C-corp quiz if you’re unsure which structure is right for your business.
What are your options?
When it comes to incorporating, you have two basic options:
- Do it yourself
- Hire someone else to help
While it’s technically possible to do this on your own, it’s easy to get lost in the complexity of the incorporation process.
Firstbase will guide you step by step, saving time and eliminating the risk of errors or missions.
We offer tools like virtual mailbox, EIN registration, accounting, and self-service tax forms that can make your life easier.
Eight simple steps for incorporation
Here’s the simple 8-step process that we’ve used to help thousands of companies incorporate in the United States.
Step 1: Get a registered agent
Before formally incorporating your business, you need a registered agent. This is because the state body requires a physical US address to send official correspondence and legal documents.
Also, a registered agent is crucial as they receive your crucial business notices and legal documents, ensuring that no significant notifications are lost or missed.
Firstbase’s virtual mailbox service helps you obtain a US address without having to physically relocate.
This address is used for all official business purposes, including registering with the state and receiving mail.
Step 2: Choose a legal structure
Your company’s legal structure will affect taxes, compliance, equity issuance, and more.
US companies are generally incorporated as either LLCs (limited liability companies) or C corporations (C-corps).
Take our LLC vs. C-corp quiz for help identifying the right option for your business.
Step 3: Choose a state to incorporate in
Each state has unique advantages, laws, or tax benefits. Delaware is known for its advanced corporate laws, while Wyoming is an LLC haven. Therefore, it’s essential to conduct thorough research to determine the state that meets your business objectives best.
When deciding the state, consider factors like state tax obligations, business laws, filing fees, and annual report fees. After selecting your preferred state, officially register with the state’s Secretary of State’s office or the appropriate government body to legally incorporate your business.
Step 4: Get all the necessary documents from Canada
Most US states require a Certificate of Good Standing and/or a certified copy of your company’s registration document (like articles of incorporation or organization) at their Secretary of State’s office. Canadian companies must provide this certificate when applying for incorporation.
Federal-level incorporated Canadian businesses
Determine what registration documents your desired US state requires. This varies from state to state, but generally, they require a Certificate of Good Standing or a Certificate of Compliance and a certified copy of your formation document. The only difference between these two documents is their name in Canada. They serve the same purpose when applying to incorporate in the US
Write a request to Corporations Canada, specifying the type of certificate you want. Include your corporation’s name and number, the name and contact of the applicant, and the destination of the documents. Be sure to pay all relevant fees.
Provincial-level incorporated Canadian businesses
If your Canadian company is incorporated at the provincial level, you will need to get the necessary documents from the province where your business is registered. These provinces may refer to the Certificate of Compliance as a Certificate of Status or Good Standing.
This process will vary from province to province but typically involves requesting a Certificate of Status/Good Standing or a certified copy of your Articles of Incorporation.
Step 5: File for incorporation with the appropriate state body
Now, you can officially register your business with the pertinent state body. This entails incorporating your business, thereby establishing it as a lawful entity.
Here, the specifics of your filing will depend heavily on your selected state of incorporation and business structure (like LLC or C-corp).
Generally, you’ll complete forms and provide details such as:
- Proposed business name
- Principal office address
- Name and address of your registered agent
- Description of your business purpose
- Information about your business’ shares (for corporations)
Remember, each state has different requirements and procedures.
Step 6: Obtain an Employer Identification Number (EIN)
Next, it’s essential to obtain an EIN from the Internal Revenue Service (IRS). An EIN is crucial for opening a US bank account, and registering with the IRS enables your company to pay taxes. (Firstbase obtains an EIN on your behalf.) Our article on how to obtain your EIN provides a step-by-step guide to this process.
Step 7: Open a US bank account
To do business in the US, a US bank account is necessary. After you’ve obtained your EIN, you can proceed to open a bank account. Firstbase has affiliations with several startup-centric US banks, like Mercury.
Step 8: File reports for compliance
Lastly, to maintain your company in good standing, you must file an annual report in Delaware every year. The reporting deadline is March 1st. Firstbase provides tools to keep you on track with these filing requirements.
Incorporating a US business from Canada may seem daunting, but Firstbase makes it easier. Take advantage of our streamlined process and legal and financial experts. We help you get peace of mind during incorporation. Incorporating with Firstbase gives your business a head start on the road to success.