Are you delivering your goods to customers in Canada? Do you intend to increase your sales and marketing in Canada? Do your staff occasionally sell your goods across the Canadian border?
Do your staff members offer services in Canada? If the answer is yes, then you have to be aware of the types of taxes that these kinds of commercial activities in Canada might produce.
In comparison to the federal government of the United States, Canada’s federal government has more taxing and executive powers. The reason behind this is its large area and low population.
So, in Canada, both the federal and provincial governments charge their customers sales taxes.
Some provinces have combined their provincial and federal sales taxes, which has complicated the situation a bit. To solve such complications while operating in Canada you may need a US-based CPA who understands the legalities of both countries.
This article will be talking about how a US-based CPA can help businesses operating in Canada with cross-border tax issues.
Moreover, we will also discuss if a US-based CPA is the best choice for US companies operating in Canada.
How a US-Based Cross-Border CPA Can Help Companies Operating In Canada
Since a US company operating in Canada must abide by the regulations of both countries, they confront difficult obstacles when attempting cross-border tax planning and business activities.
Moreover, since both countries have different legal systems for tax processes, this adds to the complexity while deadlines with processes.
The list of cross-border tax difficulties is extensive and continues to grow as important issues in the fields of immigration, residence planning, partnerships, charitable giving, and private foundations, to name a few, emerge.
If you start focusing on these cross-border tax issues, you may miss important business deals that can increase your revenue. This may further lead you NOT using your business expertise for the right tasks.
These scenarios ask to dedicate the right person to the right task. Taking help using the expertise of a US-based CPA while selling in Canada is the ideal deal for you. You save time and money!
Companies and businesses need help through all these barriers, and not to mention US-based tax experts could be the ultimate choice and help for this.
Here are three of the major things with which US-based tax experts can help you:
1. Avoiding Tax Errors that Save you from Penalties
A US-based tax expert can work to fix any mistakes that can appear on your tax returns.
These mistakes can be pricey in terms of fines linked with them, and you’ll also need a specialist’s help to rectify the issue. Enraging processing delays and a lot of back and forth with the Internal Revenue Service (IRS) might also result from the errors.
Tax interest, penalties, and obligations that result from errors can add up very rapidly. This specific specialist help can come from your cross-border tax expert.
Hiring a US tax cross-border accountant will assist you to avoid making mistakes on your tax return.
2. Addressing Entire Tax Regulations
Working with the IRS to settle your tax problems is difficult, especially if you are employed abroad.
You can effectively communicate with the IRS and resolve your tax debt by using IRS representation or tax settlement services.
Assistance with “offers in compromise” is a typical tax resolution service that enables the taxpayer to partially settle their entire tax bill.
Additionally, there is “installment agreement” aid, in which the client pays the IRS regularly, and “penalty abatement,” in which the taxpayer advocates for the reduction or elimination of tax penalties and interest.
While for you managing this all could be difficult, considering that you already have a company and its operations to look forward to. With great insights into both the country’s and their tax regulations, a cross-border tax expert could be a real help.
3. Better Chances for the Tax Credits and Deductions
A cross-border tax expert will examine your personal and professional background to see whether you are eligible for any credits or deductions.
The complexity of the tax regulations in Canada and the United States may prevent you from claiming considerable or many credits, although you may believe you are entitled to a variety of credits.
Working with an experienced company cross-border tax expert can enable you to maximize your entitlement to refunds by determining the best tax position for your circumstances.
Is US-Based Cross-Border CPA The Best Choice For Companies Selling In Canada?
The decision to expand operations into Canada is significant, and business owners must make numerous decisions before starting this process.
For instance, what is the ideal legal structure, for a US company conducting business in Canada? How much local tax is there? Which local licensing laws are relevant to your company? And a lot more questions.
Whereas it is also be considered that Canada has a completely different legal system, that does mean that the companies will be required to have different documents for operating in Canada.
The list of cross-border tax difficulties is extensive and continues to grow as important issues in the fields of immigration, residence planning, partnerships, charitable giving, and private foundations, to name a few, emerge.
We always recommend working with a US cross-border tax expert. Following are some of the benefits you will get while working with a US cross-border expert:
- Complex Legal Process for Taxes
Since US cross-border experts understand the legal process of their own country and the country you operate in, they will be in a better position to take the right decision while working on your taxes.
You may also be able to claim credits and deductions since it directly relates to the kind of expertise a US cross-border expert holds.
- Better Focus, Better Growth
If you start focusing on these cross-border tax issues, you may miss important business deals that can increase your revenue. This may further lead you NOT using your business expertise for the right tasks.
These scenarios ask to dedicate the right person to the right task. Taking help using the expertise of a US-based Cross Border CPA while selling in Canada is the ideal deal for you. You save time and money!
- Better Business Support
The closer proximity of your CPA will be, the better support your business can get.
Since both of you can dive in and are going through the same economic shifts, it will help him to measure the intensity of the problem and he can develop an empathetic relation to solve your problems.
- Less Hassle, Easy Filings
With all this combined together, you will be able to better focus on your business while your US cross-border CPA can look into the tax filings.
The results will be the better focus, less hassle, and easy tax filings.
Frequently Asked Questions
Q. What Are The Tax Implications for the Companies Carrying On Their Business In Canada?
A. What constitutes “carrying on a business” in Canada is fairly broad according to Canadian tax law. It covers customary commercial tasks including manufacturing, building, cultivating, fabricating, and packing.
However, whether the contract or transaction is to be performed inside or outside of Canada, it also covers the solicitation of orders or the offering of goods for sale in Canada by an “agent or servant.” Performing services in Canada is also considered to be doing business there.
In Canada, merely asking for business is sufficient to be in operation. You are conducting business in Canada if you send a salesperson there for weeks at a time to visit Canadian clients.
Q. What Are The Cross-Border Tax Issues With Canada?
A. You can be liable for Canadian income tax if you conduct business there or intend to do so.
Normally, a U.S. corporation would not be deemed to be carrying on business in Canada if it only sold goods or services into Canada from the U.S. without engaging in any other operations there.
In contrast, it normally qualifies as a trade or company and necessitates filing if you solicit sales through an agent or employee in Canada, keep inventory in a public warehouse, or offer services there.
Q. What are the processes to Hire a US Cross-Border CPA?
A. You can talk with a cross-border CPA with just a single click. However, please make sure that you maintain the right checks and balances before hiring any of the CPAs.
This may include checking his years-long expertise, his past clients, and what people are saying about him in the reviews.
Conclusion
Working in Canada is challenging. Along with cultural adjustment in the country where you dwell, you must also meet your financial commitments both domestically and abroad.
You can correctly comply with both U.S. and foreign tax regulations, save time and money, and even take advantage of certain tax exemptions or benefits by working with a cross-border tax accountant.
Cross-border tax specialists are seasoned professionals who have spent years understanding tax regulations and are familiar with the current and evolving rules in both the US and Canada.
What these experts can do is assist their clients in understanding specific areas of their taxes, such as deductions and savings opportunities.
