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5 FAQs about Expanding Your Business from Canada to the US

Posted by Stacey Jones

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Apr 3, 2019 9:00:00 AM

5 FAQs about Expanding Your Business from Canada to the USExpanding a business from Canada to the US is often a logical move for Canadian entrepreneurs. For some people, it may even be a goal.

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The US is the nearest international market. It’s also one of the largest markets in the world, and Canada and the US share close economic ties and similar cultures.

As you consider expanding your business, though, you likely have some concerns. This is perfectly normal. Many people ask questions about this very subject. Here are a few of the most frequently asked questions and their answers.

1. How Do You Go about Expanding Your Business to the US?

The first step in crossing the border to the US is setting up as a subsidiary company. Generally speaking, you’ll have the choice of setting up the business as a limited liability company, a C corporation, or an S corporation. You may have a few other options, depending on the type of business you run.

The process for setting up the subsidiary can be quite lengthy, so it’s best to make this decision early on in the expansion process. You’ll want to consider taxation, as each type of business entity is taxed differently. The state you operate in may also affect taxation, as well as the shape your business takes.

You can expect to spend three or four months setting up the subsidiary.

2. Which State Should I Penetrate First?

This is a question each individual business owner will need to answer on their own. That said, the state of Delaware is a popular choice for foreign businesses for a few reasons.

Delaware has a relatively low rate of corporate tax, which makes it more attractive to foreign companies looking to gain a foothold in America. Another reason some businesses choose Delaware is that the state provides a relatively simple set of corporate structure and tax rules.

Setting up in a state like Delaware can help you begin doing business across the US. However, each state offers its own advantages and disadvantages.

You’ll want to consider access to your target market and access to infrastructure and resources. Even the job market can have an impact on your decision. If you’re looking for computer engineers and software designers, for example, you might find an abundance of them in California.

3. How Can You Reduce the Risks of Expanding to the US?

The US market is one of the world’s largest, but it also has a reputation for being difficult to penetrate.

Entering the American market can be a risky venture. It’s only natural that business owners like you would look for ways to mitigate those risks.

One option you have is to work with a professional employer organization (PEO) who has expertise in the US market. This partner can help you navigate the web of US laws, ensure compliance, and even fund payroll. They can also assist with some of the paperwork and other administrative functions.

4. How Can You Determine Whether Your Company Is Ready for the US Market?

Another common question is how to know when it’s right to consider expanding your business into the US. A little prep work can help you determine whether your business is ready to cross the border.

You should conduct thorough market research and competitive analysis. Also, take a look at your finances. Finally, make sure you discuss the decision with a business advisor.

5. Who Can You Ask for Help?

These are only some of the questions you may have as you consider expanding your business to the US. You probably have more. Who can you ask for help?

Business advisors, lawyers, and other corporate experts are good choices. A PEO can be an excellent resource as well.

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Topics: Business Expansion

Stacey Jones

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