<span id="hs_cos_wrapper_name" class="hs_cos_wrapper hs_cos_wrapper_meta_field hs_cos_wrapper_type_text" style="" data-hs-cos-general-type="meta_field" data-hs-cos-type="text" >5 FAQs about Expanding Your Business from Canada to the US (Updated 2021)</span>

Expanding a business from Canada to the US is often a logical move for Canadian entrepreneurs. For some people, it may even be a goal. The US is the nearest international market. It’s also one of the largest markets in the world. Further, Canada and the US share close economic ties and similar cultures, making a move into the American market the natural first step for Canadian businesses ready for international expansion.


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As you consider expanding your business, you likely have some concerns. This is perfectly normal. Many people have questions about doing business in the US from Canada. 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 towards doing business in the US from Canada is setting up 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 Expand to First?

This is a question every business owner will need to answer on his or her 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. Businesses also often choose Delaware because 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 as well as access to infrastructure and resources. Even the job market can have an impact on your decision. In another example, if you’re looking for computer engineers and software designers, you might find an abundance of them in California, but you will have to deal with complex labor laws.

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

The US market is one of the world’s largest, but it also has a reputation for being difficult to penetrate. There are countless reasons for expanding your business to US soil, but entering the American market can be a risky venture. It’s only natural that business owners would look for ways to mitigate those risks.


One option 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 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 go a long way in helping you determine whether your business is ready to cross the border.


Conducting thorough market research and competitive analysis is a great first step. Look at how your competitors already doing business in the US are performing, and understand how your company would fit in the market. Take a hard look at your finances, and make sure that a big jump like international expansion makes sense. Finally, be sure you discuss the decision with a business advisor. They have the skills and experience to identify any blind spots you may have missed.

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, but you will likely have many more. Who can you ask for help as your business is expanding?

Business advisors, lawyers, and other corporate experts are good choices. They will help you understand the legal and technical requirements you must meet to expand your business outside of Canada. A PEO can also be an excellent resource as you take on your US expansion.