Canadian ecommerce brands selling into the US are likely overpaying in Shopify fees and taxes. This episode reveals how to save thousands annually by strategically setting up a US LLC, avoiding double taxation, and optimizing your Shopify store for cross-border sales. Learn the critical thresholds for when a US LLC makes sense and a step-by-step guide to setting it up correctly.
Key takeaways
Canadian brands doing over $50k USD/month in US sales, or on Shopify Plus, should consider a US LLC to avoid the 1.5% international payout fee and streamline tax obligations.
Set up your US LLC in Wyoming for simplicity, anonymity, and tax benefits. The process involves filing articles of organization, obtaining an EIN, and opening a US bank account (Slash or Wise are recommended for foreigners).
Crucially, ensure your existing Canadian corporation owns the US LLC, not you personally, to prevent double taxation under the Canada-US tax treaty. Many brands make this mistake, leading to significant unnecessary tax burdens.
Be aware of the timelines: obtaining an EIN can take 6-10 weeks, especially during peak seasons like Q4, which impacts when you can open a US bank account and link it to Shopify.
While setting up an LLC is straightforward, ongoing tax compliance in both the US and Canada requires attention. Consider professional help for cross-border tax filing to ensure accuracy and maximize savings.
M. Sal had his own Ecommerce store. He realized that no Canadian accountant understands US tax and virtually no one understands a Shopify business. That’s what led him to start SAL Accounting where their team now solve these problems for brands.In This Conversation We Discuss: 00:00 Introduction01:13 Discussing the accounting brand01:34 How the guest entered the ecommerce tax niche03:09 The hidden Shopify fee for international sellers04:13 Do you need a US LLC: Plus plan vs sales split06:36 Revenue threshold for opening a US LLC08:00 Step-by-step process to set up a US LLC10:22 The costly mistake of naming yourself as owner12:30 Do US brands need a Canadian setup too13:56 The $25,000 penalty for missing Form 547215:38 Why proper bookkeeping matters for ecommerce brands17:57 How monthly books help you save on taxes19:33 The risk of hiring a cheap bookkeeper22:00 Where to learn more and get help23:43 Returning Questions to a Fellow HostResources:Subscribe to Honest Ecommerce on YoutubeCPA Tax Accounting and Bookkeeping Firm salaccounting.ca/ Follow M. Salman salaccounting.ca/author/salmansalat00/ If you’re enjoying the show, we’d love it if you left Honest Ecommerce a review on Apple Podcasts. It makes a huge impact on the success of the podcast, and we love reading every one of your reviews!<
What does this episode say about finance & fundraising?
Canadian brands doing over $50k USD/month in US sales, or on Shopify Plus, should consider a US LLC to avoid the 1.5% international payout fee and streamline tax obligations.
What does this episode say about shopify & ecommerce platforms?
Set up your US LLC in Wyoming for simplicity, anonymity, and tax benefits. The process involves filing articles of organization, obtaining an EIN, and opening a US bank account (Slash or Wise are recommended for foreigners).
What does this episode say about supply chain & operations?
Crucially, ensure your existing Canadian corporation owns the US LLC, not you personally, to prevent double taxation under the Canada-US tax treaty. Many brands make this mistake, leading to significant unnecessary tax burdens.
What does this episode say about finance & fundraising?
Be aware of the timelines: obtaining an EIN can take 6-10 weeks, especially during peak seasons like Q4, which impacts when you can open a US bank account and link it to Shopify.
What does this episode say about finance & fundraising?
While setting up an LLC is straightforward, ongoing tax compliance in both the US and Canada requires attention. Consider professional help for cross-border tax filing to ensure accuracy and maximize savings.
