Getting paid from Canada
Stripe, PayPal and Shopify Payments all serve Canadian businesses, and PayPal accounts in Canada can receive and withdraw money in Canadian dollars. Payment access is not what a US LLC solves for Canadians.
What a US LLC adds is a US account structure: a US Stripe account settled in dollars to a US business bank account, and a US company on the contract. Stripe still reviews every application and decides itself.
At home
How Canada sees a US LLC
Canadian residents are taxed on their worldwide income. The CRA has long treated a US LLC as a corporation, not as a partnership or a disregarded entity. The IRS, by contrast, usually treats a single-member LLC as transparent and taxes the owner directly on its US business income.
That mismatch is the problem. US tax can fall on you personally, while Canada sees the profit as income of a foreign corporation and taxes you when it is paid out, or earlier under the foreign accrual property income (FAPI) rules for passive income. The foreign tax credits on both sides do not always line up, so the same profit can be taxed twice.
The treaty does not fix it
The 2007 protocol to the Canada-US tax treaty added rules for income earned through fiscally transparent entities, in Article IV, paragraphs 6 and 7. For an LLC owned by Canadians these rules tend to limit treaty benefits rather than solve the mismatch.
If the LLC is managed from Canada, it can also be resident in Canada for Canadian tax. It is then taxed like a Canadian company, but generally without the small business deduction, because it is not incorporated in Canada. This is why cross-border advisers often look at other structures first, such as a Canadian corporation or a US corporation. Talk to a cross-border CPA before you form an LLC.
Reporting to the CRA
- Form T1134 is required when a non-resident corporation is your foreign affiliate, which a US LLC you own usually is.
- Form T1135 is required when the total cost of your specified foreign property is more than CAD 100,000 at any time in the year.
- Penalties apply to late or incomplete forms even when no tax is owed, and the CRA gets extra time to reassess when a required T1135 is missing.
Canada has no exchange controls. You can fund the LLC and receive distributions through your bank; keep a record of every transfer and what it was for.
The US side is the same for everyone
Where you live does not change the US part. It is done online, without travelling, without a US address and without an SSN.
- Choose a state: Wyoming or New Mexico for low running costs, Delaware if you plan to raise money from investors.
- The formation document is filed with a registered agent in that state, within 48 hours.
- The EIN is requested from the IRS as soon as the state approves. No SSN or ITIN is needed.
- You get the operating agreement that banks and payment providers ask for.
- With those documents you apply for a US business bank account, for example at Mercury.
- Every year: the registered agent, the state's annual report where there is one, and Form 5472 for a single-member LLC owned by a foreign person.
Which state?
With no people or premises in the US you can choose any state. Most founders abroad choose on yearly cost and speed.
Sources checked on November 2, 2026
This page is general information, not legal or tax advice. Rules and fees change; check your own situation with a cross-border CPA in Canada before you form the LLC.
