As a consultant-owner of a new US company, what do I need to know about doing business in Canada?

December 21, 2011 3:06 PM

I just started a new (technology) consulting business. We are incorporated in the US (Inc, not LLC). One of my first clients is located in Canada. You aren't my lawyer. The client wants to start work next week. The engagement will last about a week. What do I need to know (visa?, taxes?) before heading to Canada next Monday?

I understand I probably need a visa but it's not totally clear (I am not interested in entering the "Canadian labor market"). I also understand I need a GST determination, but if i'm not mistaken I can get that later and the definitions are somewhat broad and not universal. I don't have an office in Canada, and my work with this client will probably be limited to a few weeks at most.

I've googled around and looked at previous mefi questions but I can't find a concise set of "this is what you need to do". Most questions here are for the reverse; Canadians working in the USA.

posted by arimathea to Work & Money (9 answers total)

I think what you want is actually an accountant, not a lawyer as such. You should get a lawyer to look over your contract--you do have a contract, right?--but this is basically just tax compliance stuff that any CPA who does cross-border work will be able to handle.
posted by valkyryn at 4:09 PM on December 21, 2011

Where are they paying you? If you are incorporated in the US, I don't see how you would be able to charge them GST/HST. Instead, you would have to worry about charging local (American) taxes for your services.

I do know that, technically speaking, you are not automatically allowed to cross the border to work in Canada (although you can come and go on a tourist Visa).

However, there is a NAFTA provision that allows cross-border work.
posted by KokuRyu at 5:21 PM on December 21, 2011

One of the very first things they ask at the border is: What are you coming here for? They want to know if you are going to work there. If so, you have to have a work permit, unless exempted. Start here. Follow the "work temporarily" link for more.
posted by megatherium at 6:40 PM on December 21, 2011

Response by poster: I think the thing that's confusing me is:

a) My company is based in the US.
b) We have no office or setup in Canada.
c) Our wages will be paid by a Canadian company to a US company.

The work permit regulations seem somewhat hazy: On one side it looks as if we need a temporary work visa, which for our industry would require a Labour Market Opinion. On the other it looks as if we do not. There is no NAFTA provision for technology consultants; though there is one for Management Consultants and for "Computer Systems Analysts". The latter seems to require a degree, which our consultant that will be working on site doesn't have, but the prior does not.
posted by arimathea at 8:59 PM on December 21, 2011

I don't think a temporary work visa is what you are looking for. You aren't actually going to be working for a Canadian employer--you're working for the American company that employs you. The Canadian company is purchasing a service from an American company, not hiring a temporary worker. The American company is performing the service for the Canadian client; delivering that service involves sending some of the US company's staff to Canada to work for a couple weeks. Technically, you're not working in Canada, even if you do all the work here, because you are employed in the U.S.

Similarly, the company is not starting up a branch in Canada, so the company won't charge GST/HST. It should charge whatever taxes it charges in the state it is located in.

I don't know the answers, but I think you have to reframe your questions to find out how the company has to relate to the Canadian company, rather than thinking of yourself as a short-term employee of the Canadian company.
posted by looli at 9:50 PM on December 21, 2011

Hrm. Maybe these will help?

Bringing Foreign-Based Consultants to Canada – Avoiding Tax Disputes

Canada - Government Information/American Citizen Consulting for Canadian Comapny

I think in these cases they are talking about a Canadian company hiring a foreign consultant as a short-term worker, which I still think is different from giving a contract to a foreign company who will pay its staff.

I think, instead, that you would be a business visitor.

Anyhow, definitely a question for a tax or business lawyer or smarty-pants accountant.
posted by looli at 10:05 PM on December 21, 2011

Response by poster: The challenge for me is that my services will actually be performed in Canada. All the signs i've read point to the fact that even though I am a US-based employee working for a US-based company, I need a temporary work visa. While this normally would be granted under NAFTA, above there are reasons why it cannot be granted. Business visitors are apparently strictly prohibited from providing services.
posted by arimathea at 10:26 PM on December 21, 2011

Can you not "have meetings" in Canada, but "perform the services" in the US? This may involve not billing for the meetings, but billing enough for the services in the US to cover the costs. It's not crystal clear from your explanation whether all the services need to be in Canada itself.
posted by blue_wardrobe at 12:34 PM on December 22, 2011

And even if it comes to performing services in Canada, if they are the right things on the list that @looli posted the link to, then that's okay too, in my understanding. This doesn't cover everything though.
posted by blue_wardrobe at 12:42 PM on December 22, 2011