How To Set-Up Your Canadian Company in New York
Protect your Canadian company from lawsuits, reduce taxes and avoid immigration problems by following these nine steps for doing business in New York State:
1. Choose whether to start a new corporation in New York or to apply for your existing Canadian corporation to be authorized to do business in New York.
- Can I incorporate nationally?
- What is a New York business corporation?
- How does a foreign corporation apply for authority to conduct business in New York State?
2. Determine whether your company name is already being used by another New York company.
3. Determine whether your company name is trademark protected for use by another company.
4. Retain a CPA to advise you on cross-border tax issues and to assist you with obtaining federal taxpayer identification number.
- For tax purposes, is a corporation better for Canadian investors than a Limited Liability Company (LLC)?
5. If you will be working in the U.S., retain an immigration attorney to obtain a visa and to work with your business attorney regarding incorporation of your company.
6. Retain a New York business attorney to incorporate your company and handle real estate transactions, lease, shareholder agreements and employee handbooks.
Robert Friedman of Friedman & Ranzenhofer, PC. working with a team of immigration attorneys, cpas with expertise in cross-border tax issues, real estate agents and bankers, provides a fast, efficient and cost-effective way for your Canadian business to get started in New York. His offices are conveniently located at the border in Niagara Falls, New York and throughout the Buffalo and Rochester area.
7. Provide your business attorney with:
- a. The names and addresses of the corporate shareholders, directors, officers and employees
- b. Company Name;
- c. Corp. ,Inc. or Ltd.
- d. U.S. business address.
8. Buy or lease office or warehouse space in New York.
9. Follow the business start-up checklist
What is the Trademark Electronic Search System?
This search engine allows you to search the United States Patent and Trademark Office‘s (USPTO) database of registered trademarks and prior pending applications to find marks that may prevent registration due to a likelihood of confusion refusal. The USPTO examines every application for federal registration of a trademark for compliance with federal law and the Trademark Rules of Practice. One of the most common reasons for refusing registration is that a “likelihood of confusion” exists between the mark in the application and a previously registered mark or a pending application with an earlier filing date owned by another party. Likelihood of confusion exists between trademarks when the marks are so similar and the goods and/or services for which they are used are so related that consumers would mistakenly believe they come from the same source. Each application is decided on its own facts, and no strict mechanical test exists for determining likelihood of confusion.
For tax purposes, is a corporation better than a Limited Liability Company (LLC)?
Yes. For Canadian tax purposes a U.S. LLC is taxed as a corporation. If a Canadian resident is a member of an LLC, the income that flows through it is taxed as a dividend and the foreign tax credit is limited to 15% the withholding rate for dividends. LLCs are not recommended for Canadian investors. If you need flow through for Canadian tax purposes, use a limited partnership with a corporate general partner. If you have multiple partners from both the U.S. and Canada, ask your CPA about the Canadian partner creating a U.S. blocker corporation to hold his LLC interest to avoid double taxation. Then the U.S. entity distributes income to Canadian holder as dividends.
Can I incorporate nationally?
No. There is no mechanism in the United States to incorporate on the federal level. A company interested in incorporating or forming a limited liability company must contact each state’s licensing authority.
What is a New York business corporation?
A business corporation is a legal entity separate and distinct from the individual(s) who compose the business. Its principal features are perpetual duration, limited liability and easy transferability of interests. A corporation may be formed for any lawful business purpose.
How do I form a New York business corporation?
A business corporation may be formed by filing a certificate of Incorporation with the Department of State.
What are the special responsibilities associated with forming a New York corporation?
After the corporate existence has begun, an organizational meeting of the incorporator must be held to adopt by-laws, elect directors and transact any other business. The corporation is required to keep:
- correct and complete books and records of account;
- minutes of the proceedings of its shareholders, board of directors and executive committee, if any; and
- a record containing the names and addresses of all shareholders, the number and class of shares held by each and the dates when they respectively became the owners of record thereof.
In addition, a meeting of shareholders must be held annually for the election of directors and the transaction of other business on a date fixed by the by-laws. By-laws and corporate books and records are not filed with the Department of State or any other state agency, but are internal documents maintained by the corporation.
Follow the Corporate Formalities Checklist
How do I determine if the company name that I want to use is available?
The Division of Corporations is required to reject any corporate, limited partnership, or limited liability company name that is not “distinguishable” from existing names on file. To determine whether a name is available for a corporation, limited partnership or limited liability company, to make a name availability inquiry:
- The Corporation and Business Entity Database online search is intended for status inquiries of entities already on file with the Department of State. Customers are cautioned to avoid interpreting database search information as an indication that a name is or is not available for use; or
- The records of the Division of Corporations may be searched for availability of name by submitting a written request to the Department of State, Division of Corporations, One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231. It is recommended that a copy of the name availability response be attached to the document that you are filing.
How does a foreign corporation apply for authority to conduct business in New York State?
A foreign business corporation may apply for authority to do business in New York by filing an Application for Authority .The New York Department of State does not give opinions as to what activities constitute doing business in New York State for qualification purposes. See the legal memorandum entitled “Doing Business” in New York: An Introduction to Qualification for further clarification.
Attached to the Application for Authority must be:
- A Certificate of Existence dated within one year from the official who files and maintains corporate records in the jurisdiction of the corporation. This official is generally the Secretary of State, and many jurisdictions refer to the Certificate of Existence as a Certificate of Good Standing;
- consent or approval from another state agency if certain words and phrases are used in the corporate name;
- the filing fee of $225 payable to the New York Department of State; and
- If the foreign corporation has been conducting business in New York prior to filing its Application for Authority, it must obtain the consent of the New York State Tax Commission. To request consent, call the New York State Tax Commission at (518) 485-2639.