Answers

What should I do with US profits

Asked by: Avalon  — 5 June, 2011

Hello,

I am a Canadian citizen who owns a business in the US. My company publishes a magazine and sells subscriptions to US citizens. I do not have a work visa, so I have hired a number of Americans to do all the work. I have an EIN number which allows me to function as a business but I do not have a SSN.

As a Canadian citizen, am I allowed to use the profits earned by the company to pay staff salary, rent for our office, and other business related expenses?

Answered by: admin  — 5 June, 2011

Avalon,

From your question I would assume that you own a US corporation or LLC with an EIN number.

Since this is a US business with US employees and profits produced in the US (with you being the owner) your personal immigration status is irrelevant, as you don’t have to be present in the US for the business to exist as such. The business is generally expected to produce revenue and have business related expenses, which would be deducted from that revenue, resulting in net profit. Those expenses generally include the salaries of employees, office rent, and a long list of other deductible business expenses.

I am of course simplifying that scenario (for more precise tax analysis I would recommend to hire a professional accountant). The net profit is then taxed depending on the type of entity – corporations are taxed on corporate level and then the dividends are taxed on shareholders’ personal level, and LLCs are taxed on members’ personal level only.

As far as your personal taxes go, you are entitled to collect your share of the profits (which would be 100% if you are a sole owner) and then pay personal income taxes to the IRS. For that purpose you can obtain an ITIN (Individual Tax Identification Number), which is an equivalent of SSN used by non??“US persons who are not eligible for Social Security benefits (that is for tax reporting purpose only). Your accountant should be able to assist you in obtaining ITIN.

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