I am a current TN1 holder (Canadian) who is leaving the US soon to return to Canada, but will start up an eCommerce business before leaving. I wish to have it be a US entity, but would prefer sole proprietorship. Do I need to incorporate in order to be considered as a US entity business? I already have a dba for my business in the state of AZ, a SS number, and a US business bank account. I wish to avoid the hassle of doing business with mostly US clients as a Canadian business. It is much easier to conduct business as if I was an American. I want to continue to pay into my social security and just pay US taxes. Is this even possible?
Dear Marnie,
The question of whether you can or cannot do business as a sole proprietor provided you are not a US citizen or resident is a tricky one. As far as I see, since you already were running your business as a sole proprietor you might be able to continue doing so even if you no longer live in the US, however I would strongly recommend you to reconfirm that with an immigration attorney and probably your accountant as well.
Certainly, the scenario where you form a separate business entity such as an LLC would make things much more clear. Your entity would be organized in a specific state (like Delaware, Wyoming, etc.) and you will own it as a foreign individual (but with SSN). This way you will be able to report the income you derive from this entity on our personal tax return much as you do now.
Just keep in mind – whatever you do, your accountant should be involved to make sure your income is property recorded, and all the taxes paid (both in the US and Canada).
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