Different Kinds of US Corporations

IT professionals who move to the US and choose to work independently will likely establish a US corporation to provide their IT services. When you establish a business in the US, you can choose from three different corporate structures: the Limited Liability Company (“LLC”), the S corporation, and the C corporation.

Each of these structures provides business owners with liability protection for the debts of the business. However, since LLCs and S corporations are flow-through entities, they tend to be more tax-advantageous business structures than C corporations.

C corporations’ profits are taxed at the corporate level and then again at the personal level when shareholders receive dividends. LLCs and S corporations, however, avoid double taxation: profits from these structures are taxed only at the personal level.

If you are moving to the US to start your business, you can benefit from establishing an LLC or S corporation. If you are starting a US business but plan to remain a Canadian resident, though, choose your corporate structure carefully; Canada Revenue Agency does not recognize the flow-through nature of LLCs and S corporations, so setting up one of these structures could lead to double taxation.