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Tax implications on US company for hiring a Sole proprietor

B

boatyyo

Star Member
Jan 11, 2017
75
15
Hello,
I am on PR in Quebec. I moved to Canada this year and want the company I work for in US (on H1b) to change my role as a contractor. I have already registered as a Sole proprietor in Quebec. The US company is now worried about having permanent establishment obligation if they hire me as a contractor. They want me to incorporate and have already hired another person in Toronto via incorporate setup. However, as far as I understand, if I'm going to be working primarily for one company 40 hrs/week then I cannot setup an incorporate.

This is the first I heard about the US company having tax obligations on contractor. Since many folks here are working as sole proprietors for US companies, can anyone please share what is the setup with your company?

Thanks!
 
S

swan0206

Champion Member
May 14, 2019
1,172
227
boatyyo said:
Hello,
I am on PR in Quebec. I moved to Canada this year and want the company I work for in US (on H1b) to change my role as a contractor. I have already registered as a Sole proprietor in Quebec. The US company is now worried about having permanent establishment obligation if they hire me as a contractor. They want me to incorporate and have already hired another person in Toronto via incorporate setup. However, as far as I understand, if I'm going to be working primarily for one company 40 hrs/week then I cannot setup an incorporate.

This is the first I heard about the US company having tax obligations on contractor. Since many folks here are working as sole proprietors for US companies, can anyone please share what is the setup with your company?

Thanks!
Click to expand...
Hi.

*Off topic* Are you working completely remote from quebec or doing commute to US once a month atleast? Just to findout as i've moved to quebec very recently.
 
B

boatyyo

Star Member
Jan 11, 2017
75
15
swan0206 said:
Hi.

*Off topic* Are you working completely remote from quebec or doing commute to US once a month atleast? Just to findout as i've moved to quebec very recently.
Click to expand...
For now i'm completely remote until vaccinated. After that i'll start traveling once a month.
 
N

Nick1233

Star Member
Dec 16, 2019
131
19
boatyyo said:
However, as far as I understand, if I'm going to be working primarily for one company 40 hrs/week then I cannot setup an incorporate.

Thanks!
Click to expand...
Not true. How an incorporation does its business like number of customers, hours etc are irrelevant.

You would be both founder and employee of the inc and inc would charge the US customer. US customer would pay Inc, Inc would run your payroll.
At end of the year, inc needs to file corporate income tax and you would file a personal income tax.
 
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