An EIN is a unique nine-digit number assigned to your company by the IRS and used for bank account opening, tax filing, hiring and reporting purposes. There are four main methods to obtain an EIN, each one posing its own complications for Canadian and foreign companies.

1. Online

The easiest approach, online, is unfortunately not available to most Canadian and foreign companies as it requires a personal US taxpayer ID number and a US-based address. If you use this method, we suggest you screenshot or print out the confirmation page as you will not receive any additional confirmation from the IRS of your EIN until they mail the EIN confirmation letter 3-6 weeks later.

2. Fax

This is sometimes the best method to use for Canadian and foreign based EIN filers. Simply fill out the SS-4 form and fax it to the correct number (depends on the state of incorporation). The processing time for fax applications can be anywhere from 4 business days to 3 weeks and sometimes requires a follow-up phone call in order to receive confirmation of the EIN. This is typically the preferred method as it does not require a US taxpayer ID number or US address for the filer.

3. Mail

This method is the simplest method, if you have the time. Simply fill out the SS-4 form and mail it in, taking 4-6 weeks before receiving the EIN in the mail. The biggest problem we see with our clients using this method is that, if there is a mistake in the filing, this method takes the longest to receive notice of the mistake and to subsequently correct.

4. Telephone

The IRS currently has a special EIN phone number for international businesses. While this method often results in the shortest processing time (sometimes the EIN is provided on the call), it usually doesn’t work for US-domiciled companies as this number is not meant for US-domiciled companies. US-domiciled companies are meant to call the US-domiciled business number, but this number doesn’t work outside the US.

There are ways to speed this process up, in addition to the above. If you need help applying for an EIN, please feel free to reach out to Voyer Law and we would be glad to assist with the speedy issuance of an EIN for your company.

If you are an Amazon seller, it is highly recommended you obtain trademark protection for your brand and enrol in the Amazon Brand Registry.  Amazon’s Brand Registry provides a variety of tools to monitor brand representation and prevent the sale of counterfeit goods on Amazon.

in order to take advantage of the Amazon Brand Registry you first must have:

  1. A trademark with an active or pending registration;
  2. A trademark registration number, or application number granted that the trademark is pending registration; and
  3. A list of categories that the brand falls under.

The Amazon Brand Registry provides registered users with the ability to directly address counterfeit products. Those suspected of being bad actors are automatically removed from Amazon and the sale of these counterfeit products halted. Through Amazon’s ‘Counterfeit Crimes Unit’, the company additionally holds bad actors responsible through “building cases, undertaking investigations, and pursuing civil litigation”. Furthermore, trademarked brands registered under the Amazon Brand Registry are protected under ‘Project Zero’, which offers several benefits:

  1. Suspected counterfeits are proactively blocked from being listed on Amazon;
  2. Brand owners can directly remove products they think are counterfeits, which information is fed into Amazon’s algorithms to better catch counterfeits proactively in the future; and
  3. Product serialization allows brand owners to apply a 2D code similar to QR codes on their products that uniquely identifies and authenticates the legitimacy of their brand.

There are also numerous ways that the Amazon Brand Registry helps registered merchants grow, including:

  1. Access to prioritized product advertisements, displayed on headlines of search pages;
  2. Customizable brand storefronts and the ability to specify in-depth product descriptions; and
  3. Prioritized search results that are pushed by Amazon’s internal algorithm.

If you have a brand you want trademarked in Canada or the US, please feel free to contact one of our IP attorneys. We are licensed to practise in both Canada and the US and can assist new business owners obtain trademark protection for Amazon Brand Registry enrolment.

On January 1, 2024, the US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) launched the online BOI E-Filing System and began accepting Beneficial Owner Information Reports pursuant to a new compliance regime under the Corporate Transparency Act.

1. Who needs to file?

Starting January 1, 2024, all non-exempt entities formed or registered to do business in the United States are required report Beneficial Owner Information (“BOI”) to FinCEN by January 1, 2025. This includes all corporations, LLCs, limited partnerships or similar entities created by filing a document with any US state, territory or Indian tribe as well as foreign non-US entities that are registered to do business with any US state, territory or Indian tribe.

2.  Who is a beneficial owner?

A beneficial owner is any individual who, directly or indirectly:

An individual exercises “substantial control” of a reporting entity if such individual:

3.  What information needs to be provided?

A reporting entity is required to provide the following information about Beneficial Owners:

4.  Who is exempt from the Beneficial Ownership Information filings?

There are 23 exemptions, which are listed in greater detail in the Small Entity Compliance Guide by FinCen.

One of the key exemptions is for “large operating companies” that: (1) employ 20 full time employees in the US; (2) has a physical presence in the US; and (3) filed federal income tax for the previous year demonstrating more than $5,000,000 in gross receipts or sales.

Other key exemptions are for inactive entities that are not engaged in active business and for subsidiaries of any other exempt entities.

5.  What does this mean for you?

If you are a beneficial owner of a US entity and not exempt from the filing requirements, failure to maintain and file a BOI Report by January 1, 2025 may result in fines up to $500 per day per violation and potential imprisonment.

Please reach out to the Voyer Law team to discuss your Beneficial Ownership Information filing requirements and whether your entity qualifies as an exempt entity.

Canadians often ask us to incorporate LLCs.  In response, our answer is always (1) LLCs do not exist in Canada and are only available in the US; and (2) incorporating a LLC for a Canadian tax resident is usually a bad idea. In this blog post we’ll explain what a LLC is, why it’s a less than ideal structure for Canadians (mostly) and a few situations where a LLC may be beneficial for Canadians.

 

1.  What is a LLC?  A LLC, or Limited Liability Company, is a type of corporate structure available ONLY in the US. LLCs don’t have shareholders (instead they have members) or shares (instead they have membership interests, represented by either a percentage or units (or both)).

 

2.  How are LLCs taxed?  LLCs are, by default, treated as a partnership for US tax purposes, meaning that profits and losses flow through to the individual members.  Conversely, LLCs are treated as corporations for Canadian tax purposes.

 

3.  Why LLCs are bad for Canadians.  The ownership of a LLC membership interest by a Canadian is “bad” as LLC income is double taxed, without an available Canadian tax credit. First, LLC income is treated as partnership income for US tax purposes and taxed as such.  Second, LLC income is treated by CRA as dividend income and taxed again.  Problematically, no tax credit is available in Canada to negate such double taxation as the income types are not taxed the same, partnership distribution vs dividend, in addition to a timing issue.

 

4.  Is there any case for a LLC?  There are a few situations where LLCs may not result in double taxation, for example if a LLC is incorporated into a tax-oriented structure involving additional US entities to avoid direct Canadian ownership of the LLC.

 

As a general rule, direct ownership of a LLC by a Canadian tax resident is not recommended due to the double taxation that results. While there are options for a Canadian to take advantage of a LLC, such options involve complicated cross-border tax planning and require the assistance of experienced legal and tax professionals.