Many Canadian businesses sell to the United States. 

Should they form a new corporation in the United States? 

Three main reasons for incorporating in the United States are:

1. To reduce business immigration problems, particularly in obtaining a suitable visa for non-U.S. residents to be able to do business in the United States;
2. To satisfy your customers, by recognizing and meeting the preference of Americans to do business with companies physically located in the United States and that have a U.S.-based identity; and
3. To make it easier and cheaper for your business to operate by reducing the complexity and expense that comes with accounting for cross-border transactions. Business is simpler when Canadian located companies sell to Canadian residents and U.S. located companies sell to U.S. residents. 

OK, the U.S., but Where?

Most people have heard that a Delaware incorporation has many advantages. Some people have heard that incorporating in Nevada is preferable. Lots of people from British Columbia incorporate in Washington. The best jurisdiction for your business depends on your business. Usually it is wisest to incorporate in the state where your offices will be located. Certain states like Nevada have a reputation of being business friendly, for instance, because there is no state corporate tax in Nevada. But there are many other considerations:

•  Where are your customers located?
• Where is it convenient for you and your customers to travel?
• What office and warehouse facilities does your business require?
• Do you require mail forwarding services?
• Will your business have many employees? What will the employees be doing?
• Does it matter to your business what the state income tax rates are?
• Do the state WCB rates matter to your business?
• Will your corporation become public?
• Does the director's liability laws in the chosen state affect you?
• Are the capital taxes that some states like Delaware charge too high for your business? 

And what kind of U.S. Corporation?

After deciding where to incorporate, you then have to choose the appropriate corporate structure. The main choice is between LLCs, C-corporations, or S-corporations. The C-corporation is very similar to the usual kind of incorporation in Canada. LLCs and S-corporations have special rules that must be followed to obtain the advantages (in the form of pass-through taxation rules) offered by those forms of incorporation. Usually the C corporation is the best choice for Canadian tax residents. You should consult with a professional to determine which structure is best for your circumstances.

For US incorporations we suggest you retain the services of a US based law firm which specializes in US incorporations such as Amerilawyer.com.