Buying a Business in the USA as a Canadian

When buying a business in the USA as a Canadian, a local foreign exchange specialist like MTFX can help you save on international business money transfers.

Expanding your business beyond Canadian borders is a significant step that can open up new avenues for growth and profitability. The United States is a prime destination for Canadian companies looking to scale their operations in various international markets. With its proximity, large consumer base, and economic ties, doing business in the US from Canada offers numerous advantages, making it an attractive market for Canadian businesses. In this blog, we'll look at the benefits of doing business in the US as a Canadian company, providing insights into why this move could be the next big step for your business's success.

Can a Canadian own a business in the US?

• Buying an existing business in the USA is possible if you secure the appropriate immigration status.
• Canadian citizens have two options for buying a ready-made US-based business. You can apply for an E2 visa or the EB-5 Immigrant Investor Program.
• Buying a business in the USA as a Canadian comes with challenges, such as foreign exchange risks and expensive overseas transfer fees. It's best to avoid using your bank and work with a specialist provider instead.

The US is open to business, especially to Canadian citizens, who are the equivalent of next-door neighbours. For global-minded business owners, and from a Canadian standpoint, there are several advantages to purchasing an existing business in the US.

Such a business usually has an already established brand, existing clients, and a tried-and-tested supply chain. In addition, the US is a complete package because of its thriving economy, advanced technology and infrastructure, tax benefits and government incentives. Additional benefits include new markets, a quality workforce, lifestyle benefits, and no communication or cultural barriers.

As a Canadian buying business in the USA, optimizing your bottom line is essential. For example, exchange rate fluctuations can affect your transactions and must be managed. Here's everything you need to know about successfully buying a US business as a Canadian.

Is it worth buying a business in the US as a Canadian?

Expanding your business into the United States can be strategic for Canadians looking to grow and diversify their operations. With its vast consumer base, robust economy, and favourable trade relations with Canada, the US market presents many opportunities for Canadian businesses.

Proximity to the US market

One of the critical advantages for Canadian businesses operating in the US is the geographical proximity. Logistics, transportation, and cross-border trade are more manageable and cost-effective with a shared border. This proximity also allows for easier operations management and quicker response times to market demands.

Access to a larger customer base

The US is one of the largest consumer markets in the world, offering Canadian businesses access to a significantly more significant customer base. Expanding into the US allows companies to reach millions of potential customers, which can lead to increased sales and revenue growth.

Diverse market opportunities

The US market is highly diverse, offering various opportunities across various sectors. Whether your business is in technology, manufacturing, retail, or services, the US provides numerous avenues for growth and expansion. This diversity also allows Canadian companies to tap into niche markets and customize their offerings for different regions.

Favourable trade agreements

Canada and the US have a strong trade relationship, bolstered by agreements like the United States-Mexico-Canada Agreement (USMCA). These agreements reduce trade barriers, such as tariffs and quotas, making it easier and more cost-effective for Canadian businesses to operate in the US. The regulatory alignment between the two countries also simplifies cross-border trade.

Strong economic ties

The US and Canada have one of the most robust economic partnerships in the world. This solid economic relationship provides stability and confidence for Canadian businesses looking to enter the US market. The integrated supply chains between the two countries also enhance business efficiency and reduce operational costs.

Innovation and technology adoption

The US is a global leader in innovation and technology, providing Canadian businesses access to cutting-edge technologies and industry trends. By operating in the US, Canadian companies can leverage this environment to enhance their competitiveness, develop new products, and adopt the latest technological advancements.

Ease of doing business

The US consistently ranks high in global ease of doing business indexes, making it an attractive destination for Canadian companies. The country offers a transparent regulatory environment, a well-established legal system, and strong protection for intellectual property, all contributing to a business-friendly climate.

Potential for partnerships and collaborations

The US offers numerous opportunities for partnerships and collaborations, whether with American companies, research institutions, or industry organizations. These partnerships can lead to shared resources, increased market reach, and innovative solutions that benefit Canadian and US businesses.

Access to talent and skilled labour

The US has a vast pool of skilled labour and talent across various industries. Canadian businesses operating in the US can use this talent to drive innovation, improve operations, and maintain a competitive edge in the market. Access to a diverse workforce also supports growth and expansion strategies.

Steps to buying a business in the US as a Canadian

Buying a business in the US as a Canadian comes with many variables, but there are basic steps any firm can follow.

Step 1: Explore the best states to buy a business in the US

Corporate acquisitions in the US are appealing because of business-friendly laws and regulations. Some of the best states to buy a business in the US include:

• California: The Golden State has the most significant state economy and GDP among US states.
• Texas: The Lone Star State is one of the least expensive states to run a business and has friendly corporate tax laws.
• Colorado: The Centennial State, or "Colorful Colorado," offers a business-friendly environment and a thriving entrepreneurial community.
• Florida: Buying a business in the Sunshine State comes with tax benefits and a robust labour force.
• North Carolina: The Tar Heel State has low corporate and property tax rates and a favourable business climate.

There are 50 states in America plus Washington, DC, so plenty of options exist. In addition, there are many factors to consider when choosing which state to register your business. The list includes tax laws, business regulations, workforce, cost of doing business, infrastructure, and access to capital.

Step 2: Do your research about investing in the US as a Canadian

Any corporate acquisition requires intensive research, especially for cross-border deals where you may be unfamiliar with the target company's country.

Areas to focus on include laws and regulations, market potential, buying processes, the best way to manage the business, whether you want a limited liability company (LLC) or a corporation, and more. The good news is that the internet can help you make an informed decision as a foreigner buying a business in the US.

Step 3: Work with reputable experts

Working with reputable experts to minimize risks to your capital investment is essential. For example, experienced business and immigration lawyers can help you find the perfect ready-made business in the United States that suits your requirements.

They can also provide legal support regarding buying and auditing the business, applying for the right immigration visa program, and ensuring your business is compliant. You may also benefit from professional assistance from an experienced accountant, real estate broker, and tax attorney.

Step 4: Find the best currency exchange service

Making international payments can be complicated when buying a business in America while in Canada. The best way to simplify overseas transfers is to use a specialist international payment provider, such as MTFX.

This is a more affordable option than making international transfers through business bank accounts, and it also comes with many value-added services.

Where should you incorporate your business in the US?

Choosing the right state to incorporate your business in the United States is a crucial decision that can significantly impact your company's success. Each state offers different benefits regarding taxation, regulatory environment, and business incentives. For Canadian businesses expanding into the US, understanding these factors is essential to making an informed decision.

Delaware: The go-to state for business incorporation

Delaware is renowned for its business-friendly environment, especially for large corporations, due to its specialized legal system and favourable tax laws, making it a top choice for incorporation.

Nevada: Favorable tax environment and privacy

Nevada is attractive for its lack of corporate, franchise, and personal income taxes and strong privacy protections for business owners, appealing to those seeking discretion and tax advantages.

Wyoming: Low costs and strong asset protection

Wyoming offers low incorporation costs, no state taxes, and robust asset protection laws, making it an economical and secure choice for startups and small businesses.

Texas: A booming economy with a pro-business climate

Texas, with its strong economy, lack of corporate income tax, and various business incentives, is ideal for companies looking to grow in industries like energy, technology, and manufacturing.

Florida: No personal income tax and strategic location

Florida’s lack of personal income tax and strategic location for access to Latin American markets make it appealing for businesses seeking tax savings and international opportunities.

New York: Access to capital and a global market

New York offers unparalleled access to financial markets and global opportunities, making it a prime choice for businesses needing capital and aiming for international expansion despite higher taxes and regulations.

How can MTFX help Canadians buy US businesses?

Are you looking to buy a business in America as a Canadian citizen? Do you need to convert Canadian dollars to US dollars for your business?

MTFX can make it worthwhile with competitive exchange rates, low transfer fees, expert foreign exchange tools, and personalized currency exchange guidance.

Competitive exchange rates and low transfer fees

Buying a business in the US as a Canadian requires you to send large sums of money across the border, and it's crucial to reduce the pressure on your bottom line.

As a specialist provider, MTFX offers competitive exchange rates and significantly lower fees. Specialist providers are often the cheapest way to transfer international business money because they use a high-volume, low-margin approach.

Risk management solutions

Foreign acquisitions have risks, such as CAD/USD exchange rate fluctuations. Buying a company in the US as a Canadian takes time. The exchange rate may be favourable today, but there's no guarantee it will stay so by the time you're ready to close.

MTFX can help you mitigate exchange-rate risk and improve budget certainty with tools like forward contracts and market orders that track, target, and even lock in your desired exchange rate.

Expert guidance from currency exchange specialists

We have dedicated currency specialists to guide the currency market, share CAD - USD exchange rate trends, and give insight into how new developments affect your business. You can enjoy simple business money transfers by skipping the bank.

MTFX offers reliable and trusted currency exchange services for Canadians looking to buy a business in America.

With MTFX, you benefit from competitive exchange rates, low transfer fees, personalized guidance from dedicated currency specialists, and a range of tools for making business international money transfers and other payments online via our secure platform.

Open an account today with MTFX to save on foreign exchange costs when buying a business in the US as a Canadian.

FAQs

1. Can a Canadian citizen buy a business in the USA?

Yes. Canadian businesses have the advantage of strong economic ties between Canada and the US, as exemplified by the United States-Mexico-Canada Agreement (USMCA), preceded by The North American Free Trade Agreement (NAFTA).

2. Can I get a visa if I buy a business in the USA?

Yes, the two main options are the E-2 and the EB-5 Visa. The E2 visa is a temporary visa which expires after a defined number of years. The EB-5 visa is a permanent visa which requires a more substantial investment and leads to a green card.

3. Can Canadian businesses do business in the US?

You can live, work, and do business in the USA if you obtain the appropriate immigration status.

4. Can I hire employees in the USA for my business?

Yes, as a foreign business owner, you can hire employees in the USA. However, you must comply with US employment laws, including obtaining an Employer Identification Number (EIN) and adhering to payroll tax requirements.

5. Do I need a physical presence in the USA to start a business?

No, you do not need a physical presence in the USA to start a business. Many states allow foreign entrepreneurs to incorporate remotely. However, having a US address and bank account may be beneficial for practical reasons.

6. How can I protect my intellectual property rights when starting a business in the USA?

To protect your intellectual property (IP) in the USA, you should register your trademarks, patents, and copyrights with the relevant US authorities, such as the US Patent and Trademark Office (USPTO). It’s also wise to use legal agreements to protect your IP from unauthorized use.

7. What types of visas are available for Canadian entrepreneurs to start a business in the US?

Canadian entrepreneurs can explore several visa options, including the E-2 Treaty Investor Visa, L-1 Intracompany Transfer Visa, and TN Visa under NAFTA. Each visa has specific business operations and investment requirements in the US.

8. Can Canadians start a new business in the USA?

Yes, Canadians can start a business in the USA. The process typically involves choosing a state for incorporation, registering the business, and complying with state and federal regulations. While physical presence is not required, understanding legal and tax obligations is crucial.

9. How can MTFX help with buying a business in the US?

MTFX offers safe and secure currency exchange services and a cost-effective way to exchange CAD for USD and make international business payments. FINTRAC regulates us and has specialized in FX and global payments for over 25 years.