Entrepreneurship & Small Business

Wyoming LLC Setup for Canadian to Trade with Tasty works USA

  • Last Updated:
  • Jul 13th, 2018 10:32 am
[OP]
Newbie
Apr 15, 2016
7 posts

Wyoming LLC Setup for Canadian to Trade with Tasty works USA

Hey everyone,

Quick question, I'm looking at setting up an LLC in Wyoming USA to trade options with Tastyworks (online brokerage in the USA). Tastyworks in not available in Canada, hence why I'm doing this. For tax reasons, I'm not sure how this would work and hoping to get a bit more insight. In Wyoming you are not charged corp tax, and since I'm canadian I wouldn't be charged personal tax. What tax am I liable to pay in Canada? Would I just pay the dividend tax rate on payments to myself in Canada? Has anyone setup an LLC for trading stock/options in the USA?

Regards,

Zach
15 replies
Newbie
Sep 26, 2016
16 posts
8 upvotes
Are you going to do that just because of low commissions?
[OP]
Newbie
Apr 15, 2016
7 posts
COrrect, huge savings involved. $60 month compared to over $180 with TD. Adds up.
Member
Nov 12, 2014
235 posts
93 upvotes
Kingston, ON
Setting up a US LLC for investments is the absolute WORST thing you can possibly do....don't do it....pay for proper cross border advice.
You're looking at double tax issues, and FAPI issues (any investment income is included in your personal income)....expensive and punitive....get advice.
Newbie
Jan 18, 2017
75 posts
47 upvotes
This. US LLC is a terrible idea for tax planning. FAPI rules catch the tax "deferral". The accounting and legal fees for US filings will eat up a chunk of your trading profits as well.

You could always try a US C-corp, but FAPI still applies, and compliance costs will still be there.
QN5252 wrote:
Jul 10th, 2018 8:53 am
Setting up a US LLC for investments is the absolute WORST thing you can possibly do....don't do it....pay for proper cross border advice.
You're looking at double tax issues, and FAPI issues (any investment income is included in your personal income)....expensive and punitive....get advice.
______
Canadian & US tax guy
[OP]
Newbie
Apr 15, 2016
7 posts
I don't believe Wyoming charges tax... I don't mind paying Canadian tax on the dividend amounts that I pay myself. Am I wrong?
Member
Nov 12, 2014
235 posts
93 upvotes
Kingston, ON
Zventures wrote:
Jul 10th, 2018 2:42 pm
I don't believe Wyoming charges tax... I don't mind paying Canadian tax on the dividend amounts that I pay myself. Am I wrong?
There is US Federal Tax though....you are wrong....get proper advice.
Newbie
Jan 18, 2017
75 posts
47 upvotes
Wyoming doesn't charge a corporate tax, true. But the US Federal Government still does. With an LLC entity, this is where the double-tax issue comes into play (You get to pay tax US-side, and then pay Canadian-side tax on that same income.)

Additionally, even though the US may charge a lower tax rate (Or in the case of certain Caribbean countries, zero tax), Canada has tax legislation in place that ignores that fact, particularly with things like investment income. Canada then taxes that income as if you had earned it yourself.

But ignore all of that. The elephant in the room is the fact that assuming TD charges $180/mo in fees vs. Trade Tasty's $60/mo, that's a savings of $120/mo, or $1,440/year. $1,400/year doesn't even come close to covering the accounting/compliance fees required for a non-resident alien holding a US LLC. Any trading fees you might have saved would easily be eaten up by the accountants and lawyers.
Zventures wrote:
Jul 10th, 2018 2:42 pm
I don't believe Wyoming charges tax... I don't mind paying Canadian tax on the dividend amounts that I pay myself. Am I wrong?
______
Canadian & US tax guy
Deal Guru
Aug 2, 2010
12472 posts
3035 upvotes
Here 'n There
This is opening up the biggest can of worms, Pandora's box, throwing in a monkey wrench, etc [insert suitable analogy or facsimile thereof here).
[OP]
Newbie
Apr 15, 2016
7 posts
Why would accounting and compliance fees be that high? Its just a tax return? The filing fee is only around $100 usd I believe per year? Plus a registered person at $50. Again, i have no problem paying tax, I still believe it would come out to be less then in Canada for corp and persona l tax?
Member
Nov 12, 2014
235 posts
93 upvotes
Kingston, ON
Zventures wrote:
Jul 10th, 2018 8:13 pm
Why would accounting and compliance fees be that high? Its just a tax return? The filing fee is only around $100 usd I believe per year? Plus a registered person at $50. Again, i have no problem paying tax, I still believe it would come out to be less then in Canada for corp and persona l tax?
The colleague I know who deals in this area charges $700/hour...your initial meeting with him would eat 50% of your savings and that doesn't even include the costs to file a US corporate tax return (looking at $500-$1,000 minimum there) and the T1134 in Canada ($500-$750 there) plus the FAPI calculations....minimum $1,000....it's complicated; that's why it costs to much....you can go ahead and do what you want, but be warned it's a bad idea and will cost you more than you' think you're saving....if you can't understand our warnings then maybe you shouldn't be in this space to begin with....
[OP]
Newbie
Apr 15, 2016
7 posts
Any other ideas? I don't mind opening a normal corp as well in the USA. Just need to open up a corp to be able to trade on this platform. Not only cost but ease of use for the strategy I'm using.
Member
Nov 12, 2014
235 posts
93 upvotes
Kingston, ON
Zventures wrote:
Jul 12th, 2018 8:50 pm
Any other ideas? I don't mind opening a normal corp as well in the USA. Just need to open up a corp to be able to trade on this platform. Not only cost but ease of use for the strategy I'm using.
There are ways to do it, but you're not going to get free advice about it on the internet....
[OP]
Newbie
Apr 15, 2016
7 posts
I beg to differ. But thank you for the positive reinforcement!

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