Thousands of Canadian entrepreneurs form U.S. LLCs each year to access the American market, receive payments via Stripe or PayPal, and build global startups. One of the most popular states for formation is Wyoming, known for its business-friendly environment, low costs, and lack of state income tax. But once your LLC is formed, an important question comes up: Do I need to file U.S. taxes if I live in Canada and own a Wyoming LLC?
The answer is yes—U.S. tax law requires nearly every foreign owner of a U.S. LLC to file federal forms, and Wyoming has its own annual state obligations as well. Even if your company has no income, you must comply with these rules. In this article, we’ll walk through what Canadians need to know about their U.S. tax obligations, how to avoid penalties, and how Bookmate can help you meet your requirements.
Can a Canadian Own a U.S. LLC?
Yes—Canadian citizens and residents can legally form and own 100% of a U.S. LLC. You don’t need a U.S. address, Social Security Number, or visa to start the process. It’s entirely legal and straightforward. Many Canadian founders choose Wyoming because of its:
- No state income tax
- Low filing fees
- Strong privacy protections
- Easy online formation
To set up a Wyoming LLC from Canada, you simply choose a registered agent, file Articles of Organization online, and wait for your confirmation. Once approved, you’ll apply for an EIN (Employer Identification Number) from the IRS.
With your EIN, you can open a U.S. business bank account, apply for Stripe or PayPal, and begin legally operating your company.
Understanding Your U.S. Tax Responsibilities as a Canadian Founder
Many Canadians assume that if they don’t operate in the U.S. physically, they don’t have to file anything. This is false. U.S. tax law requires reporting by ownership—not just by income or presence. That means if you own a U.S. LLC, even from Canada, you’re subject to certain filings.
Your responsibilities fall into two major categories:
1. Federal Tax Filings (IRS)
The IRS classifies your LLC differently depending on how many owners it has.
Single-Member LLCs (SMLLC): If you are the only owner, the LLC is a "disregarded entity" for tax purposes. Even if you had no business activity, the IRS still requires:
- Form 5472, used to report foreign ownership and any transactions between you and your LLC (including simple money transfers)
- Pro forma Form 1120, a simplified corporate return filed alongside Form 5472
These forms are due annually by April 15, and the penalty for missing them is steep—$25,000 or more per year.
Multi-Member LLCs (MMLLC): If your LLC has more than one owner, the IRS considers it a partnership. Your filing obligations include:
- Form 1065, the U.S. partnership tax return
- Schedule K-1s for each partner to report income distribution
If the business earns effectively connected income (ECI) in the U.S., each Canadian partner must also file:
- Form 1040-NR, the nonresident income tax return
The only exception to filing is if the multi-member LLC has zero financial activity—no income, no expenses, no fund transfers. This must be verified with a tax professional before skipping any filings.
2. State-Level Filings (Wyoming)
Wyoming makes compliance easy compared to other states. There’s:
- No state income tax if you don’t have a physical presence (like an office or employees) in the state
- A required Annual Report due each year on the anniversary month of formation
The Annual Report is filed online and costs $60 minimum per year. If your LLC owns property in Wyoming, the fee could be higher depending on its value. Failure to file this report can result in your business being dissolved.
It’s important to know that state-level filings cannot be extended like federal ones. Even if you’re granted a federal extension, you must still meet your Wyoming deadlines.
What If I Had No Income or Customers?
Even if your Wyoming LLC is just getting started and has made no money, the IRS still expects a filing. For single-member LLCs, Form 5472 and pro forma 1120 are still required regardless of income or activity. These forms report your ownership and any capital contributions or transfers—even if you only deposited money into your company bank account.
The only situation where you may not need to file is with a multi-member LLC that had absolutely no financial activity. If nothing happened—no money in, no money out, no expenses—you might be exempt. But this is rare, and it’s always safer to file than skip it.
Do I Need an EIN for My U.S. LLC?
Yes. An EIN (Employer Identification Number) is essential for:
- Opening a U.S. business bank account
- Applying for payment processors like Stripe, PayPal, or Wise
- Filing tax returns
You don’t need a Social Security Number to get an EIN. Canadians can apply for an EIN using Form SS-4, and submit it by fax to the IRS. Once approved, you’ll receive your EIN in writing, which will unlock access to banking, payment platforms, and tax filing tools.
What About Canadian Tax Implications?
Canada has strict rules on foreign corporations, including controlled foreign corporations (CFCs). If you earn income through your Wyoming LLC and transfer it to yourself, you may need to report that to the Canada Revenue Agency (CRA).
You may be required to:
- Declare foreign corporate ownership
- Report passive income earned abroad
- Possibly pay taxes on distributions received from your U.S. LLC
Canada has a tax treaty with the U.S. that helps avoid double taxation, but you must still report earnings properly. While Bookmate doesn’t provide Canadian tax services, we’ll gladly coordinate with your accountant to ensure your filings match up across borders.
Bookmate Makes Filing Easy for Canadian Entrepreneurs
At Bookmate, we specialize in helping foreign founders—especially those from Canada—meet their U.S. tax obligations without stress. We prepare all the required IRS forms for your Wyoming LLC and handle the entire process digitally. No paper, no U.S. address required.
We regularly help clients with:
- Form 5472 + pro forma 1120 (for single-member LLCs)
- Form 1065 + K-1s (for multi-member LLCs)
- Form 1040-NR if you have U.S. income
- IRS extensions and responses to IRS notices
Our team of licensed CPAs and professionals specialize in cross-border filings and understand the nuances of international tax rules.
What It’s Like to Work With Bookmate
We’ve created a seamless, fully remote experience for Canadian LLC owners to get their taxes done quickly and correctly.
Step 1: Free Consultation We start with a Zoom call to learn about your company structure and what needs to be filed.
Step 2: Engagement Letter & Invoice After we confirm your needs, you’ll receive a digital engagement letter and invoice.
Step 3: Secure Web Form You’ll upload your business documents, EIN, and ownership info using our encrypted portal.
Step 4: We Prepare Your Tax Filings Our team completes your required IRS forms and shares them with you for review.
Step 5: We File and Support We submit your tax forms to the IRS and help with any follow-up or notices if needed.
Everything is handled online. You’ll never need to fax or mail anything to the IRS yourself.
Need Help With U.S. Tax Filing From Canada?
Whether your LLC is brand new or you’ve missed prior deadlines, we’re here to help you catch up and stay compliant. Bookmate works with founders across Canada who want a reliable, remote solution to manage their U.S. filings.
📅 Book a free consultation or visit trybookmate.co to get started.
Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Please consult with a Canadian accountant for information on CRA filings and personal tax implications.
