The United States is a prime choice for many non-US citizens, like Canadians, to expand their businesses. Typically, because of its vast market, new opportunities, economic ties, etc., many consider buying a business in the US a very clever step to up your game.
To put this into perspective:
- Canadian businesses invested a staggering $16.7 billion in US acquisitions in 2024 alone.
- Furthermore, 82% of Canadian businesses setting up in the US opt for key states like Florida, Texas, California, or Nevada, known for their investor-friendly policies and booming industries.
- On average, a Canadian business acquisition in the US is valued at $3.2 million, highlighting the potential for significant growth and profitability.
- Remarkably, in 2022, cross-border investments between Canada and the US reached an impressive $500 billion, emphasizing the strong economic ties between the two nations.
Buying a business in the US as a Canadian involves understanding visa requirements and tax obligations, choosing a state with suitable regulations that cater to your interests, and finally closing the deal. However, in some specific sectors, you might have to obtain some licenses and permits before closing the deal.
If you’re a Canadian looking to expand your business and wonder, “Can a Canadian buy a business in the US?” you’ve come to the right place. In this article, I will walk you through all the details you need to know about buying or starting a business in the US.
Now, let’s look into how a Canadian can buy a business in the US with our step-by-step guide.
Table of Contents
How Can a Canadian Buy a Business in the US?
Buying a business in the US is not just signing some papers and suddenly owning one.
Suppose you’re a non-US businessman wondering, “Can a Canadian buy a business in the US?” you must know the exact steps and present enough documents to purchase an entity and get to work (Additional Data). Here, I will guide you to buy a business in the US easily in 6 steps, facing no strange complications.
Step 1: Choose a state (Typical Timeframe: 2-4 Weeks)
Before doing anything, you must choose a state to buy a business. As you know, there are 50 states in the United States, each with its own laws and regulations, benefits, and downsides. As a businessman, you must weigh your options carefully and choose one that fits your ideals. Selecting the proper state can directly impact the level of growth and success your entity mightexperience. Some favorable choices among non-US residents are Florida, Texas, Nevada, and California. The table below compares the four states to see their advantages and downsides. We will let you decide which state works best for you!
| State | Purchase Environment | Canadian Benefits | Tax | Markets | Challenges |
|---|---|---|---|---|---|
| Florida | • Simple acquisition • Many businesses for sale | • Large Canadian community • Direct Canadian flights | • No state income tax • Foreign-friendly taxes | • Tourism • Real estate • Senior care | • Hurricane risks • Seasonal markets |
| Texas | • Streamlined process • Lower costs | • Canadian business hub • USMCA benefits | • No state tax • Low corporate tax | • Healthcare • Tech• Energy | • Complex licensing • High competition |
| Nevada | • Quick registration • Minimal paperwork | • Entertainment focus • Tourism synergy | • No state/corp tax • Foreign-friendly | • Hospitality • Gaming • Tourism | • Strict regulations • Seasonal revenue |
| California | • Large market • Diverse options | • Tech presence • Pacific trade | • Complex taxes • High costs | • Tech• Innovation • Trade | • Highest costs • Heavy regulation |
Step 2: Considering Visa Requirements (Typical Timeframe: Few Months to a Year)
Can a Canadian buy a business in the US without a visa? The short answer may be yes, but there are some things to consider, too. You don’t need any specific visa to purchase a business in the US. However, if you want to physically be present in the US and manage your business on-site, you’d need a specific type of visa to authorize your work.
So, if you’re under a B-1 (Temporary Business Visitor) visa, you can only freely sign the paperwork and complete the transaction. With a B-1 visa, you can’t serve as an officer of the company and must apply for a proper visa to operate in the United States.
What Are Your Best Visa Options to Buy a Business in the US?
You can apply to get the proper visa based on the type of business you’re willing to buy. The US Citizenship and Immigration Services offers a variety of visas tailored to your business. Each one of the visas has its own set of regulations, investment requirements, and benefits. Here we will only compare two popular choices among foreigners to buy a business in the US. And you can decide which one works best for you!
- E-2 Treaty Investors Visa
E-2 Treaty Investor visas are for foreigners from specific countries called treaty countries. These countries maintain a friendship with the United States and have reached a treaty of commerce with them. With an E-2 visa, your family (spouse and unmarried children under 21) can accompany you to the United States. Of course, they should seek a classification as dependents first. There’s also no limit to the number of extensions an E-2 nonimmigrant might apply for.
However, there are some requirements you have to meet to apply for an E-2 Treaty Investors visa:
- You must be a legitimate national of a country where the US has a treaty of commerce and navigation.
- Invest substantial capital into a bona fide entity in the US. The E-2 visa doesn’t impose a minimum amount of investment on foreigners.
- Entering the US to develop and manage the entity you’ve bought shares of. This can be proven by showing at least 50% ownership over the entity.
- EB-5 Immigrant Investor Visa
According to USCIS, business owners holding an EB-5 Immigrant Investor visa can move to the United States with their spouses and unmarried children under 21. They will get an immediate permanent residency (green card). In 1990, Congress created this program to encourage investors to the United States and help create jobs for its citizens.
However, there are some requirements you have to meet to apply for an EB-5 Immigrant Investor visa:
- Invest around $1.05 (or $800,000 in targeted employment areas) in a new or existing entity in the US.
- Make at least 10 permanent full-time jobs for legal US citizens seeking a job.
- To obtain an EB-5 visa, you must wait an extended processing period.
Step 3: Get an ITIN (Typical Timeframe: 6 to 8 Weeks)
Now that you almost know “How can a Canadian buy a business in the US?” it is time to apply for an Individual Taxpayer Identification Number (ITIN). You’d need an ITIN to buy a business in the US. The IRS handles ITIN issuing for foreign business owners in the US for federal tax purposes only. Once you have an ITIN, you can apply for an Employer Identification Number (EIN), used to identify a business entity.
Step 4: Prepare Proper Licenses and Permits (Typical Timeframe: Few Weeks to Several Months)
As a Canadian, you should pay attention to minor details when buying a business in the US, as there could be complications and restrictions. While the answer to “Can a Canadian buy a business in the US?” remains yes, there are federal laws that restrict the foreign ownership of some business sectors, such as:
- Banking
- TV & radio broadcasting
- Aviation
- Marine transportation and fishing
- Insurance
- Defence industry
- Mineral leasing and resources
- Electricity, gas, and utility supply
- Agricultural
Depending on which business sector you want to purchase, you may need to obtain permits and licenses from your chosen state or federal authorities. Make sure to do this before buying the company.
Costs for Permits and Licenses
When starting or purchasing a business, understanding the financial obligations tied to required permits and licenses is crucial for effective budgeting. Below is an overview of common costs associated with launching or acquiring a business:
| Permit/License/Service | Approximate Cost | Notes |
| Business Registration | $50 – $500 | Costs vary significantly by state. |
| ITIN Application | Free | Individual Taxpayer Identification Number. |
| E-2 Visa Filing Fee | $205 | Required for eligible foreign investors. |
| Business License | $50 – $400 | Depends on the type of business and location. |
| Legal Services | $2,000 – $5,000 | Covers contracts, permits, and compliance. |
| State-specific Permits | $100 – $1,000 | Examples include health permits or zoning. |
These costs can vary widely depending on the type of business, the state or locality, and the specific industry regulations. It’s recommended to consult with professionals or use official state resources to get precise estimates for your specific situation.
Step 5: Prepare a Letter of Intent (LOI) (Typical Timeframe: Few Weeks)
Once you’ve looked up different businesses for sale and have chosen one to purchase, you need to ask for the seller’s Letter of Intent. A Letter of Intent is a piece of document that mentions all the necessary information about the deal and key terms, such as the type of the transaction, the agreed price between the two parties, the names of the parties, conditions, copies of lease agreements, and termination mutual terms.
Step 6: Close the Deal (Typical Timeframe: 1 to 3 Months)
Knowing the answer to “Can a Canadian buy a business in the US?” is one thing, but knowing minor details to consider before closing the deal is another. Depending on the nature of your business, there are some essential things to consider:
- Transfer of lease: If the business you’re buying has a rental property, the seller must transfer the lease to your name.
- Transfer of vehicles: If the purchased business owns vehicles, they must also be transferred to your name and registered with the DMV.
- No competition agreement: The business seller must sign an agreement that states the “no competition” rule, with specifics like the period and location to be mentioned in the agreement.
- Transfer of intellectual property: Trademarks, copyrights, and patents must all be transferred to your name. This way, you ensure you can use them, and no one can file a lawsuit against you.
- File forms: At last, you must file the IRS Form 8594 and specify the business is acquired.
- Notify authorities: Notify all the local, federal, and state officials about the business acquisition.
Why Should You Buy a Business in the US?
If you are a Canadian looking for new opportunities and diversifying your operations, buying a business in the US has many benefits. These include access to a larger market, the potential for higher profits, and the opportunity to take advantage of the US’s business-friendly regulations and tax system.
Lower Corporate Taxes
Compared to other countries, the tax regulations in the US impose lower corporate tax rates on business owners. In the latest reform back in 2017, the authorities in charge set a flat tax of 21%, when it was bound to even go up to 35%.
Stable Economy
The United States has a strong and stable economic state. This strength and stability were evident during the COVID-19 pandemic when it was among the few countries to resume work following minimal lockdowns. Hence, this country saved its economy from a downfall and continues to grow more than ever.
Small Business-Friendly
The US is very supportive of new small businesses. This can be seen in the business-friendly regulations and rules the US has imposed. Some government agencies, like the Small Business Administration (SBA), even provide small businesses with the information and guidance they need to buy or incorporate a business in the US.
Case Study: How SAL Accounting Helped a Canadian Entrepreneur Buy a U.S. Business
Background
In early 2024, a Canadian entrepreneur, Oliver Davis, approached SAL Accounting with a vision to expand his business ventures into the U.S. market. John had identified a small but profitable manufacturing company, USA Manufacturing Inc., in Michigan, as a potential acquisition target. He sought guidance on navigating the complex process of purchasing a U.S. business as a Canadian resident.
Step 1: Identifying the Right Business
John had already done some preliminary research, but SAL Accounting assisted him in conducting a more detailed market analysis to ensure USA Manufacturing Inc. was a suitable fit. We evaluated its financial health, market position, and growth potential, confirming it aligned with John’s business goals.
Step 2: Conducting Due Diligence
SAL Accounting led the due diligence process, which involved a deep dive into USA Manufacturing Inc.’s financial records, legal contracts, liabilities, and operational practices. We identified potential risks and opportunities, providing John with a comprehensive risk assessment to inform his decision-making.
Step 3: Structuring the Deal
Our team worked closely with John to structure the deal most advantageously. We advised on the benefits of a share purchase versus an asset purchase, ultimately recommending a share purchase to simplify the transition of existing client contracts and licenses.
Step 4: Securing Financing
John needed assistance in securing financing for the acquisition. SAL Accounting prepared detailed financial projections and introduced him to a network of Canadian banks with expertise in cross-border transactions. With our guidance, John successfully secured a loan with favorable terms that met his needs.
Step 5: Navigating Regulatory and Tax Implications
Buying a U.S. business as a Canadian involves navigating complex regulatory and tax landscapes. SAL Accounting ensured that John complied with Canadian and U.S. tax laws, advising on optimal tax strategies to minimize liabilities. We also helped him with necessary filings and registrations in both countries.a
Step 6: Ensuring a Smooth Transition
After the purchase, SAL Accounting continued to support John by overseeing the integration process. We helped in aligning accounting practices, managing payroll across borders, and setting up effective financial reporting systems to monitor the business’s performance post-acquisition.
Outcome
Thanks to the comprehensive support from SAL Accounting, John successfully acquired USA Manufacturing Inc. The acquisition resulted in a 30% increase in his annual revenue within the first year, and he has since expanded his operations further in the U.S., with plans for more growth in the coming years.
Final Words
Buying a business in the United States has many benefits, such as a vast market base, lower taxes compared to other countries, and better regulations for foreign business owners.
In this article, I started by answering the question, “Can a Canadian buy a business in the US?” I then mentioned a few benefits of buying a business in the US as a foreigner. Since knowing the visa requirements is crucial for foreign businessmen, I introduced and compared two popular types of visas. I then walked you through the detailed steps to buy a business.
Our professional team at SAL Accounting fully understands the hurdles a Canadian might face while purchasing a business in the US. The expertise we have to offer can make the entire process completely seamless for you.
So, don’t waste any minute; let us simplify your US business journey—reach out today!
Key Takeaways
Understand the Process: Canadians can buy a business in the US by following a structured six-step process, including selecting a suitable state, understanding visa requirements, obtaining an ITIN, and preparing necessary licenses and permits.
Visa Options: Key visa options for Canadians include the E-2 Treaty Investors Visa and the EB-5 Immigrant Investor Visa, each with specific investment and operational requirements.
Tax and Legal Considerations: Acquiring a US business involves navigating complex tax and legal landscapes, including federal and state-specific regulations. Consulting with professionals like lawyers and accountants is highly recommended.
State Selection: Different states offer varied advantages and disadvantages in terms of tax policies, business regulations, and economic environments. Canadians should choose a state that aligns with their business goals.
Due Diligence: Conducting thorough due diligence, including financial reviews and risk assessments, is crucial to ensuring the business is profitable and aligns with long-term objectives.
Business-Friendly Environment: The US offers lower corporate taxes, a stable economy, and supportive regulations for small businesses, making it an attractive destination for Canadian investors.
Financing and Loans: Canadians can secure financing in the US, though it may involve specific conditions, such as ownership percentages and building credibility with US banks.
Legal Assistance: While not mandatory, hiring a lawyer is advisable to simplify the purchase process, ensure compliance, and handle the complexities of US laws and regulations.
Frequently Asked Questions About Buying a US Business as a Canadian
Can I get a green card if I buy a business in the US?
Obtaining a Green Card in the US requires a specific type of visa with certain investment requirements. With the EB-5 visa program, you will also get a Green Card, which ensures your permanent stay with your family in the United States.
Can I move my Canadian business to the US?
Yes, you can easily move your Canadian business to the US in any state. As for the registration part, you must submit a Certificate of Compliance and/or a certified copy of your articles from the federal agency, Corporations Canada.
How long can a Canadian stay in the US?
Canadian citizens can travel to the US and stay there for up to 6 months and no more than that. However, you’re not permitted to work or study. For these purposes, you might need to apply for a proper visa.
Can foreigners get loans in the US?
Generally speaking, business owners holding a Green Card can apply for a small business loan. Since obtaining a Green Card can take a long time, you might as well apply for SBA loans for small business owners holding a legal immigrant visa. However, as a non-US citizen, you are only allowed a maximum of 49% of the ownership. So, 51% of the business should be owned by a US citizen or a Green Card holder.
Can a Canadian get financing in the US?
Yes, Canadians can get financing in the United States, but the process often has specific conditions and requirements. Building credibility with US-based banks can help them get loans more quickly and easily.
Do I need a lawyer to buy a business in the US?
While you’re not obligated to hire a lawyer, it’s highly recommended that an experienced business attorney assist you with due diligence, simplify the purchase process, and ensure you completely comply with US laws. They can also help you thoroughly navigate visa and tax requirements to avoid tax evasion and expected penalties.
How can I find businesses for sale in the US?
If you’re a Canadian businessman looking for a business to buy, you can search through online platforms like BizBuySell or BusinessBroker.net to see what catches your eye. You may also work with business brokers or attend trade shows and networking events to explore your options more cautiously and streamline the process.
Are there state-specific requirements for Canadians buying businesses in the US?
Yes, as each state has its own licensing, registration, and tax requirements, we advise you to research state-specific regulations before purchasing a business. It can affect the performance of your business severely. For example, some states are more tax-friendly (like Texas or Florida), while others may have stricter regulatory environments (like California).
What are the risks of buying a business in the US as a Canadian?
If you’re a Canadian businessman willing to buy a business in the US, you must also be aware of the risks and challenges you might face. However, conducting thorough research and due diligence can help mitigate these risks.
The risks are typically with:
-Market competition.
-Fluctuations Currency exchange rate
-Compliance issues in legal or regulatory aspects of the business
-Cultural differences that may affect business operations.
How do I ensure I’m buying a profitable business in the US?
Conducting due diligence is critical. This includes reviewing financial records, understanding market conditions, evaluating assets, and verifying licenses and permits. Hiring professionals like accountants, lawyers, and business brokers can also provide insights and minimize bankruptcy risks.
What industries are best for Canadian investors in the US?
Industries such as technology, hospitality, healthcare, real estate, and franchises are attractive to Canadian investors due to high demand and room for growth. Choosing an industry that aligns with your expertise and market research can also benefit you in the competitive market.
