Registering a Canadian Corporation in a US State

Does selling to customers in a state require registration?

Sales alone usually do not require a Canadian corporation to register in a US state. The question is whether the corporation conducts the kind of business inside that state for which its corporate law requires authority. A customer address is not, by itself, an office or local operation.

Review each state where people, stock or work are located. For the filing process, see Registering in another state.

Is shipping from Canada or accepting orders in Canada doing business there?

Shipping goods from Canada and accepting the customer contract in Canada generally point to cross-border sales, not local business operations. Florida expressly excludes orders that become contracts only after acceptance outside Florida; its statute lists interstate commerce but does not expressly list foreign commerce. California excludes foreign commerce and orders requiring acceptance outside California (Florida Statutes, s. 607.1501; California Corporations Code, s. 191).

Keep records of contract acceptance, shipping and work locations. A website alone does not decide registration. The answer can change if the corporation starts fulfilling orders from local stock or regularly performs services at customer sites. Registration and a sales tax permit are separate questions.

Which local activities make registration more likely?

A local office, employees doing ongoing work, a warehouse run by the corporation or repeated on-site projects make state qualification more likely. The key distinction is local operating activity, assessed under each state's law. California defines intrastate business as repeated and successive business transactions within the state; Florida lists exceptions but says its list is not exhaustive (California Corporations Code, s. 191; Florida Statutes, s. 607.1501).

An independent contractor making sales and an employee soliciting orders for acceptance in Canada may fall within express exceptions. Staff who also deliver services, make binding local contracts or manage operations need a closer review. A warehouse raises further inventory and tax questions; the registration answer depends on what the corporation actually does there.

An isolated transaction completed within 30 days is excluded in Florida; California's window is 180 days. Neither exception covers a series of similar projects (Florida s. 607.1501; California s. 191).

What Canadian documents and US agent does a state ask for?

Expect an application identifying the Canadian corporation, proof that it exists in its incorporating jurisdiction and a person or entity in the state to receive legal papers. Florida asks for its legal name, Canadian jurisdiction, incorporation date, addresses, directors and officers, plus a Florida registered agent's written acceptance. Its existence record must be authenticated within 90 days before filing; a non-English record needs a sworn translation (s. 607.1503). California asks for a good-standing certificate from the incorporating authority and an agent for service of process (s. 2105).

Order the record from the jurisdiction under whose law the corporation now exists. The Ontario Business Registry offers a certificate of status. For a federal corporation, Corporations Canada's Certificate of Compliance confirms required filings and fees; its Certificate of Existence confirms existence only. California asks for good standing, so check whether it accepts the compliance certificate. Ask the receiving state whether it requires an apostille; Canadian authentication rules direct some provincial documents to provincial authorities. For the agent's address and role, see US business addresses and agents.

Does state registration mean state income tax or a US return is due?

State authority, state income tax, sales tax permits and federal returns have separate tests. California qualification itself requires a Form 100 return; tax depends on income, and the minimum franchise tax does not apply in the first taxable year (California Franchise Tax Board). Florida's qualification exceptions do not determine tax exposure (s. 607.1501(4)).

For state income tax and P.L. 86-272, see Business income tax in other states. For federal Form 1120-F, the IRS instructions include a foreign corporation engaged in a US trade or business even when treaty relief may apply; see Canadian corporation US tax returns.

What happens if the corporation operated without registering?

The immediate risk is often a blocked lawsuit until the corporation qualifies, along with back fees and possible penalties. In Florida, an unqualified corporation transacting business cannot maintain an action until it obtains authority. The corporation owes the state fees and penalties that would have applied; a court may also order US$500–US$1,000 for each year or part-year (s. 607.1502). Its contracts remain valid, and it can defend a lawsuit. Shareholders, officers and directors are not personally liable solely because the corporation failed to qualify.

In California, a corporation that starts a suit over intrastate business before qualifying cannot continue it until it qualifies and shows payment of filing fees, a US$250 penalty and applicable back taxes. The corporation may also face US$20 for each day of willful unauthorized business (s. 2203). Qualifying before suing avoids that court restriction, but not past tax or other penalty exposure.

Should you register the Canadian corporation or form a US subsidiary?

Register the Canadian corporation when that same legal entity will carry on the US operation. A US subsidiary is a different corporation, with its own formation and filing obligations. Incorporating a subsidiary does not retroactively qualify its Canadian parent for business the parent already conducted.

The choice affects liability, contracts and tax reporting in both countries. Before filing, identify which entity will employ staff, own inventory, sign customer contracts and receive income. Compare the structures in Canadian business expanding into the US.

What keeps the registration in good standing?

File the state's periodic report, pay its filing fee and keep the registered agent and addresses current. In Florida, file an annual report between January 1 and May 1, starting the calendar year after qualification, even if nothing changed. A missed report can revoke authority and block a Florida lawsuit until the report, fees and penalties are paid (s. 607.1622). In California, file the first Statement of Information within 90 days after qualification, then annually in the six months ending in its registration month; file a new statement when the service agent changes (s. 2117; filing schedule).

Keep the Canadian corporation active too: the US state relies on its status in its incorporating jurisdiction. If US activity ends, check the state's withdrawal process rather than simply stopping reports. The state filing calendar and the Canadian corporate calendar are separate.

Example

Toronto orders, Florida customers

An Ontario corporation sells C$100,000 of goods to Florida customers. It accepts each order in Toronto and ships from its Toronto warehouse. With no Florida people or premises, those sales generally fit Florida's exception for orders accepted outside the state. A Florida sales tax permit is a separate test.

Florida warehouse and sales rep

The same corporation leases a Florida warehouse, fills orders from stock there and lets its local employee sign customer contracts. Those local operations make a Florida certificate of authority more likely; the lease or order solicitation alone does not settle it. It gathers its Ontario certificate of status, appoints a Florida registered agent and checks whether Florida wants further authentication.

California project work and an unpaid invoice

A Canadian corporation completes repeated projects on site in California for two years, then sues a customer for US$40,000 before qualifying. If that work was intrastate business, it cannot continue the suit until it qualifies and shows payment of the required fees, US$250 penalty and applicable back taxes. The outcome depends on the work and timing.

Different for you?

• You sell into several states: compare each state's activity test in Registering in another state.
• You keep US inventory: see Canadian sellers with US inventory.
• You need a sales tax permit: see Foreign sellers and sales tax.
• You may owe state or federal income tax filings: see State business income tax and Canadian corporation US tax returns.
• You must choose a branch or subsidiary, or correct years of unregistered operations: see Canadian business expanding into the US and get business formation help with your contracts, work locations and operating dates.