Canada LP/LLP Company setup + Bank account

[zeytin]

Hello,

I run an online business with 2 other partners. I live in Thailand as a foreigner legally. I used to receive incoming payments from our only vendor to my personal offshore bank account. However, amounts are grown up, and I've been warned a few times already. I just want to split payments to my partners and get on with it. However, new regulations make everything harder for us.

Money is sourced from an American company so a US LLC is not going to work for me. We don't want to pay corp. tax, withholding tax or double tax. For that purpose, Canada LP/LLP looks great on paper. However, how do I get a bank account? I don't have a Canada visa for a personal visit, and even if I visit banks in Canada, they may not open a bank account unless they see a connection to Canada (we have no business in Canada). Is there an easy way to get a real bank account for the Canadian LP/LLP business? I can make a personal visit to Singapore or HK if necessary.

Single source for incoming funds -> Distributed to three different people in four different locations in USD.

Transferwise won't work in the long run because they don't want money derived from the Adult industry (ours is Adult, unfortunately). Even if I can find a good cover business or fabricate a good story and invoices, Transferwise ain't stupid. I could use it temporarily until I get a real bank account though.

Any suggestions are appreciated. Thank you for reading.

 

[JohnLocke]

You could setup everything in Cyprus with real office and staff etc. it has been suggested a few times. Regardless who you are going to use for your banking needs you will most often have to setup a cover business. Sometimes you can speak with your local bank even though it i Adult, but I don't believe that to work in Thailand

Have you looked in your niche what banking facility people are using there? It may be worth to aproach a few maybe they are willing to share the info.

 

[kranj99]

I currently manage a Canadian LP - set up was easy, and opening the bank account was quick and easy too. BUT I did all of it in person (both the LP registration + bank account opening). In Ontario, you either need to use an agent to set your LP up or do it in person (I went to the office in Toronto for mine). BUT I believe in Quebec you can set up an LP online, on their portal - the only thing is that their portal is in French. I do not know what the other provinces are like. Unfortunately I do not know if you can open a bank account remotely, but I do know you don't need to be a Canadian citizen nor resident to open a bank account for a LP (at least for BMO and RBC - perhaps other banks might have different requirements)

 

[Joe Blasco]

I currently manage a Canadian LP - set up was easy, and opening the bank account was quick and easy too. BUT I did all of it in person (both the LP registration + bank account opening). In Ontario, you either need to use an agent to set your LP up or do it in person (I went to the office in Toronto for mine). BUT I believe in Quebec you can set up an LP online, on their portal - the only thing is that their portal is in French. I do not know what the other provinces are like. Unfortunately I do not know if you can open a bank account remotely, but I do know you don't need to be a Canadian citizen nor resident to open a bank account for a LP (at least for BMO and RBC - perhaps other banks might have different requirements)

hi there I am also interested in opening an LP but ofcourse I need a reliable bank account so I have postponed everything up until spring to visit personally why bother with ice...Anyway did you use any kind of authentication service ( apostille which does not exist in Canada) and if yes which one ? Thks...

 

[zeytin]

If I open a one man LP or LLP in Ontario (where we're not tax liable), can I open a corp bank account in Singapore for example? LP/LLP is not a corporation and it may not have all the necessary documents one can expect in a LLC/Limited company setup.

 

[bnpsu]

I currently manage a Canadian LP - set up was easy, and opening the bank account was quick and easy too. BUT I did all of it in person (both the LP registration + bank account opening). In Ontario, you either need to use an agent to set your LP up or do it in person (I went to the office in Toronto for mine). BUT I believe in Quebec you can set up an LP online, on their portal - the only thing is that their portal is in French. I do not know what the other provinces are like. Unfortunately I do not know if you can open a bank account remotely, but I do know you don't need to be a Canadian citizen nor resident to open a bank account for a LP (at least for BMO and RBC - perhaps other banks might have different requirements)

From the banks I spoke with, they were VERY worried to open a bank account for a Canadian LP with a foreign partner. What was your experience?

 

[JohnSeed]

What do you mean by worried? Did you get the account or they refused?

 

[bnpsu]

What do you mean by worried? Did you get the account or they refused?

They would not open the account for me, at Scotiabank and BMO, and I also tried a credit union

 

[zeytin]

From the banks I spoke with, they were VERY worried to open a bank account for a Canadian LP with a foreign partner. What was your experience?

At least you have a Canadian Partner? In my setup, I was planning to be completely foreign (no Canadian partner).

 

[bnpsu]

At least you have a Canadian Partner? In my setup, I was planning to be completely foreign (no Canadian partner).

No, this was without a Canadian partner at all. For example, having a Canadian LP with two foreign corporations.

 

[Joe Blasco]

They would not open the account for me, at Scotiabank and BMO, and I also tried a credit union

did you try with an EU passport or some other ?

 

[bnpsu]

did you try with an EU passport or some other ?

I actually have a Canadian passport, and they mentioned as soon as any foreign entities are involved, they automatically raise HUGE red flags. I am looking for more information if anyone can resolve banking for Canadian LPs. Another downside is to use Canadian LP with companies like Stripe, they require a TIN which will cause a registration with the CRA.

 

[kranj99]

hi there I am also interested in opening an LP but ofcourse I need a reliable bank account so I have postponed everything up until spring to visit personally why bother with ice...Anyway did you use any kind of authentication service ( apostille which does not exist in Canada) and if yes which one ? Thks...

Apologies for the delay - am only back on this forum now. No I did not use any apostille type service. All I did was:

1. Went to the Ministry Office at 375 University Avenue in Toronto (near the Toronto City Hall) and filled out the Form (Pen + Paper). No ID check was done at the ministry office, so technically I could have set up a fake name - but this is not wise as then you cannot open a bank account ! The form was entered in the computer by the clerk and stampted with a BIN (Business ID Number).
2. Went to a BMO Branch and opened an account with that form and my passport - bank account and debit card was provided on the spot.
3. You probably need to draft an LP Agreement as the banks ask for this. But you can find free samples online and just fill it out to your convenience.

I've never had any Canadian tax return to file on this.

If you want additional Liability protection, once you've done the above, you can create a Ltd. company (just an ordinary numbered company) and set that up as the General Partner of your LP - no need to inform the Bank of this change. Not too sure if I'd have an easy of a time had I opened the LP Bank account with an Ltd. as the GP, so I originally opened the account with me as the GP. But in the public record my Ltd. is listed as the GP of my LP.

You do need a registered address though.

You don't get full privacy like this, but you get a reasonably discrete vehicle, in a prestigious jurisdiction and low paper-work.

 

[bnpsu]

Apologies for the delay - am only back on this forum now. No I did not use any apostille type service. All I did was:

1. Went to the Ministry Office at 375 University Avenue in Toronto (near the Toronto City Hall) and filled out the Form (Pen + Paper). No ID check was done at the ministry office, so technically I could have set up a fake name - but this is not wise as then you cannot open a bank account ! The form was entered in the computer by the clerk and stampted with a BIN (Business ID Number).
2. Went to a BMO Branch and opened an account with that form and my passport - bank account and debit card was provided on the spot.
3. You probably need to draft an LP Agreement as the banks ask for this. But you can find free samples online and just fill it out to your convenience.

I've never had any Canadian tax return to file on this.

If you want additional Liability protection, once you've done the above, you can create a Ltd. company (just an ordinary numbered company) and set that up as the General Partner of your LP - no need to inform the Bank of this change. Not too sure if I'd have an easy of a time had I opened the LP Bank account with an Ltd. as the GP, so I originally opened the account with me as the GP. But in the public record my Ltd. is listed as the GP of my LP.

You do need a registered address though.

You don't get full privacy like this, but you get a reasonably discrete vehicle, in a prestigious jurisdiction and low paper-work.

Wow interesting - what residents were the two partners of the Canadian LP of? Which year did you do this in? And how was their reaction creating the bank at BMO?

I also went to BMO and they were very hesitant on this, and basically told me no

 

[John Andrews]

@vbam99 Have you tried applying for Stripe and/or PayPal?

 

[bnpsu]

@vbam99 Have you tried applying for Stripe and/or PayPal?

@vbam99 Another issue with this, was Stripe/Paypal needed an ITN, which would have forced the LP to register with the tax authorities, did you ever get around this?

 

[Tax Cow]

If Canada's central bank keeps raising rates, I'm sure we'll see more banks open up to questionable foreigners. As a result, Canada itself could become a better offshore business hub. Will keep an eye on developments, but so far sticking with the US as my go-to

 

[kranj99]

Wow interesting - what residents were the two partners of the Canadian LP of? Which year did you do this in? And how was their reaction creating the bank at BMO?

I also went to BMO and they were very hesitant on this, and basically told me no

Hello - so I am essentially the ONLY partner (at the LP Opening, I was both the GP and the sole LP) after opening up the bank account I set up a numbered Ltd company and registered that as the GP of my LP. Ontario Law allows for a single member LP - and you need to talk the talk when you go to the bank to get them to understand. In my case they placed a call with their corporate compliance department during my visit. I set this up back in 2016.

I am NOT resident in Canada, but rather in Belgium. However I hold dual nationality with Canada. But when I opened the bank account for the LP, I declared myself as non-resident/non-subject to CRA reporting (the bank asked me to sign a form) and I was able to open the bank account showing my Belgian passport, not the Canadian one.

The other thing to note is that I'm only using this for small time trading (less than 100K CAD per year), so I am not generating significant revenues with this, nor do I ever expect to. I have a new project in the works where I will require a proper holding company and for that I would likely do so in Belgium, just to keep things simple, but also to be able to access financial vehicles (I am into M&A activities especially LBO's and I will need access to capital partners and finance)

Summary - Canadian LP's are mainly of interest as they can be a low-cost/low-maintenance/low-paperwork/reporting entity to get you up and running for a small project (i.e. e-commerce/drop-shipping style businesses). My personal opinion is that the LP is not a suitable solution for tax-avoidance though. But it does offer some degree of discretion, assuming you do not engage in any high-risk activity.

But for more bigger/complex activities where you might need partners and finance, you might be better off doing that in your country of residence (or if you are in the EU, you can do so in any EU member state that is to your convenience). Even in high tax countries like Belgium, there are lots of loopholes that allow you to write off a lot so that your aggregate tax obligations are not so bad at the end.

For the other comment on not being able to open Paypal/Stripe - I have both of these for my LP and I only have PayPal only for my Ltd. company. I do not recall ever being required to submit TIN's (don't even know what this is!) and as far as I recall I only communicated my BIN (the number I got upon LP regisitration). I have only used Paypal and Trasnferwise to/from BMO, but never Stripe - so essentially it is a dormant service for me.

Another thing to note: the LP is not tax-resident in Canada as long as it does not do business in Canada (but I understand e-commerce as in selling/drop-shipping goods to Canadians is NOT considered as doing business in Canada). If an LP does conduct business in Canada then tax reporting requirements apply. I do not do any activity in Canada so I cannot comment much beyond this superficial understanding.

Hope this helps!

 

[hernanday]

Just a head up, I believe the only reason OP could do this was his dual Canadian status. If he was a complete foreigner with no connections, I believe the banks would give him a hard time opening an account and I think (unless the rule changed) he'd need at least one Canadian to be on the board/ as a director and/or 25% share holder or something like that. He won't need a tax number for his partnership because the partners are taxed not the partnership and the bank will use his SIN number to report taxes.

OP did not mention in canada, the banks are mandated by law/policy of the government to provide all Canadians with a bank account so they cannot refuse Canadians (but can foreigners) so it will be piss easy for him to open an account.

Also just because the LP is not a "tax resident" of Canada doesn't mean it is not subject to taxation, specifically withholding taxes. If OP uses that Canadian company and does trades on Canadian stock exchange he is going to be made to pay a very high tax rate on whatever he earns.

I'd also caution the OP to seek legal advice and be extremely careful because he is skating on thin ice.

1. He owns a company in Canada
2. He is conducting business in Canada
3. He holds a bank account in Canada
4. He is going to be made to pay tax in Canada on whatever his business earns, including its foreign income unless subject to a tax agreement
5. CRA might come a few years later and say this "Belgian" non-resident guy has a Canadian bank account, Canadian ID (passport, driver's license, healthcard, SIN), Canadian renter/tenant (after all he needed an address for the bank and his company right), owns a company in Canada that SHOULD be paying taxes here. You are at an extremely high risk of being classified as a Canadian "factual resident".

I just have 2 question for you, when did you notify the CRA you emigrated from Canada and when did you file your departure tax forms?

 

[Joe Blasco]

Just a head up, I believe the only reason OP could do this was his dual Canadian status. If he was a complete foreigner with no connections, I believe the banks would give him a hard time opening an account and I think (unless the rule changed) he'd need at least one Canadian to be on the board/ as a director and/or 25% share holder or something like that. He won't need a tax number for his partnership because the partners are taxed not the partnership and the bank will use his SIN number to report taxes.

OP did not mention in canada, the banks are mandated by law/policy of the government to provide all Canadians with a bank account so they cannot refuse Canadians (but can foreigners) so it will be piss easy for him to open an account.

Also just because the LP is not a "tax resident" of Canada doesn't mean it is not subject to taxation, specifically withholding taxes. If OP uses that Canadian company and does trades on Canadian stock exchange he is going to be made to pay a very high tax rate on whatever he earns.

I'd also caution the OP to seek legal advice and be extremely careful because he is skating on thin ice.

1. He owns a company in Canada
2. He is conducting business in Canada
3. He holds a bank account in Canada
4. He is going to be made to pay tax in Canada on whatever his business earns, including its foreign income unless subject to a tax agreement
5. CRA might come a few years later and say this "Belgian" non-resident guy has a Canadian bank account, Canadian ID (passport, driver's license, healthcard, SIN), Canadian renter/tenant (after all he needed an address for the bank and his company right), owns a company in Canada that SHOULD be paying taxes here. You are at an extremely high risk of being classified as a Canadian "factual resident".

I just have 2 question for you, when did you notify the CRA you emigrated from Canada and when did you file your departure tax forms?

this is typically written by somebody that has not multiple citizenzips and theorizes how things should be but never actually done them. For those that have at least 2 different passports make the next experiment: open an account with one of your passports and then walk to the bank with your other passport and try to have any banking service. It is IMPOSSIBLE even if your data is exactly the same. For the bank you are two complete different entities just based on your citizenship !