Can A Canadian Citizen Form An LLC For Vehicle Registration?

So, we have another question from the inbox that we’ll probe into. Apparently, many Canadians make winter pilgrimages down into the southern states to winter, many of which own RVs. We did not expect the sheer volume of snowbirds that head south and own properties, especially in Arizona and Florida. Of course, it makes sense since Canada has no warm southern shores. 

It’s tough to figure out the numbers, but thousands of them trek south yearly. A question that repeatedly popped up on the forums is how to register a car here. See, snowbirds who own houses in the U.S. often buy a car, truck, or even an RV that they plan to leave at their residence here when they leave. It makes sense: fly in commercial, take an Uber to your house, and your U.S.-tagged car is waiting. But how hard is it for a Canadian national to buy, tag, and register a car in the United States? And does it matter how or where they do it? Let’s find out. 

Can a Canadian Legally Reside in the US?

Yes, they certainly can. The question is for how long. The generally accepted answer is six months per visit (182 days), but this isn’t altogether a complete picture. See, there are two driving forces here: immigration policy and tax policy. Since governments don't always talk to each other or even themselves, the answer is a little convoluted

It becomes clearer if you separate the two sides of the issue. 

In terms of immigration policy, the answer is a resounding six months. A Canadian National can spend up to 182 days in the states without a visa at a time, although they need to be careful about doing this too many times, or else the CBP may deny entry. From what we’ve found researching, it sounds like a lot of the decision-making authority is at the individual customs agent level. If you’re going to come in and out often, you may want to talk to an immigration attorney. We strongly encourage this if you purchase real property in the U.S., like a car.

How About An LLC? Can They Have One?

Note: we are not legal experts or tax experts. We are enthusiasts who want to help you find answers and solutions. 

Another reminder that Canada is pretty 😍

The short answer is yes: Canadians can own an American LLC. This is a fairly common course of action for Canadians looking to buy real property or assets in the U.S. However, there may be some tax issues that result from it. 

Again, we are not tax experts, but we can pass along the information that we found useful. 

Here are a couple of the links that we found most useful:

• Canadians and LLCs - Don't Use Them in the US | Incorporate.ca

• Canadians beware! United States limited liability companies may be hazardous to your (tax) health - Moodys Private Client

The general consensus is that owning an American LLC can cause problems with your taxes as a visiting Canadian. The gist is that an LLC has a pass-through tax system that ends up being a double tax, which could prove troubling. What does this mean, though? 

The corporation could end up paying along with the individual, although it is unclear if that would apply to an asset-holding LLC, i.e., an LLC used for the sole purpose of holding your vehicle, property, etc. 

It might be best not to convolute things with the part-time residence. However, if you're tax-savvy or have a tax accountant or attorney telling you it's no big deal, then go right ahead.

Here at Dirt Legal, we offer excellent vehicle registration options that don’t require an LLC but still allow you to do all of your registration paperwork from the comfort of your home. We also offer LLC formation options to register your vehicles under an American LLC in a state with no sales tax.

Canadians Buy Cars Here All The Time. How About RVs?

Sure, why wouldn’t they? Look, it’s a dang long drive from any Canadian border crossing to our warm southern border. Having done some long-haul RVing in my day, I can attest to the pain and misery of driving a few thousand miles with a trailer in tow. It sucks. Anyone who says it doesn’t suck either doesn’t pay attention to ANYTHING while they drive or is an absolute liar. 

When going through snowbird forums, I found Canadians will buy an RV in the states and put it in storage after they head back to the wintry north. This makes sense - RV storage lots have become big businesses in a country where the annual economic impact of RV campgrounds and related travel services is nearly $36 billion. 

It makes great sense to buy an RV, live in the RV for six months, then simply put it in storage in the United States for the rest of the year. Canadians can then travel directly to the city their RV is stored in, pull it out of storage, and live in it whenever they are ready instead of lugging it between the countries. 

What State Should Canadian Snowbirds Register Their RVs In?

This is the million-dollar question: what state should they register their RVs in? Or any other vehicles, for that matter. 

As a traveling Canadian, you are free to pick your vehicle's registration location since you aren’t a permanent U.S. resident, especially if you don’t own a home and only intend to live in the RV on the road. 

Montana is a great option. Thousands of people use it because there is no state sales tax. The downside might be that you have to get an LLC to register your vehicles there. South Dakota is a great option as well. With a low 4% tax rate, your taxes due at registration will be reasonable. It is also not a border state, which was one issue that snowbirds warned of avoiding. We’re not totally sure why that matters, but it was presented as being a legitimate issue by those who have done it, so there you go. 

In any case, you should consult an accountant who is familiar with these dealings, i.e., people owning assets in two countries. Consider consulting a tax attorney to ensure everything you are considering is acceptable. Better to front that money to accountants and attorneys and stay out of hot water than to be fined (or worse) for being wrong. 

How Dirt Legal Can Help

So, yes, a Canadian can own an LLC in the states. It may have unfavorable tax consequences in some situations, although it seems benign from our perspective since it’s a holding company for vehicle registration. But if, after seeking tax guidance, you determine an LLC is a good option for you, we're here to make it happen.

We suggest our Montana LLC registration program if the LLC isn’t an issue. However, if you’d rather not mess with an LLC, then our standard auto registration program should fit the bill nicely, along with our RV/motorhome registration service.

If you have questions not covered in the text, please don’t hesitate to contact us, and we can discuss the issue. Again, if there are any legal or tax questions without obvious answers, we encourage you to find a reputable attorney or accountant and have them explain the specifics of the situation to you. But we've got you covered when it comes to helping Canadians register vehicles under American LLCs.