Partnership spanning US & Canada

[GameDevBill]

Jurisdiction

Texas

I live in Texas, and have previously set up LLCs both as partnerships in Texas and as a sole proprietor. So i am familiar with the basics.

The complication this time is that I'm about to embark on a partnership between myself in Texas USA and and someone else in Montreal, Quebec in Canada. The business is software, so all sales will be digital.


Any ideas as to how we should set this up? We are open to creative solutions. A 50/50 % partnership. Or 51/49 % if its better for a majority member to exist. Or a sole something that somehow hires (or contracts, or something's) the other person.

Thanks for any help,
Bill

 

[Tax Counsel]

Any ideas as to how we should set this up?
Bill

There are all kinds of possibilities and no one size fits all answer to this. First, it matters a lot what the deal will be between the two of you, who will do what, where the software will be sold, etc. I suggest you consult business lawyers in both the U.S. and Canada and tax professionals in both countries as well. Depending on the set up you may find yourself subject to some rather complex U.S. federal tax rules that come into play when a partnership has both U.S. and foreign partners.

 

[GameDevBill]

Thanks for the info.

rather complex U.S. federal tax rules

That's exactly what i hoped to avoid

The setup is that we are both developing the software, and it'll be sold through app stores. I believe all the companies hosting those stores are all US based.

I suggest you consult business lawyers

I had a feeling that would be required. I guess i was hoping for some pre-education so I'd be a bit more knowledgeable before walking into the lawyers office. We don't expect to make much on this, so don't want to spend a yon on lawyers setting it up.

Do you know if there is an option where i form the business entity here and then somehow contract or hire the partner? That maybe is less complex?

Thanks again,
Bill

 

[zddoodah]

I . . . have previously set up LLCs both as partnerships in Texas and as a sole proprietor.

No you haven't. LLCs, partnerships, and sole proprietorships are separate and distinct forms of business ownership. You cannot "set up [an] LLC[]" as a partnership or a sole proprietorship.

I suspect that what you intended to say is that you have set up one or more LLCs in which you are the sole member and have also set up one or more LLCs in which you are one of multiple members. Correct?

Any ideas as to how we should set this up?

Sure. I have lots of ideas, and so will anyone else here. You can set it up as a corporation or an LLC or a general or limited partnership, or a joint venture. However, it will be impossible for anonymous strangers on the internet, who know virtually nothing about you or the other person(s)/entity(ies) involved in this business venture -- or about the venture itself -- to opine intelligently about what might be best for you.

I strongly suggest you consult with a local attorney who has some international business experience.

Do you know if there is an option where i form the business entity here and then somehow contract or hire the partner? That maybe is less complex?

If you're "contract[ing] or hir[ing] the [other person/entity]," then he/she/it would not be a partner. However, sure, this could be an option. But again, no one here has any way of knowing whether it's a good option for you and/or the other person/entity.

 

[GameDevBill]

I suspect that what you intended to say is that you have set up one or more LLCs in which you are the sole member and have also set up one or more LLCs in which you are one of multiple members. Correct?

correct, I was using laymen short-hand. partly due to lazy ignorance and partly due to a desire to be brief as I typed the message in my phone.

I strongly suggest you consult with a local attorney who has some international business experience.

Understood. I was hoping to get some education first here on this forum, as I have been unable to find anything useful hunting online. I understand advice may be hard to drum up without full context, but I'm honestly not sure what full context you'd need.


I think my largest concern with this setup is I want to avoid double taxation. I'm hoping my income is taxed by the US, and the partner's is taxed by Canada. Any portion being taxed by both seems like a big loss. If that means one of us is not legally a "partner", that's fine.

I'll start lawyer hunting. Thanks for replying.