I see a lot of Canadian retailers right now fretting over the postal strike north of the border. I have some advice to pass along that hopefully might just helps some folks in growing their businesses.
I’m a Canadian and I own a Canadian corporation which is an internet retailer of boating and outdoor supplies. Like most Canadian internet retailers, 90% of my customers are American.
One of the biggest barriers as a Canadian internet retailer is shipping. It can cost up to twice as much to ship a package from Vancouver to Seattle as it does Miami to Seattle (not to mention the potential surprise customers get if they’re ever hit with duties and/or taxes by the carrier). Internet retail can be very cut throat and to say the least, this is a competitve disadvantage. The solution is simple: warehouse and ship your stuff from the states.
We store almost all of our merchandise in a U.S. based Pick & Pack warehouse south of the border. This third party fulfilment companies stores our inventory and ships it for us. We simply email them in our orders every morning and forget about the rest of it.
We do enough volume that we’ve negotiated some pretty favorable rates, but in general, the going rates are about $3-$5 per parcel and then $1/sqft warehousing space. You may think that is a lot of money but if you consider how much money you have to spend on warehousing and logistics staff, the rates are quite competitive. There’s hundreds if not thousands of these fulfillment companies located in border downs all across America. Just google “Pick and Pick xxx-city”.
As a Canadian company, the U.S. and Canada have decades of years of treaties (even before NAFTA) which make it very easy for a Canadian company to do business in the U.S… Basically, if you just want to store your goods in the U.S. and have them shipped it’s about as simple as can be. You don’t need a U.S. business you just technically need to be registered as a Foreign Profit Earning company (take this with a big grain of salt, but many accountants I’ve spoken to over the years agreee it’s pretty easy to fly under the radar if your revenues are fairly limitied, re: $100,000 or under).
As a foreign profit earning corporation you are responsible for filing a U.S. tax return. This tax return will report your income, expenses, and everything else typical with your normal tax return except you will almost certainly be required to pay no income tax- again, Canada and the U.S. have tax treaties eliminating ‘double taxation’. This fact that you probably won’t owe the U.S. Fed any money is a good reason why it’s easy to fly under the radar.
The only hitch with taxes comes with sales tax. If you’re storing your goods in, say for example, Washington State, and you ship to a customer in Washington State, you are legally required to collect WA sales tax and pay it. Again, with an accountants help it’s easy to get registered at the state level (expect to pay around $1000 for everything) although it’s one more headache to worry about. If you’re getting your feet wet into fulfilling your items from the U.S. and selling a few thousand dollars a year of merchandise, I wouldn’t worry about getting completely legal (the tax man has bigger priorities than the new learning business who missed paying $95 in sales tax). Once you start doing any kind of volume though definitely get your ducks in a row!
As your little operation into the U.S. gets underway you’re going to have to make trips to the states to do certain things like talk to fulfillment companies, check on your merchandise, etc… This becomes a very gray area for Canadians without work visas. You can go to fulfillment companies and talk to them all you want, pay bills, etc. but you can’t technically do things like move your merchandise (if you move one box of widgets you’re now working in the U.S.). You can go to trade shows in the U.S. and show off your products and go back to Canada and sell them to U.S. companies but you can’t actually sell anything while you’re on U.S. soil. These little ‘catches’ go on. I mention this because you’re probably going to find yourself working illegally in the states, knowingly or not. I can assure you the department of homeland security has bigger priorities than ensuring Johnny Canuck doesn’t move a widget from point A to B, but nevertheless, if you’re going through the border and you tell them you’re moving a widget from point A to B they’re going to have no choice but to make things a real pain. Better to tell them you’re going to get gas or pay a bill 
In summary, I hope this opens Canadians eyes to how easy it is for a Canadian company to do business in the U.S. (if I’ve been able to do it, it’s the biggest testament to this!) The U.S. and Canada have the largest trading bloc in the world simply because of this ease.