Doing business in the USA
Your entity is deemed to engage in a US trade or business when the income from sources within the United States is considered “Effectively Connected Income” (ECI).
This occurs when:
- you perform personal services in the United States.
- you own and operate a business in the United States selling services, products, or merchandise
- you realize gains and losses from the sale or exchange of US property
- you collect Income from the rental of US real property
If this is the case, you will need to determine which state(s) your activity is connected to. Although this varies by state and the nature of the business, it is essentially determined by physical presence such as having employees or an office in the state. However, there are other factors which can trigger such a connection. For example, the use of a local third party to install your product.