Why I charge my clients in USD even though I’m Canadian

Ok so – I have had a lot of people asking me lately about charging in USD. Why I do it, whether THEY should do it, and any weird banking stuff they need to know about to make it work and how to get the best exchange rate possible!)

So I wanted to walk you through the simple way that I make it work to get paid in USD.

NOTE that I am Canadian. If you’re from another country, this SHOULD still work but you’ll have to try it, talk with your bank, and find out for yourself! Note also that this is not legal or financial advice, ok? Onwards!

 

First – WHY charge in USD?

Well, for me (a Canadian), I charge in USD for a few reasons. A few years back, I was billing clients in CAD, and I had a few people tell me they were pleasantly surprised to see their invoice for less than they thought it should be! I was charging them $300, and they assumed that was $300 USD. Instead it was $300 CAD, which came to about $215USD.

Knowing this, I instantly went into Paypal and changed my currency from CAD to USD – BOOM – I gave myself a raise! If people already assumed it was USD, then why not!

Aside from the fact that most people assume it’s USD (since that tends to be the most common currency for all things online), I also charge USD because ALL my business expenses are USD. The tech I use (hundreds of dollars a month), my assistant and consultants I work with (thousands a month), and training and development programs that I invest in (thousands a year) – all are billed in USD. I need to charge USD to cover those costs and still turn a profit.

ALSO – I could change my pricing back to CAD for my Canadian clients (though the tech would be a headache), the price would just be higher. So my $4000 program would be more like $5400. The price in USD wouldn’t be equivalent to the price in CAD.

Note: When the exchange rate goes up so much that the equivalent CAD cost is a LOT more for my Canadian clients, I do offer special CAD pricing. It it not at par with the USD rate, but not as much as what it would be if the paid in USD. Whether I offer this varies depending on what the exchange rates are (I stated doing it during Covid when the rate skyrocketed to 1.47)

 

“But, what about taxes?”

Taxes. Yes, those are a thing. I’m obviously NOT an accountant and this is not legal tax advice, but here’s what I do:

• I don’t charge sales tax to people outside of Canada (check your local tax laws and confirm with an accountant – this may depend on what you are selling)
• I don’t charge tax to Canadians either (because charging them USD and then adding tax on top seems sketchy and isn’t cool). But since you technically DO need to charge sales tax to people you sell to from Canada,….
• I DO keep track of where each of my Canadian clients is from, and then at tax time my accountant calculates how much HST/GST I have to remit to the CRA… If you don’t have a fancy bookkeeper yet, you can do this yourself in a spreadsheet. Make a tab for each province and at the end of the month pull a report from Paypal and note down who paid how much. Your accountant will then calculate how much tax you need to pay. This means that you need to collect people’s address when they checkout with Paypal/Stripe so make sure you are doing that!

*Note that this means that for each client you work with in Canada, you are making less money, because the tax they should have paid is “rolled into your price” and you are essentially paying it out of pocket. I’d say you’re still coming out ahead because you’re bringing in USD.

^^Please run this all by an accountant before proceeding. This is what I do and has worked for me and been verified by my accountant over the years, but your business might differ and you might need a different strategy.

 

Maximize your exchange rate

So then – now that you’re getting paid in USD, you’re going to want to make sure that you maximize the exchange rate. Here’s how I do this:

1. Get paid via Paypal or Stripe in USD

Make sure all your prices are in USD and take payments via one of these trusted online payment processors. Yes, they charge a fee. It’s the cost of doing business and it makes your life WAY easier. Just use them.

 

2. Open a USD bank account with your local bank

I am with RBC here in Canada. Because I’m incorporated I have corporate a USD account and a personal USD account, as well as Canadian accounts for each. If you’re not incorporated you will just have everything in one account (but make sure to open a USD account)

 

3. Send money from Paypal and Stripe to your USD accounts

This is where it gets confusing and most people get tripped up. Stripe is easy – you can just link your USD account in Stripe and it will send the money you make into that account on a rolling basis, all in USD.

Paypal is a bit trickier — if you have a Paypal account and you’re Canadian, Paypal will want to automatically convert your USD into CAD when it puts it in your account (and unless you have a USD account from an actual US bank, you can’t link your USD account in Paypal.) This is NOT GOOD because they take a cut and give you a shitty rate. You’ll lose out on hundreds to thousands of dollars a year (I did the math and I was losing about $5000 on this exchange, which is NOT just a cost of doing business, because I have another way! Read on!)

S0 – what you need to do is to go to Wise.com and sign up for an account (that link right there will give you your first transfer for free, so make sure to bookmark it!). Then, sign up for a borderless account through Wise.  Super easy to do, it’s free, and will take a few days. Once that is open, you can link THAT account to Paypal, and then you can manually send all your USD from Paypal to this borderless Wise account, then from there, send that money to your USD bank account that you opened with your local bank.

 

4. Convert your money to CDN

Now all your money should be sitting in USD funds in your local bank, in a USD account. Now you can use it to pay your USD bills! But what if you need that money in CAD to pay CAD bills? Because USD is stronger right now, you’re gong to be getting a sweet exchange rate. BUT – not if you change your money in the bank. I used to just go to my online banking and just transfer USD to CDN there, but, like PayPal, they give you a shit rate.

Instead, use Wise to move your USD to CDN (use this link and you’ll get your first transfer for free and save about $75!). They charge a small fee but the rate you get is way better than doing it with a bank! You’ll go into Wise and set up a transfer from your USD account to your CAD account, and that will move the money from your USD account to your CAD account (note that you will likely have to go to the bank to make this wire transfer after you set it up online in Wise. Wise will give you all the info you need to take to the bank to complete the transfer).  Going to the bank is one extra step, but it will give you an amazing rate that usually saves me up to hundreds of dollars per transaction. BOOM – I just gave you another raise! if you don’t want to have to go to the bank, you can simply keep your USD piling up in your borderless account in Wise, and send it to your CANADIAN bank account from there when you need it.

NOW — before you get all transfer happy —  I prefer to keep all my money in USD in my bank account, and then change it when the rate is in my favor. I don’t do it every time I have income come in! I also like to keep USD in my account for times that I travel to the US (I’m writing this from Colorado with a fat stack of US bills in my wallet to pay for gas, food, and fun. This works way better for then than paying everything on my credit card here and again, losing money on the exchange.)

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Todo bien? So, to recap:

1. Get paid in USD in Paypal and Stripe
2. Set up borderless USD account in Wise (use this link to get your first transfer for free!)
3. Send money from Paypal into borderless account, and then from there into USD bank account with your local bank (if you have bills to pay in USD for your busienss). Send $ directly from Stripe to your USD bank account.
4. Use Wise to change your money to CDN when the rate is good, and save some US cash in your account for travel where you need USD.

 

Additional tips:

1. I like to keep about $5000 in my Paypal account to pay my own business expenses (since I get charged in USD for everything, it makes sense to just keep the money there and then send it out again rather than transfer it then have to transfer it back)
2. I also have a USD credit card (with RBC, super easy to get) for my business so that if I have to pay for a course or a consultant, and to pay those pesky recurring monthly fees for my email marketing system and other tech stuff – they all go right onto my USD card, and then I pay that off with the USD money in my bank account…. again, saves having to pay for those expenses in CDN and lose out on the exchange.

Cool? So now – go off and bring in that USD, and you’re welcome for the thousands of dollars I just saved you!

xx becca

PS. Wanna start actually getting clients in your business so you have someone to charge USD to in the first place?? Make sure you check out Uncage Your Business —  this is the BEST way to jumpstart your business if you’re a new coach or service provider!