Well, I don't know what you mean by "doing business" in SF. If you mean the LLC is technically founded in Canada and just happens to have an SF branch, maybe that would be fine. But, that seems legally dubious to me.
Why not just startup in Toronto? I'm actually a Bay Area boy who lives in Toronto; I came here to do his Master's at U. of Toronto. I've stayed ever since working for a startup, and my roommate is about to start a company with his fellow labmates as well. There is a great community of startups here, and lots of amazing talent from U. of Toronto and Waterloo.
