There is no restriction on an Non Resident becoming a director or share holder of a U.S Corporation, however the only exception to that is an S Corporation. The subchapter “S” Corporation is a variation of the “C” Corporation and under a different IRS Tax Code. The “S” Corporation is allowed the flow-through taxation treatment similar to that of a partnership and sole proprietorship. Double taxation is avoided by its owners/shareholders. The limitations however are that:
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Non-resident aliens cannot be shareholders.
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Ownership is limited to 100 stockholders.
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Owners cannot be corporations, partnerships, pension plans, charitable organizations, certain trust.
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To maintain subchapter “S” Corporation status and therefore there is a requirement for strict compliance with stringent rules.
So, in essence the option for Non Residents, Non American Citizens is to incorporate their business as a C Corporation or as a Limited Liability Corporation (LLC).
Incorporating a company in the U.S not only helps you to protect your assets, but also de-risk and overcome some of your Work Visa (H1, L1, F1 Opt) challenges. It also allows you to plan your tax and save some money from going to Uncle Sam! Incorporate your investment business, Day care center, Consulting business, REIT, Non profit activities today, and realize the asset protection, Saving in tax dollars today! ___________________________________________________________________________
Author of this post, is the President & CEO of ICS, Inc. www.mybizfiler.com.
Any U.S. tax or other forms of advice contained in the body of this page was not intended or written to be used, and cannot be used, by the recipient as a guidance note, or for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or other Federal, State or Local tax law provisions. If you need Taxation & Financial services, OR Professional guidance in interpreting federal or state laws, kindly contact a professional from ICS Inc.
August 14, 2008 at 9:24 pm
Thank you for the wonderful piece of information via this blog. I am an employee working for a technology company on H1 and am recieving income for consulting services provided to a different company. Can I then form a LLC to bring in my consulting income. I am assuming that there are more expenses also I can take through a LLC compared to treating that income as Sole Proprietership or Schedule C Income on my personal income tax return.
I found http://www.mybizfiler.com very impressive. It is good to know that you provide end to end solutions from Incorporation to Accounting, Payroll & HR Services.
August 14, 2008 at 9:46 pm
You are welcome. Yes, as an employee of technology company you can take your Consulting income into the company you incorporate. However, Income from your employment using your H1 cannot be passed thru the company. You can charge expenses attributable to the consulting income you earn, in the books of the company. Employees of well known technology companies from India (Wipro, Satyam, Infosys, Cognizant etc) are our clients.
Yes, mybizfiler.com offers end to end services, we incorporate, provide corporate secretrarial, bookkeeping, payroll processing, and Virtual office services as well. We are a proud association of accountants, attorneys and Business consultants.
August 28, 2008 at 11:28 pm
hi, its a good article and which is having every info about incorporating a S Corporation
September 14, 2008 at 10:41 pm
Thanks for the wonderful information you gave in the blog above. I am a salaried employee working for a technology company on H1visa. Company has already filed my Green card and i have also got my EAD but currently not using it. I have an offer from a publisher to write a book on a particular subject. Just want to know whether am i allowed to write & publish my book, if i am not a permanent resident or citizen of US.
Your advice on the subject will be really appreciable.
Thanks
September 17, 2008 at 4:38 pm
I work on L1A blanket visa sponsored from one of Indian company. Can I or my spouse (L2 visa) form a company in USA . Can we put company name as the rented residence? and how much will be initial expense?
Thanks
September 17, 2008 at 5:40 pm
Dear Adi,
You can most certainly form a corporation in U.S. working on L1/L2 Visa. The type of entity that you can create is Limited Liability Corporation (LLC) or a Regular C Corporation. S Corporation is not an option for you since the requirement for S Corporation is that a person has to be a U.S. Citizen or a Green Card Holder. We suggest LLC as a better option in your case since there is no requirement of withdrawing salary as a shareholder / officer and also the compliance requirement for LLC is less…
You can certainly put the name of your corporation as rented residence if the name is available in the state where you want to incorporate or form the LLC. It also should not be a dissallowed name by that particular state. The requirement from all the states is that you put LLC or INC. behin your corporation name…
Kindly contact us at sales@mybizfiler.com if you need assistance with incorporation of your entity.
Thank you,
http://www.mybizfiler.com
October 31, 2008 at 4:40 pm
For a long time I have been considering the idea to start my own business as independent broker or independent sales agent. My question for you is if under my condition of H-4 visa holder I can become a broker, make business with American and oversea companies and enjoy the profits of my work without incur in any illegal act. According with my lawyer that technically, under the H-4 visa, I am not legally able to work (derive income) from any work that I do under the H-4 visa. Therefore, for me to form a company and do work and derive business from anyone in the United States would be in violation of my H-4 visa. Also that If I was employed by a foreign entity and was being paid by that foreign entity, then I would work abroad and also do business in the United States. However, for me to form a company and pay myself an income in the U.S. would be a problem. Is it true? I would appreciate your input on this.
Thanks,