Our Law Firm has formed hundreds of corporations in the United States. No capital investment is required. We can also form a corporation for you in any U.S. state.
Many non-U.S. residents have questions about forming a corporation. We would like to answer these questions in a general way, because individual cases usually require specifically tailored answers.
Are we allowed to start a corporation in the United States?
Yes, generally a foreign person can form a corporation. The corporation is formed by an incorporator initially, often a lawyer, who will then resign in favor of the shareholders (owners) of the corporation. The corporation is registered with the Secretary of State, Division of Corporations. The name of the proposed corporation should be checked with the Secretary of State for availability. No two corporations may have the same name, or closely similar names, to prevent confusion. The corporate name must include the word "corporation," "incorporation," "company" or such other word or abbreviation, such as "Inc." or "Corp." to indicate that it is a corporation, not a natural person or partnership. The shareholders (owners) need not be identified or registered. The shareholders can be individuals or other corporations, including foreign corporations. At least one director must be shown in the Articles of Incorporation. One person can hold all corporate positions and titles: director, president, secretary and treasurer. That person or persons need not be residents of the United States and can conduct business from outside of the United States. It is required that the corporation always identify a "registered office" in the U.S. and a "registered agent" who must be a resident of that State.
How much capital is required?
Typically, as little as $100 is sufficient as capital. That would be, for example, $1 value per share for 100 shares. Therefore, a large capital investment, as may be required in other countries, is not necessary in the United States.
What types of corporation can be formed?
There are three types of corporations: A "C" corporation is responsible for the debts of the corporation, but not the individual shareholders. The net profits are taxed and the dividends are paid to the shareholders who may have to report the dividends as income. "S" corporations have the same functions and benefits as "C" corporations, except that they can have no more than 35 shareholders and that the shareholders must be U.S. residents for tax purposes. Holders of an E-2 investor visa, L-1 visa L-1 visa and even B-2 tourist visa, if they pay taxes in the U.S., can qualify to be shareholders of an "S" corporation. The main advantage of the "S" corporation is that the corporation's net profits are passed on to the shareholders and are not taxable to the corporation. A Limited Liability Company (LLC) is a corporation with limited liability, similar to a "S" corporation, yet with several significant differences. One major difference is that it requires at least two persons to form an LLC. The owners need not be U.S. citizens or U.S. taxpayers. There are several other differences that cannot be adequately addressed in this article. Whether or not an LLC qualifies to be taxed like an "S" corporation should be discussed with a tax advisor.
Who can form a corporation for me?
Typically a lawyer will form the corporation, although others may do so also as long as they are not practicing law without a license by providing legal advice.
Must I live in the United States?
No. A person can ask an incorporator, usually a lawyer, to form the corporation without being in the U.S. The incorporator can sign the articles of incorporation. The president and secretary must sign the shares giving ownership to the shareholders. Later the shareholder can sign documents at the required annual meeting.
How can I obtain a Social Security or Tax Number?
Social Security Numbers are available only to U.S. citizens, Green Card holders or people holding a U.S. visa which allows them to work, such as an E-2 Investor and L-1 Intra-company transfer visa. Others may apply for a Taxpayer Number from the Internal Revenue Service if they must file a U.S. tax return. Corporations must apply for a Taxpayer Identification Number with the Internal Revenue Service. The application must be signed by an official of the new corporation. If that person does not have a Social Security Number, then a copy of his foreign passport must be attached to the application. If the corporation will sell products to the general public, it must also apply for a Sales Tax Number from the State Department of Revenue and collect sales tax. Businesses are also required to hold a Business License available from the city where the business is located.
Must I open a business in the United States?
No, it is not required that corporations operate a business. An individual can incorporate himself, for example. A corporation may be used for the sole purpose of owning real estate, even a house. However, an active business must be established to qualify for an E-2 Investor or L-1 Intra-company Transfer although this business could be a real estate investment or activity corporation.
Can a non-immigrant, foreign worker invest money in any venture?A person on an H1B or other temporary work visa in the United States is legally allowed to invest in any venture or company, and could start to undertake volunteer work on behalf of the venture or company at any time. The person cannot work on a full-time basis for that company and earn a salary until obtaining prior approval from the INS or DOL to work for that venture or company. In order for the person on an H1B to work for another company or employer, the person is required to obtain a concurrent H1B approval to work for the new entity, in addition to the present employer.