I am researching the simplest legal way for a Non US Citizen to partner with an S corporation.
I am forming a Nevada S Corporation and I have a partner in India. If my partner was a US citizen then I would give them shares of the corporation. But they are a “non resident alien”. So I am looking for some alternative to shares that is legal and simple to write up an agreement for them.
[li]They do not have friends or relatives who are US Citizens/residents who they would trust with their shares. That would be the second easiest option.[/li][li]Bearer shares are not an option for an S Corporation[/li][/ol]
So what would you do? I am also talking with attorneys, but I thought I would throw the question out to dopers to see if any creative, yet simple solutions come up that I haven’t thought of. Thanks!
I don’t understand, certainly even if the non-resident alien is not allowed to be employed in the United States unless they have an employment permit(or whatever it is called nowadays) but are you implying it is somehow easier and cheaper for you to get around the S corporate restriction rather than form a C corporation? The tax break cannot be that significant, can it?
I am not a lawyer, much less a corporate one, but might I suggest you look into setting up a trust or fund that owns the shares? Is that allowed for S corporations? If I remember my business law correctly, a domestic corporation could not be a shareholder in an S corporation, but I do not remember if that applies to foreign corporations(most likely it does, but it’s an avenue worth researching). Maybe your partner can form a corporation in India that owns his share?
Oh and remember, I am not your lawyer, you are not my client, this is not legal advice, I do not vouch for its correctness, I am not licensed to practice law in your jurisdiction.
Just some thoughts,
Form an LLC instead of an S-corp.
The same tax treatment applies (if uo apply for it) and the practical legal distinctions between a acorp & an LLC are minimal. The biggest distinction is that a non-US citizen (or a non-natural person) can own shares in an LLC.
In fact, that’s essentially what they were invented for; to get around some of the limitations the IRS arbitrarily installed on S-corps.
Go talk to an attorney. There are significant tax and other distinctions between LLCs and S Corporations, particularly under certain circumstances. There are also significant differences between the tax treatment of an S Corporation and a C Corporation. The statements made so far have either been wrong or wrong if certain circumstances apply.
I talked to an attorney today and she agreed that an LLC is probably a good option. I have been doing some research and it does seem to basically have everything I need. Thanks guys for the help!