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    17 Replies Latest reply on Jul 22, 2009 2:54 PM by nj_ItInfra

    H1B Visa holder wants to start a company in US with his family members back in India!

    alchemist Newbie
      Hello Everyone,

      I am on
      H1-B Visa and work for a company in US. I understand that I can only
      open a company here but cannot work for it since I am already working
      for the company which has sponsored my H1-B.

      I don't want to involve any unknown person in my company.
      I would prefer to do it with my brothers who reside in India. So
      now if I want to open a company, may be a C Corportation or a LLC, can
      I do this legally- I want to have me and my brother (who is not a US
      Citizen or a Green Card Holder but is an Indian Citizen) to run the
      company. I can be a sleeping partner, who is not working at all for the
      company and all the work is done by my brother who is the partner in
      the company I formed. Is that legal? Can I hire a person to work for my
      company, is that legal?

      Further can I share the profit or loss for the company? If I make
      profit for the company, I intend to pay my taxes to the IRS and if I
      have a loss, I would want to write-off my losses too.

      Is there any other way to achieve the same? What does it take, in cost, to open a subsidiary of an Indian Company in USA?
      Which would turn out to be cheapest on taxes:
      1. A company formed by me with my brother as a partner
      2. A subsidiary of the Indian company in USA
      3. A company formed between me and a person who has a green card or is a citizen.

      Thank you for your help!
      Regards
        • Re: H1B Visa holder wants to start a company in US with his family members back in India!
          CEO Space Scout
          Here is some information for you to read about it with lots of other references.

          http://en.wikipedia.org/wiki/H1B_visa

          I would suggest that you talk to your immigration attorney before you spend any money in this project
          just to be on the safe side.

          Good Luck
          • Re: H1B Visa holder wants to start a company in US with his family members back in India!
            Lighthouse24 Ranger

            I think the easiest way to achieve this would be for your brother to form C corporation, and name a "resident agent" (called a "registered agent" in some states). This agent has no ownership or management role in the company -- it's just someone who lives in the state of incorporation, and who the company authorizes to receive service of process (SOP) and other official notices on its behalf.

            The new company would issue common stock, half to you, half to your brother (so you'd own half the company, but you would not be listed as an officer -- only your brother's name would appear on the corporate filings). Your brother would draw a salary, you wouldn't. Consequently, you would not be getting paid by the company or be on record as having any active part in managing it -- you'd merely be a passive investor or stockholder (of course, nobody can keep you from giving your brother "free advice" on how to run the business).

            As the company's value increased, so would the value of your shares. If the company paid a dividend to shareholders, you get it just as you would if you owned stock in any other U.S. company that paid a dividend. You'd claim it as income and pay taxes as appropriate.

            There are people and companies that specialize in creating corporate entities like this, even to the point of handling the filings, opening a bank account, and setting up a virtual office. If you search for "registered agent" online, you'll probably find dozens of them who can advise you in more detail. Best wishes.
            1 of 1 people found this helpful
              • Re: H1B Visa holder wants to start a company in US with his family members back in India!
                alchemist Newbie
                Thank you Lighthouse for your reply. Since I am on H1-B visa, I can legally act as a passive investor but cannot work for the company other than the one who has filed my H1-B Visa. Thus I can invest in the company which I make with my brother. As you said:

                "This agent has no ownership or management role in the company -- it's
                just someone who lives in the state of incorporation, and who the
                company authorizes to receive service of process (SOP) and other
                official notices on its behalf."

                Isn't this like working for the company where I will be authorized to receive SOP and other official notices on my brother's behalf. If no, than I can form such a cooperation.

                Btw, out of curiosity, forming such a cooperation, is it an expensive affair? Does it lead to higher taxes compared to a LLC?

                Thanks
              • Re: H1B Visa holder wants to start a company in US with his family members back in India!
                nishantk Newbie
                Dear Alchemist,

                I am Indian with H1B visa. In last 4 years I have explored multiple companies law in different states of USA.

                Theoretically, any body can do business in USA without even being here. USA is heaven for enterpreneurs and setting up a business is piece of cake. You could do entire setup sitting in the home.

                For your specific situation, I found that state of Delaware would be best to get incorporated. State of Delaware provides multiple flexibitlity in company incorporation and partnership with least government intervention. That is why 60% of fortune 500 companies are incorporated in Delaware.

                There are multiple web-sites with more information on this (google them), one of them is: www.thedelawarecompany.com

                Also, for all your legal consultation need (family or business) you can have a legal insurance and have unlimited telephonic consultation over phone for any legal matter. Do visit www.JusticeMadeSimple.com or write me.

                Best of luck,
                Nishant
                1 of 1 people found this helpful
                  • Re: H1B Visa holder wants to start a company in US with his family members back in India!
                    alchemist Newbie
                    Thanks for your help Nishant! Appreciated!

                    If I
                    import in California on the name of a company which is registered in
                    Delaware, and dispatch the good directly from California to my buyers
                    all across US, do I pay any taxes to any of the two states since
                    Delaware does not have a sales tax and I am not incorporated in CA!!

                    -Thanks
                      • Re: H1B Visa holder wants to start a company in US with his family members back in India!
                        nishantk Newbie
                        Every state has different laws on it. For my online business, my customers purchase in one state and goods are supplied from another state. Most of the time I pay sales tax in the state where client lives (where product is shipped).

                        For more detail, you have must get details from qualified person on this matter, as you know I am not.

                        Please explore business section of www.JusticeMadeSimple.com
                          • Re: H1B Visa holder wants to start a company in US with his
                            pgk500 Newbie
                            Hi Nishant,
                            Thanks for your encouraging reply.I am interested in starting a consulting firm and after reading a lot on this topic i have realized that you need someone with atleast GC to run your company as you can only be a passive investor and not an active investor because of h-1 restrictions.Do I have to run the payroll for the person I hire with a fixed salary and can I open a bank account and get funds deposited by client directly in my account. If I have to pay my employee can I pay by personal check cause i know as an passive investor I cannot even sign checks. Your response would be very much appreciated.

                            thanks,
                            P.K.
                          • Re: H1B Visa holder wants to start a company in US with his family members back in India!
                            Lighthouse24 Ranger
                            alchemist, if your business is located in California and you sell/ship products to customers in California, you collect sales tax from them on those sales. You don't collect sales tax from customers outside the state. (It's the customer who is paying the tax, not you. You're just collecting it from them at the point of sale and passing it on to the state.)
                              • Re: H1B Visa holder wants to start a company in US with his family members back in India!
                                alchemist Newbie
                                Thanks for your reply, Lighthouse. The only reason why I wanted to know is to stay competitive in the market. I don't want my customers to pay more because I reside in CA. Well, thats the reason why I was wondering if my company is incorporated in Delaware and I have a warehouse in CA where I keep my imported stuff. Would the sales tax be applied of the state where my wearhouse is, or of the state where the company is incorporated or of the state where my buyer stays in.

                                Nishant, thank you for your useful reply. As you said, for your online business, your
                                customers purchase in one state and goods are supplied from another
                                state. Most of the time you pay sales tax in the state where client lives
                                (where product is shipped). How come you are paying sales tax or did you mean you collect sales tax and pay state tax? Also, does it not matter where your warehouse is or where your company is incorporated? Since if you collect taxes from different states, do you have to pay state tax in all the states where you collected the sales tax from?

                                Thanks
                          • Re: H1B Visa holder wants to start a company in US with his family members back in India!
                            alchemist Newbie
                            Hello Nishant, I tried to go through this website http://www.delawarellcwyomingllc.com/ and it seems that opening a llc in Wyoming has some more advantages compared to Delaware. Though, I am not quite sure about it. Could you please post in your comment as to why you think Delaware is a good option for my kind of business.

                            Thanks
                            • Re: H1B Visa holder wants to start a company in US with his family members back in India!
                              amitdce Newbie
                              Hi Alchemist,

                              I am starting a company in the fashion industry here in Calfornia, and saw your posts. It might be useful for us to get in touch and exchange our findings. I am currently exploring whether we should take the LLC or C-corp route.

                              please reach me at amitdce @ gmail

                              -Amit
                              • Re: H1B Visa holder wants to start a company in US with his family members back in India!
                                laborvisalaw Wayfarer
                                Alchemist-

                                Notwithstanding what has been said before, you should be very careful not to actually work for this new company. The U.S. immigration laws allow you to be a passive owner of a company and receive dividends only if you rely on somebody actually running the business.

                                From what you describe, your brother will not be running the company from India, instead you will be doing so from California. This is most likely to be considered "actively working for the company" and it may be considered a violation of your H-1B status. The chances that the USCIS will commence an investigation without anything more are small; nonetheless, you should consider the possibility of losing your H-1B. In addition, if and when you apply for a green card in the future, the application process may include review of your tax documents which may, in the best case, delay your application.

                                I urge you to consult with an immigration attorney who can hear more of the details and nuances of your plan and give you an opinion.

                                Best-

                                -laborvisalaw