Incorporation and non-US founders
Avoid some common traps by keeping a few things in mind...
Hey founders et al. In today’s edition, we explore how non-US citizens can start a corporation and what to keep in mind while doing so. We also highlight great resources and tools in the world of corporate formation.
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US corporations and non-US founders
I see this question a lot in one form or another: Can non-US citizens or those outside the US form companies within the US? The short answer is yes. Non-US citizens, regardless of where they reside, can start an LLC or a C-corporation (this is not the case for an S-corporation, see here). For purposes of this article, we will focus on C-corps. While the exact mechanics can get a bit tricky when the processes differ from state to state, here are some important things to keep in mind.
Have a visa strategy: Unfortunately there is no clear step-by-step process that would apply across the board. Since everyones starting point is different, addressing anything in a linear fashion here would be misleading. However, generally speaking, you should take into consideration your visa status before figuring out what to do first. As stated above, you don’t need to be a US citizen to own a US business. But you’re not allowed to work without a valid visa. And if you want to work for the business you own, you’ll need to obtain this. Make sure you have a clear visa strategy before you make any decisions around incorporating in the US. This article is a great resource discussing visa types and what this means for working and incorporation
Getting the numbers right: Contrary to some information floating around the interwebs, you do not need an SSN or ITIN (Individual Taxpayer Identification Number) to form a legal entity or obtain an EIN in the US (however, it may take a bit longer and be a bit more annoying than one would like). This article does a great job discussing the numbers you need, and how to get them
Congratulations, it’s a… person: Of course, once incorporated, the business has to adhere to all relevant federal and state regulations. Imagine your new corporation as a new person that was just born in the USA. Your new USA baby is subject to all the same laws as the rest of us. E.g. employment and labor laws including FLSA, OSHA, EEOC and FMLA, patent and copyright laws, privacy laws, environmental regulations etc. Make sure you speak with an attorney who understands your industry and the laws you’ll need to adhere to after incorporation.
Tools and Resources
There are some excellent incorporation specific resources out there that founders may not know about. We are always adding to this list. See the full list of resources here.
Helpful articles for non-US citizen founders: As mentioned above, this article is a great resource discussing visa types and what this means for working and incorporation, and this article does a great job discussing steps to obtain an EIN.
For a deep dive into the H-1b Visa: Check out this video from AbstractOps and Alfred Bridi, Immigration Lawyer at Scale LLP.
The best handbook (that I’ve seen, at least): Clerky published an excellent handbook that covers all things corporate formation, as well as other topics like fundraising and employment matters.
Law firm resources: Orrick and DLA Piper both have solid corporate formation documentation in their startup libraries. Feel free to them out and let me know which one you like more :)
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Thanks for reading. Stay lawyerly.
Brian