Archive for the ‘LLC’ Category

Foreign Founders in US Startups

July 31st, 2014 By Virtual Paralegal Services

What are the basics when foreign founders, who neither are dual citizens nor have a green card, start up an LLC in the United States, but operate it from their native country?

Company Status:
Requirements vary according to the native country. For example:

  • Canadian: In addition to the US LLC, a Canadian citizen may also need to form a US C Corp to own the LLC, which would be owned through the local LLC.
  • Spanish: Spanish law would generally treat the US LLC as a corporation.
  • Belgian: Setting up a US LLC, but checking the box for corporate taxation, will generally result in the founder being listed as a shareholder and income as dividends.

It is recommended to consult a tax advisor and attorney in both the US and in the foreign jurisdiction to be certain that the foreign founder of a US start up is following the correct protocol.

Obtaining an FEIN:
Foreign founders of US startups will need to obtain an FEIN for their LLC, but they are not required to have an SSN or ITIN. When completing form SS-4, be sure to write foreigner in line 7b (requesting SSN or ITIN). Contact Virtual Paralegal Services for assistance.

Banking:
This aspect of starting up a foreign owned US LLC is more complicated and generally must be done after the founder has obtained an FEIN. There are several options:

  • Choose a mega bank that has branches or affiliates in the founder’s country. This will enable him to set up his account in his own country and build a US banking relationship from home base.
  • If the country is an official signatory of The Hague Convention, as is the US, and his chosen bank accepts it, he can get an apostille attached to his paperwork to avoid coming to the US.
  • The foreign founder makes a trip to the US and appears in person at the bank with passport, and corporate documents in hand.

For assistance with US LLC startups, contact Virtual Paralegal Services.

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The Importance of Annual Maintenance

March 15th, 2014 By Virtual Paralegal Services

In order to maintain the limited liability protection afforded legal entities organized under the laws of a jurisdiction, entities must follow certain legal requirements pursuant to the laws of its state of formation. Failure to follow these legal requirements may cause a court to “pierce the corporate veil” by treating the obligations and liabilities of the entity as the obligation and liabilities of its stockholders or members. Many times this results from failure to do any of the following:

  • Supply it with Adequate Resources
  • Observe Corporate Formalities such as Holding Annual
  • Meetings of Stockholders and Directors
  • Keep Separate Record Books Of the Corporation
  • Distinguish Corporate Assets From Personal Assets
  • Issue Stock

To learn more about the importance of annual maintenance, view the Importance of Annual Maintenance

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