Getting ownership in a company co-founded by NON Immigrants + US Citizens

[aniketm]

Hello,

I am currently on F1 Student Visa working in a small startup company . We are group of 4 ppl in this startup where 2 are on F1, one is having greencard, other is a US Citizen. We are planning to start a company. Can anyone help me in getting answers to the following questions

- Whether 2 ppl who r on F1 can get H1b sponsered with the new company they co founding - Can they get ownership or Equity in the company. - Would they be allowed to work in the new company. - How should the company get incoporated as a C-Corp or S-Corp

It would really be of great help.

Thanks

[ahsanhilal]

Yes it is definitely possible, but not easy, since the INS is as incompetent as they get. However, the brief overview that you have given does not contain all the details required. First of all, have you graduated yet? If yes, then it seems that you should be able to use your OPT until then, and can continue to work on the startup. However, on OPT you cannot receive ownership of any company stock and as such have to be excluded. You are free to work, but not free to own. The company can pay you some salary, provided it has the ability to do that. The rules could be murky here, but as far I understand it, my lawyer expressly stated that I should not own any shares before obtaining my visa. (Although my visa category was an E2 investment visa, which is a different designation)

For your company to sponsor you for an H1 visa, it needs to be able to show that it has considerable financial resources (either revenue, or investors). So if in a year from you have a LOI from an investor or revenue, you can show that to the INS for credibility.

As far as the incorporation goes, I think initially its best to have it as a partnership LLC, since it is pretty flexible and gives you enough wriggle room since LLC's are often open-ended and can be structured in a variety of different ways. Once you go big, have your H1B you can think of shifting towards another incorporation model, as most investors would want you to anyways.

IF you have not graduated, then best advice: take a min number of credits while in school and work on the startup till you get decent sized enough that you can attract funding or have enough revenue to get an H1B or an E2 investor visa.

Hope that helps. I know how hard these immigration issues are to wrap ones head around, so let me know if you have any more questions. I have been through it.

There is also a great blog post written by one of the principals at K9 ventures. I suggest reading all of his stuff on visa issues as well: http://bit.ly/nTsGTy (its a text only version since actual page is not loading)

[aniketm]

Thanks a lot for your info.It really helped me to understand some of the things clearly.Appreciate it. I would give the information about me. May you can guide me in the right direction.

- I graduated in December 2010. I started working from January 2011 in let say Company X.I have 12 months OPT with a STEM extension of 17 months only if company is e-verified.

- I am working in a Company X , whose founder's is planning to start a new venture(Let say Company Y) with me and other 2 ppl as mentioned previously.

- I guess he might sponsor my H1 through Company X.I am planning to take C- level position in Company Y. I do not want get into Immigration issues.

- from the reply I see u suggesting to form a LLC rather than C Corp or S Corp based on the condition. - once we have H1, in how many years I would get the Greencard(E2 one).

I would surely go through the blog.Any help would greatly appreciated.

Thanks, Aniket

[trussi]

---Preface---

I have no experience (or advice) on the immigration piece.

I have no experience with LLCs or any other non-corporation entity. I have formed and have been using Corporations for many years with a lot of success.

---Ownership Advice---

Do not try to get you ownership in your name. Get your ownership in the name of another company that you own.

Here's the structure:

1. You own a Nevada or Florida Sub-Chapter S Corporation 100% (called Aniketm Corp).

2. Aniketm Corp owns X% of Company Y (the startup).

The legal structure of Company Y is irrelevant, but I would recommend a Sub-Chapter S Corp (most legal protection for the owners, most favorable tax treatment, very low IRS audit rate).

It costs $100 to form a corporation (http://www.amerilawyer.com) and about $100 per year to maintain.

Anybody (including foreigners) can own a corporation.

This ownership structure gives you an extra layer of protection because you have an additional corporate veil between yourself personally and the startup company.

Don't let forming a corporation scare you. It's pretty simple and low-risk.

[aniketm]

Thanks for your advice. This means that I can form my own corporation whether I am on F1 or H1 doesn't matter. Is there any other way without me opening a corporation(Aniketm Corporation) to have ownership in Company Y. How does Shares and equity concept work. If I tell that I do not want ownsership but I want shares and equity in Company Y, would this simple or according to rules and regulations. If at all I want ownership then is that possible on a F1 or H1 Visa status

[toddoh]

I think student visa is unable to do that. Visa law/system is really complex so you should ask to someone who know it well :)

[aniketm]

Thank you

[ekm]

Talk to your international Student Advisor.

[aniketm]

They are of no help..:(

[rprasad]

If Cali-based, form an LLC in California. You derive no tax advantage from organizing an LLC out-of-state.

You cannot form an S-Corp if you have non-resident founders (anyone who is not a US citizen or permanent resident), which sounds like the case here. This is a strict legal requirement which cannot be avoided. They can hold ownership/equity in the company as long as its not an S-Corp.

As for how to become a Corp or LLC: - Go to the secretary of state website for the state you choose, then their Business Filings section - Download the Articles of Incorporation (for a Corp) or the Articles of Organization (for an LLC). - Fill the form out. - If any of your founders live in the state of incorporation/organization, just mail it in or drop it off at the local office for your secretary of state. OTHERWISE, find a registered agent in that state and pay them to do it for you. - Take care of the remaining corporate/LLC formalities: get an EIN from the IRS (free, takes about 5 minutes), and write up your Bylaws or Operating Agreement, have a company meeting.

Sorry about the late reply. For some reason, this showed up on my front page 12 days after your post.