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Like H1B holders can F1 holders own a company?

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  • #16
    Hi Gotham,

    <BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">1-Contrary to SundevilUSA misinterpretation of the immigration code, you do not necessarily need an employment authorization to work for your own company. So, in regarding to my start up will be a web based tiny online business, can we say that i dont need to anybody to do some necessary work by myself? Doing some aggrements with second and third parties with my own name will be OK without a problem? </div></BLOCKQUOTE>
    The Employment Authorization Document is for dependent personal services only, not independent personal services, ie independent contractor for instance. Generally, if you start your own company and are considered an independent contractor, but this will also depend on how you set up your company. If you hire someone as a dependent personal services, ie employee, then an EAD would be required if you hired an alien. However, with e-commerce such as a web based company, there are very complex tax regulations that would determine how the company would be taxed if you set up as a corporation.

    <BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">2-I am from New York, do you have any idea according to NY state law will i be foreign or domestic business owner? </div></BLOCKQUOTE>
    You are considered a non resident of the state, which may have an impact on how you set up your company. You will need to call 518.292.5220 or visit their site. I do not live in New York.

    <BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">3-For my type of company which of these The business entities include limited liability company, sole proprietorship, partnership, corporation, or S-corp (only for domestic association or corporation). would be most proper by considering getting bigger in time? </div></BLOCKQUOTE>
    This will really depend on how you want the company to be taxed and how easy it would be to obtain capital. First, I would write a business plan and determine what your goals are in the short term, lets say 2 years, mid term, 2-5 years, and long term, more than 5 years. This would need to include whether you intend to stay in the U.S. go back home to your home country, or move to a third country. This will help you on how to obtain future capital and how the comapny will be taxed. A paopular method for most individuals is to set up a LLC. For IRS purposes, LLC is not officially recognized but the tax authority has default rules. If you are s single member LLC, then the default rule is the company will be taxed as a sole proprietorship. An advantage to an LLC is that your liabilities would generally be limited to only what the company owns whereas a pure sole proprietorship will have both personal and business assets intermingled. A multiple member LLC, that is two or more members, the LLC is taxed as a partnership under the default rules. But again, the members will have their liabilities limited to what the company owns. In either a single or multiple member, the company has a choice, an election, to be treated either as a corporation or S-Corporation (if certain requirements are met). If you establish a corporation under the article of incorporation within NY state, this will generally be considered a domestic corporation. You can still elect to become a S-Corporation if certain requirements are met.

    For tax purpoeses, a single member LLC or a sole propiortorship will be taxed on the 1040 series and you may be subject to self employment tax, unless you are a non resident alien for tax purposes. Generally, aliens who are F visa holders are generally non resident aliens for a max period of 5 years. this is the simpliest tax situation. For partnerships or multiple member LLC, a Form 1065 will be filed and the net income or loss is passed to each of the partners. Generally partnership income is also subject to self employment tax, but there are regulations of withholding to non resident aliens. This can complicate the tax situation very quickly. S Corps is another pass through tax return which the shareholders are taxed on their net profit or loss. However, shareholders of S corps are also employees, which mean that the S Corp will be subject to the employment tax rules too. corporations are taxed as an entity. Shareholders are taxed on any dividends paid to the shareholders after income tax is considered. This is a form of double taxation.

    It is up to you and what you want to do that will determine how you want to set up your company. I did not provide all of the advantages and disadvantages for each besiness entity, but the Small business Administration has some great tools to help you.

    <BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">4-Either my business taxed as foreign or domestic i will not need EAD( working permit i guess) right? </div></BLOCKQUOTE>
    I am sorry, I was a little ambiguous on this. There are several factors that will determine whether an EAD will be required. The biggest factor is whether you will be considered an independent contractor or an employee. If an independent contractor here in the US, generally the EAD is not required. EAD is only used for employer-employee relationships, ie dependent personal services. Other factors may include wither the company is a foreign or domestic entity and whether there is a permanent establishment of the business entity in the U.S. However, you first need to determine how your comapny will be taxed before we start looking at whether the EAD is required or not.

    <BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">5-What should be done to establish a start up and how much would it cost to me to establish a company. </div></BLOCKQUOTE>
    This will depend on what type of business entity you want to establish and what type of business you are getting into. For example, in certain industries professional certificates is required when performing certain services. Or you may need specialized equipment or software to help you with your product or service. And there are the fees to establish the business. For instance, it may cost you several thousand dollars to pay someone to prepare the articles of incorporation and pay the required fees. These are the start up costs.

    I hope this helps you. Good luck Gotham.
    "Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence." John Adams on Defense of the boston Massacre

    Comment


    • #17
      You can establish a business and receive profits from the business but you cannot pay yourself a salary or commission. If you do so you are an employee and therefore must have employment authorization. Structure your business so that you are not paid a salary or wages. Nothing in the immigration law prohibits you from receiving profits however, as long as it is not wages or salary. Don't forget to maintain your full time student status.

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      • #18
        Hudson,

        Thank you very much that you have replied my questions and for your research. I really appreciated. Actually reading your answers lead me to new questions which are very important to getting close to solution. I will check the site that you have recomended to me. Thank you again You helped me much.

        Federale86,

        Thank you for your time and your sharing. I got that i can have a company but i still dont know if i can make some business agreement with my suppliers and delivery companies. Because these would be the basic requirement of my web based company. Can i use/sign with my own name while doing these agrements or business correspondences ? Would it be counted like working as an employer? If so, then how would it be possible to establish a company if the owner will not allowed to do the basic business correspondences/aggrements? If not me then who going to decide which is right which wrong for my own company? It will be a very tiny company so i would not have budget to hire anybody. I have to do everything by myself. If you have time to reply my questions i would be happy thank you.

        Gotham

        Comment


        • #19
          Remember, the prohibition is on employment, not work. For instance, aliens can do volunteer work with charities in the U.S. without restriction, so long as they maintain their status. You will be receiving profits, but you will be working, but you will not be employed, e.g. not receiving wages, salary, or commission. Most small businesses pay their owners salaries because most new small companies don't make a profit at first. The owner's wages are a business cost like that of other employees, so there are various tax advantages. However, you will have to survive on profits, and not receive wages, salary, or commission, so if no profits, you make nothing. However, you must maintain your status, e.g. full time student status. You can do all the work you want, just don't get paid for it. In any event, after one year in the U.S. your student advisor should be able and willing to sign off on employment of limited hours off campus. Then you can work according to the restrictions on students generally, e.g. # of hours, etc. Incorporate and then you can be an employee with permission from your foreign student advisor and the USCIS. For instance, you incorporate your business as Acme. Acme hires you to do work in compliance with the employment restrictions on foriegn students and you can be paid and also receive profits from your company.

          Comment


          • #20
            Hi again federale86,

            Thank you very much for your time and sharing of your knowledge. It is helping me much By the way i have not idea if you had time to read my very first, opening message of this tread, but i mentioned over there that i just got a campus job and because of the job i could get my SSN. I have been here in NY for approximately 14 months. So it seems that i have fufilled both of the requirements that you have mentioned in your answer.

            <BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content"> after one year in the U.S. your student advisor should be able and willing to sign off on employment of limited hours off campus. Then you can work according to the restrictions on students generally, e.g. # of hours, etc. Incorporate and then you can be an employee with permission from your foreign student advisor and the USCIS. For instance, you incorporate your business as Acme. Acme hires you to do work in compliance with the employment restrictions on foriegn students and you can be paid and also receive profits from your company. </div></BLOCKQUOTE> Yes i am working in school campus but if i am not mistaken i cannot use this permit out of campus for instance to work for my own company Acme. Are you sure can i work for my own company 20 hours per week? By the way working the time limitation is 20 hours per week. This would be something new for me if you insist on saying that i could work out of the campus and for my own company. I have no idea if you are attorney or law student but I appreciate your help. Thank you in advance.

            Gotham

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            • #21
              Any reply?

              Gotham

              Comment


              • #22
                You can get permission to work off campus with the approval of your foreign student advisor then apply for your EAD with the USCIS. See your foreign student advisor for details. He or she will make that approval, or are supposed to make that approval, based on your grades, course load, etc.

                Comment


                • #23
                  <BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by Gotham:
                  Any reply?

                  Gotham </div></BLOCKQUOTE>
                  Gotham,
                  I see you are still confused whether you can owrk for your own company or not.

                  Have you decided what type oc business entity you want to establish? This is very important because it could have a direct impact on your student visa.

                  Second, have you decided whether to remain in the U.S. or return home after your studies are complete? Again, you need to consider this because it will have a direct impact how you want your company to be established and retain the maximum potential working capital in the future.

                  From what you wrote, you want to work in e-commerce, that is design web, internet, and computer software either from you home or maybe an office location. The tax rules are very muddy when it comes to this type of work, but I think we are not at a point to talk more about taxes.

                  Regardless of which type of business entity you want to establish, you still must maintain your full time student status. This means working part time. If you are performing services for internet or web design, you are not going to have that much clientele. If you get numerous clients, then you will have to change your visa fro F to a work visa, more likely an E-2 visa.

                  The one thing you have to remember about the EAD, it applies only to dependent personal services. That is, an employer-employee relationship. It does not apply, generally, to independent personal services; that is, independent contractor or self employed. Again, you have to determine first what type of business entity you would want. Also keep in mind that as you progress with your business, your business entity can change.

                  With bank accounts, it would depend on where your clients are located and where you want the payments to be deposited. U.S. bands, specifically, investment banks can help you with this. Tax treaties have an impact on where the income is taxed. More than likely, the bank will require an Employer Identification number (EIN), sometimes referred to as a federal i.d number. This is the tax id number of a business. You can either go online to the I.R.S. web site or call 1-800-829-4933. Applying for an EIN will not impact your F-1 visa directly. But as I stated, it would depend on keeping your full time status for the F visa, not owning the company.

                  If you have searched immigration.com, which is sponsored by the Rajiv S Khanna law firm, I tend to find their answers to this type of question disingenuous.

                  Hope this helps
                  "Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence." John Adams on Defense of the boston Massacre

                  Comment


                  • #24
                    Hi All,

                    Thank you for your replies. After Hudson's reply i thought that i thought that I couldnt express myself and my intention. Thus i want to summarize them.

                    1- I have been here in US for 14 months and i have at least 3.5 year visa time left.

                    2- I want to establish a WEB BASED company.

                    3- It will be a retail website. I will buy goods from wholesalers to sell them online via my retailer website or in numerous auction websites.

                    4- I am an F-1 visa holder and my student status is not in danger as far as I attend to school. Currently i take 20 class hours per week and if i can establish the company that wouldnt affect my schedule.

                    5- I can stay and settle a life here in US. I dont care where i am from. We have a proverb at where i've come from, which says that "not the place u have born but the place you can survive/earn your life is your motherland". US can be my motherland. I do not believe in nationalities also. Anyway...

                    6- I cannot decide which type of business entity should i choose because all i know about them are things you have said to me guys. In an additon, i've read that i have to pay $800 per year for LLC type of entities regardless the company makes profit or not. So i guess i should choose sole proprietorship or something like that and take all the risks. If my company makes profit and if i find it reasonable in the future then i can switch to LLC or what ever it should be i guess. Right?

                    7- I need EIN because i have to make some business agreements with some of the wholesalers to buy some goods from them and to sell over my retail website. If you do not have an EIN they do not take you seriously. That is why i wanna have one. Here you can see some information about why i NEED EIN. I've found this in a wholesalers website for newbies.

                    Five Reasons to Get a Tax ID


                    If you are serious about establishing a business on eBay, then you'll need a federal Tax ID number. Find out why...
                    What is it?

                    Your federal tax ID number is a nine-digit number used to identify you to the IRS. This is different from a Sales tax number, which is issued locally.
                    Who needs it?

                    All US businesses selling products or services that pay any kind of taxes and/or have employees must have a federal tax ID number (also known as an employer identification number or EIN).

                    It is advisable for all US eBay sellers to get a Tax ID number, except if you are the sole proprietor of the business. This does not apply to sellers outside the US. In this case you can use your social security number instead. It's very easy to apply for your Tax ID. It literally takes less than 5 minutes over the phone to the IRS, or you can also apply online through the IRS website. As an eBay seller, there are 5 reasons why a Tax ID is useful to you:

                    1. Tax Breaks:If you run your business from home, you will be eligible for a number of tax breaks. To take advantage of these you will need your tax ID when you file your returns.
                    2. Business account: If you want to open a business bank account, you will need your tax ID as well as the social security numbers of the signatories.
                    3. Employees: Many eBay businesses have employees, often just part-time students taking care of packaging and post. Before you can legally employ anyone, you need a tax ID.
                    4. Open Wholesale accounts: Many US wholesalers will require a Tax ID number before they can do business with you. This is because all retailers in the US are required to collect sales tax from the end user. Without a Tax ID you can't do this and the wholesaler could face penalties for selling to you. International buyers do not require a tax ID when purchasing from US wholesalers..
                    5. Tradeshows: Tradeshows are a great way of meeting wholesalers, but you will need your Tax ID to register.

                    I hope this time i could make my self more clear. I mean i dont know which type of entity would be best for a tiny e-commerce company but i need EIN to make agreement with wholesalers to buy some goods to sale in retail. It is not that i am dyeing for to pay tax well if it is needed, i know it needs, then i would pay. But first i need my EIN. If i can change the type of the entity in the future so it means i dont need to worry about it from now. For the beginning i need the less expensive and simple one which ever one it is.

                    Do you have and idea how much would it cost to me to have an attorney or accountants help while i am establishing this company? I mean roughly.

                    Thank you for your time and comments in advance.

                    Gotham.

                    Comment


                    • #25
                      Any reply? Thank you.

                      Gotham

                      Comment


                      • #26
                        Gotham, here is a website that may be of help to you too:

                        Starting Own Business

                        A F1 student Visa holder asks some questions there and looks like a good site to get additional information
                        -----------------------------------------------------------------------------------------------
                        God Bless America - God Bless Immigrants - God Bless Poor Misguided Souls Too

                        National Domestic Violence Hotline:
                        1.800.799.SAFE (7233) 1.800.787.

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                        • #27
                          Thank you Sprint_girl07

                          Gotham

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                          • #28
                            Sodium Hypochlorite

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