From highly developed sectors ranging from agriculture to robotics to the world’s most abundant capital markets, the United States offers fertile soil for newly-formed corporations to thrive. Are foreign nationals allowed to own C-corporations in the United States? Read on to find out.
C Corporations vs. S Corporations – Understanding the Concept
A corporation is a company established as a separate legal entity from its owners. Hence, a corporation can own assets, borrow money, file lawsuits against other parties, or be sued in its own name, which protects its owners from business debts and liabilities.
The owners of a corporation are referred to as shareholders. Please note that the shareholders own the corporate structure, but the corporation itself owns the business. There are two types of corporations – C-corps and S-corps.
Under the rules established by the Internal Revenue Service (IRS), C-corps are the default corporate businesses. On the other hand, S-corps are corporations where shareholders have opted for a special tax status.
The prefixes “C” and “S” come from the parts of the Internal Revenue Code under which each type of company is taxed. To get taxed under Subchapter “S” of the Internal Revenue Code, the owners of a corporate business must file Form 2553 with the IRS.
C-corps are subject to double taxation. First, these companies must pay taxes at the corporate level when they file Form 1120. When shareholders receive income in the form of dividends, they must also pay taxes on a personal level.
On the other hand, S-corps are “pass-through” entities. While these entities file federal tax returns, corporate income is not taxed at the corporate level, as profits and losses “pass-through” the company to the shareholders’ personal tax returns.
Accordingly, the shareholders only pay taxes at the individual level, which avoids double taxation. In either case, the corporate business structure offers limited liability protection, which shields shareholders against personal liability for the company’s debts and issues.
Can Foreigners Own C Corp? – The Verdict
US law does not restrict foreign ownership of C-corps. Even non-US residents can form C-corps in the United States, as no regulation requires shareholders to be US citizens, green card holders, or pass the substantial presence test.
No legal rules restrict foreigners from fully or partially owning a C-corp. Please note that the same standard is not applied to S-corps.
This business structure is restricted exclusively for US citizens or permanent residents, which makes non-residents not eligible for either full or partial S-corp ownership.
Another aspect of foreign C-corp ownership is the authorization to work for the company. Depending on the nature of the company’s activities and other circumstances, a foreign C-corp shareholder can apply for different visas like:
- E-1 Treaty Trader Visa
- E-2 Treaty Investor Visa
- EB-5 Immigrant Investor Visa
- L-1 Multinational Executive Visa
- H-1B Visa
While non-US residents can own or direct a C-corporation in the United States without a visa, they can only work in the business as foreign officers with proper work authorization.
Do You Want to Own a C Corp in the US as a Non-Resident? – Count on Us to Help You Accomplish Your Entrepreneurial Goals
As an experienced legal advisor on US business and immigration law, Attorney Romy B. Jurado is willing to help you succeed. Immediately contact us by calling (305) 921-0976 or emailing Romy@juradolawfirm.com to schedule a consultation.