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  #1 (permalink)  
Old 10-31-2007, 12:07 PM
n2b n2b is offline
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Default S Corp on EAD?

I know there are other threads discussing creating a company and all. But I have a very specific question.

I believe there has been various interpreation regarding who can and can not open a S Corp company and what is considered as a legal resident?

I have been in this country and paying tax each year for past 7 years. My wife has been in this country and paying tax each year for over 5 years now. I am the principal applicant of I-485, and my wife and I, we both are on H1B and we both have received our EADs. However, I have opened a S Corp company just on my wife's name. If I start any business I plan to do it only through my wife and have her utilize her EAD and probably she may maintain her job with her H1B employer as long as possible. I plan to maintain my H1B with my employer and not use EAD as long as possible.

I have the following questions -
1) Are we considered legal resident for opening a S Corp or not?

2) Can my wife now operate a S Corp using her EAD?

3) If opening an S Corp was a bad idea, is it ok to not do any business with this company and just keep the company on records with zero revenue? Or will create any issues during I 485?

4) Has anybody operated a S Corp on EAD while 485 is pending and had any issues?
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  #2 (permalink)  
Old 10-31-2007, 12:40 PM
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I am looking to start a company too so have similar questions (sorry no answers yet!). I would advise OP to consult an attorney.
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  #3 (permalink)  
Old 10-31-2007, 12:42 PM
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Quote:
Originally Posted by n2b View Post
I know there are other threads discussing creating a company and all. But I have a very specific question.

I believe there has been various interpreation regarding who can and can not open a S Corp company and what is considered as a legal resident?

I have been in this country and paying tax each year for past 7 years. My wife has been in this country and paying tax each year for over 5 years now. I am the principal applicant of I-485, and my wife and I, we both are on H1B and we both have received our EADs. However, I have opened a S Corp company just on my wife's name. If I start any business I plan to do it only through my wife and have her utilize her EAD and probably she may maintain her job with her H1B employer as long as possible. I plan to maintain my H1B with my employer and not use EAD as long as possible.

I have the following questions -
1) Are we considered legal resident for opening a S Corp or not? - Yes

2) Can my wife now operate a S Corp using her EAD? - YES

3) If opening an S Corp was a bad idea, is it ok to not do any business with this company and just keep the company on records with zero revenue? Or will create any issues during I 485? - no issues

4) Has anybody operated a S Corp on EAD while 485 is pending and had any issues?
- same situation, spouse on dependent EAD, we hired a qualified CPA and he suggested opening S-corp, I asked is it okay to do on EAD, he said yes and he has done same for hundereds of desis. Enjoy
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  #4 (permalink)  
Old 10-31-2007, 12:46 PM
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Quote:
Originally Posted by H1bslave View Post
- same situation, spouse on dependent EAD, we hired a qualified CPA and he suggested opening S-corp, I asked is it okay to do on EAD, he said yes and he has done same for hundereds of desis. Enjoy
Thank you for your response.

http://immigrationvoice.org/forum/showthread.php?t=2441 (Next Attorney Conf. Call) => IV attorney conf call, one of us should raise this question.

http://immigrationvoice.org/forum/showthread.php?t=4118 => IV thread on starting a company; post this message there and OP will probably get better response.
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  #5 (permalink)  
Old 10-31-2007, 12:52 PM
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Default

Quote:
Originally Posted by n2b View Post
I know there are other threads discussing creating a company and all. But I have a very specific question.

I believe there has been various interpreation regarding who can and can not open a S Corp company and what is considered as a legal resident?

I have been in this country and paying tax each year for past 7 years. My wife has been in this country and paying tax each year for over 5 years now. I am the principal applicant of I-485, and my wife and I, we both are on H1B and we both have received our EADs. However, I have opened a S Corp company just on my wife's name. If I start any business I plan to do it only through my wife and have her utilize her EAD and probably she may maintain her job with her H1B employer as long as possible. I plan to maintain my H1B with my employer and not use EAD as long as possible.

I have the following questions -
1) Are we considered legal resident for opening a S Corp or not?

2) Can my wife now operate a S Corp using her EAD?

3) If opening an S Corp was a bad idea, is it ok to not do any business with this company and just keep the company on records with zero revenue? Or will create any issues during I 485?

4) Has anybody operated a S Corp on EAD while 485 is pending and had any issues?
Here is what I know. Obviously, this is not a final ruling on the topic and you should be checking with a knowledgeable attorney.

1) All S-corp owners need to be Citizens or Green card holders. Some people have been confused by the IRS definition of a resident using their "substantial presence" logic, but that is only for dependants of tax payers. The S-corp requirement comes from section 7701(b)(1)(B) of tax laws. The recommended choice for people in 485 status is obviously a c-corp or LLC. As I know, you can later change a c-corp to s-corp and get back the extra tax paid out until then.

2) Based on 1, the answer is No.

3) Based on 1, one in 485 status should not be owning an S-corp in part or full - revenue or no revenue.

4) No idea.

Last edited by kaisersose; 10-31-2007 at 12:56 PM.
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  #6 (permalink)  
Old 10-31-2007, 02:11 PM
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Default Good Immigration Attorney in Southern CA

Guys,

Do you know any knowledgable and experienced Immigration Attorney in Southern California ?

I want to discuss my work options (self-employment or change of employer/Change of job description - Developer to Team Lead etc.)

pls. share your experiences and recommendations.

Thanks.
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  #7 (permalink)  
Old 10-31-2007, 06:34 PM
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Default no

doesnt matter if you open S corp or LLC. you might be OK opening any type of company and hiring others.
but in order to work for your own company you will have to use EAD. which would change your status to parolee and hence would invalidate your H1.
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  #8 (permalink)  
Old 10-31-2007, 07:07 PM
n2b n2b is offline
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Default

Quote:
Originally Posted by sukhwinderd View Post
doesnt matter if you open S corp or LLC. you might be OK opening any type of company and hiring others.
but in order to work for your own company you will have to use EAD. which would change your status to parolee and hence would invalidate your H1.
Seems like people here are saying no S Corp at all, does not matter if you work for your own company or not!
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  #9 (permalink)  
Old 10-31-2007, 11:50 PM
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Default

It is not a good idea to open an S-Corp. If you want an incorporation a C- Corp is a better Idea. An S-Corp is basically for citizens and has a lot of legal implications. A C-Corp is much more flexible. The best is an LLC. You get tax benifits and your liabiality is limited with an LLC. But if you intend to hire other people a C-Corp is your choice.

Why did you choose an S-Corp over an C- Corp? Any particular reason?

1) And 2)- NO

3) Keeping the company on Zero revenue is going to cost you. You have to pay yearly taxes. For e.g, in NJ you will end up paying $750 for state taxes and another approximately $140 in annual reports etc for a company with no revenue.

It might be a better idea to cut your losses and open an LLC.

I started an C-Corp 2 years ago. What ever the company earns remains in the company, I am not an employee. This is so I don't invalidate my H1. I can now work for my company though, since I have my EAD.

Hope this helps, but consult a CPA or Attorney.


Quote:
Originally Posted by n2b View Post
I know there are other threads discussing creating a company and all. But I have a very specific question.

I believe there has been various interpreation regarding who can and can not open a S Corp company and what is considered as a legal resident?

I have been in this country and paying tax each year for past 7 years. My wife has been in this country and paying tax each year for over 5 years now. I am the principal applicant of I-485, and my wife and I, we both are on H1B and we both have received our EADs. However, I have opened a S Corp company just on my wife's name. If I start any business I plan to do it only through my wife and have her utilize her EAD and probably she may maintain her job with her H1B employer as long as possible. I plan to maintain my H1B with my employer and not use EAD as long as possible.

I have the following questions -
1) Are we considered legal resident for opening a S Corp or not?

2) Can my wife now operate a S Corp using her EAD?

3) If opening an S Corp was a bad idea, is it ok to not do any business with this company and just keep the company on records with zero revenue? Or will create any issues during I 485?

4) Has anybody operated a S Corp on EAD while 485 is pending and had any issues?
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  #10 (permalink)  
Old 11-01-2007, 06:33 AM
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Default Hmmm..

Quote:
Originally Posted by smisachu View Post
It is not a good idea to open an S-Corp. If you want an incorporation a C- Corp is a better Idea. An S-Corp is basically for citizens and has a lot of legal implications. A C-Corp is much more flexible. The best is an LLC. You get tax benifits and your liabiality is limited with an LLC. But if you intend to hire other people a C-Corp is your choice.

Why did you choose an S-Corp over an C- Corp? Any particular reason?

1) And 2)- NO

3) Keeping the company on Zero revenue is going to cost you. You have to pay yearly taxes. For e.g, in NJ you will end up paying $750 for state taxes and another approximately $140 in annual reports etc for a company with no revenue.

It might be a better idea to cut your losses and open an LLC.

I started an C-Corp 2 years ago. What ever the company earns remains in the company, I am not an employee. This is so I don't invalidate my H1. I can now work for my company though, since I have my EAD.

Hope this helps, but consult a CPA or Attorney.

TRUE: Not a good idea to start a S-Corp based on the EAD status.

TRUE: An S-Corp is basically for Citizens

TRUE: [sic] Has a lot of legal implications. Not just a S-Corp but any legal entity.

NEUTRAL: A C-Corp is much more flexible

TRUE: Best is an LLC

NEUTRAL: You get tax benefits and your liability is limited with an LLC

FALSE: If you intend to hire other people, C-Corp is your choice.


I don't want to say anything and I hope you do your research and work with a qualified corporate attorney and an immigration attorney but I have a LLC and a C-Corp incorporated in two different states without any hindrance whatsoever. How I did it? I don't want to say simply because it depends not only on federal laws but also state laws and what I did is completely related to the line of business and the relevant state and federal laws associated with that business.

One thing I can tell you is that Starting a S-Corp on a EAD is definitely not a good idea since most of the benefits are exclusively defined for US Citizens or Resident Aliens.

http://www.irs.gov/publications/p519/ch01.html#d0e470


If you are confident and detail oriented and don't mind spending the extra money to back your findings with sound legal guidance and interpretation, go for it. You are only good as the attorney representing you. So don't look for cheap and inexperienced attorneys. I burnt my fingers and that is my sincere advice. I fought a state agency on their intepretation through a top law firm and got what I wanted. Don't hesitate to believe in yourself and your idea.

And please, please, please.. Just because everyone is doing it, doesn't mean it is the right thing. Research, research, research and don't be cheap to not hire the best attorney or CPA out there to interpret/back your research. Trust me, it will save you a lot of money in the long run. Plus, Attorney's and/or CPA's will not mess with you because once you do your research and talk to them in their "language" they know that you are serious and smart.

I am lucky to have some of the best lawyers in my city working for me and my best friend's brother as the CPA. Opening a business by impulse is definitely not a good idea, but if you are adventurous and a risk taker, do what you should. Money and a good lawyer will always bail you out of any situation. But again, don't take my advice for it.

Its a wonderful and exciting world of entrpreneurship here in the US and if you are like me, you will love it.

Piece of advice after you open a business - Trust no one! If only I had another 12 hours in a day.. *wishful thinking* And yes, please join your state chapter.
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Last edited by sw33t; 11-01-2007 at 06:36 AM. Reason: blah
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  #11 (permalink)  
Old 12-27-2012, 12:42 PM
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Default S Corp on EAD- Urgent replies wanted

I am planing to open a S- Corporation on EAD is it advisable

I have a very specific question.

I believe there has been various interpretation regarding who can and can not open a S Corp company and what is considered as a legal resident?

I have been in this country 17 and paying tax each year for past 17 years.I am the principal applicant of I-485

I have the following questions -
1)Are we considered legal resident for opening a S Corp or not?

2) I heard that there will be tax benefit. I am paying a lot on my taxes every yr. Is it true

3) If opening an S Corp was a bad idea, is it ok to not do any business with this company and just keep the company on records with zero revenue? Or will create any issues during I 485?

4) Has anybody operated a S Corp on EAD while 485 is pending and had any issues?
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  #12 (permalink)  
Old 12-27-2012, 01:12 PM
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Default S Corp on EAD- Urgent replies wanted

Did you start S-Corp ?????? I need answers from people who started and got GC


Quote:
Originally Posted by Rams2012 View Post
I heard you need to be green card holder or US citizen to start S corp. But anyone can start C corp or LLC.
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  #13 (permalink)  
Old 12-27-2012, 01:32 PM
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Default

Why only S corp?

You also need to look at the reasons why you want to open an S Corp vs say an LLC

Do a search on the forum archives. These topics were discussed at length in the past . You can dig up those threads. If you can help others like you looking for such answers, please add useful tips in IV wiki . It would be appreciated.
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  #14 (permalink)  
Old 12-27-2012, 01:36 PM
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not residents can not open S class ..
if you want a corporation then C class is the only option ..
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  #15 (permalink)  
Old 12-27-2012, 02:12 PM
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Default

what is the benefit of incorporating at the last minute of the FY?
Would you be able to increase tax savings on your non-incorporated earnings?
are you planning to link your personal income to new incorporation as capital investments?
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