Answers|Dictionary

Can a founder living outside the US own and run a US company?

Non-US foundersFormationTax

Yes. Neither federal law nor any state's corporation statute requires a shareholder, director or officer of a US corporation to be a US citizen or resident, and LLCs are the same for members and managers. A founder in Berlin or Bangalore can own the whole company, sit on its board and sign as its president. What the founder cannot do is work in the US for it without a visa, and the company cannot elect S corporation status with a non-resident shareholder, which is one reason startups with foreign founders are C corporations. The rest of the difficulty is administrative.

Tax numbers

The EIN application asks for a responsible party with a Social Security number or ITIN. A founder with neither cannot use the online tool and applies by phone, fax or post instead, writing foreign or N/A in the identification box; the phone route is the fast one. The 83(b) election asks for a taxpayer number too, and there is no IRS guidance on filing without one, so foreign founders file on time regardless and mark the box. An ITIN can be applied for afterwards on Form W-7.

Banks

US banks have to identify the beneficial owners of a company and often want to see a founder in person, or a US address and phone number. Some newer banks and fintechs open accounts for foreign-owned US companies remotely; traditional ones frequently will not. Budget time for this.

Tax at home and abroad

Dividends the company pays to a non-US shareholder are subject to US withholding at 30 percent, reduced under a tax treaty if the founder's country has one and the founder gives the company a Form W-8BEN. Whether the company's activities create a taxable presence in the founder's home country, and how the founder's shares are taxed there, are questions for counsel in that country, and worth asking early.

Arabella forms the company for founders anywhere, and files the EIN for a responsible party who has a US number. A founder without one has a step-by-step guide to the phone route.

Written by the lawyers who built Arabella. This is legal information, not legal advice for your situation, and reading it does not make us your lawyers. For a real dispute or a high-stakes decision, talk to a licensed attorney. More questions.