Legal Question in Business Law in California

Answers:

1. Yes, but having side ventures may be contrary to the sponsor's policy.

2. An investor in a corporation, LLC or partnership, or any other kind of business except a sole proprietorship, can be active, semi-active, passive, etc. The degree of activity is unrelated to the fact of ownership or the form of the business. The H1B person's involvement should be more or less passive, and in line with his responsibilities to his sponsor.

3. The corporation will have tax liabilities while it operates. The tax liabilities don't just disappear if the corporation is closed. The shareholders will have to see to it that the corporation's liabilities are paid before they can accept liquidation proceeds when the company closes down. In other words, if X, Y and Z form a corporation, and each is a shareholder and director, and X gives the corporation a truck in exchange for his shares, and Y puts in $10,000 cash for his shares, and Z exchanges computer equipment for his shares, when the company is closed and its business wound up, all debts including taxes must be paid off 100% before any insider, X, Y or Z, may legally take back any money or equipment or vehicles or even paperclips.

4. Yes, and file reports in both states too.