Legal Question in Business Law in California

Your question is too board to accurately answer. Generally, you would go through the same basic due diligence in starting any business (business plan, business agreements, etc). However, one main restriction is that you cannot operate the business as an S-Corporation, because S-Corps require that all stock holders be US citizens. However, you have a number of other choices (i.e. LLC, C-Corp, etc), so the S-Corp restriction should not be a huge hurdle.

Another potential issue is that owning a business and being able to stay in the US to run the business are different question. Although the foreigner is able to own a business, he might be not able remain in the US to run the business. If the foreigner wants to remain in the US to operate the business, he will need to have a visa. One type of visa is an E-2, but he is required to make substantial capital contributions to the business along with having to meet other requirements in order to obtain this visa.

In the end, if you are okay with the possibility of your business partner not being in the US, starting a business with a foreigner should not be a problem. Feel free to contact me or an attorney in your area to further discuss this matter.

Jim Betinol

Partner

Withrow and Betinol Law

www.wibelaw.com

E: [email protected]

P: 424.229.2560

F: 424.258.7001

Disclaimer: This communication does not create an attorney-client relationship and such a relationship can only be formed through a signed written agreement. This communication is not legal advice and should not be solely relied upon in making your legal decisions. Any situation depends on many different facts and specific laws that require an in-depth legal consultation to evaluate the best solution for your needs.

I agree with the previous answer except the description of the limitation on ownership of an "S" corporation isn't totally accurate. The limitation is not as to non-citizens. An "S" corporation cannot have a "nonresident alien" as a shareholder. Your "S" corporation co-owner can be a non-citizen so long as he has residency status in the U.S.