Cliff Ennico
"I have been living in the United States for several years now on a temporary visa. Last year, I set up a limited liability company (LLC) for an online retail business. I understand that I do not have to be a U.S. citizen to own an LLC, but my attorney is telling me that I am not legally permitted to work here and so cannot do anything on behalf of my business. Is that correct? I have applied for a 'green card' so that I can stay here permanently, but it may be a long time before I get it."
While you do have to be a U.S. citizen or "green card" holder to own shares of stock in a subchapter S corporation, you do not need to be a U.S. citizen or resident to own shares in a regular or C corporation, or an ownership interest (called a "membership interest") in a limited liability company. However, that does not mean you have the legal right to enter into contracts or otherwise conduct business in the U.S. on behalf of your company.
You should talk to your immigration attorney about this. There are several different types of temporary visa the U.S. grants -- some allow you to work in this country while you are here, some allow you to work in this country but with certain restrictions (such as the number of hours each week you can work, or the types of jobs you can hold) and some do not allow you to work at all. You will need to follow the rules that apply to your specific visa type.
Since you have applied for a "green card," you should be able to obtain a "work authorization," which would allow you to work temporarily for your company until your "green card" application is either approved or finally rejected. This "work authorization" generally issues 90 to 180 days after your "green card" application is filed, but you may need to apply separately for it so be sure to talk to your immigration attorney about this.
If it is not possible for you to get a "work authorization," then talk to your immigration attorney and ask if the following approach would be acceptable:
"I live in Mexico and would like to make a little extra money by drop-shipping goods to people in the United States. I import the goods into the U.S. via a fulfillment company located in Texas. I only use this company to ensure the passing of the goods to the U.S. without being stopped by customs agents. I have found a wonderful U.S. wholesaler who can sell the goods online to U.S. buyers, but he has asked me for a federal tax ID number. My question is this: If my fulfillment company in Texas ships the goods directly to my U.S. buyers, do I really need to have a federal tax ID number since I assume the fulfillment company has one of their own?"
It is difficult to answer this question without knowing more about the legal relationship between you and the Texas fulfillment company, but I will assume that you still legally hold title to the goods that are stored there, and that the fulfillment company merely holds them "on consignment" for you, as that is the way these companies normally work.
Since the fulfillment company is selling the goods only as your agent (you are legally the "seller" your buyers are buying from), then your drop-shipper is correct in insisting you have a federal tax ID number because he or she will have to send you (not your fulfillment company) a Form 1099 at the end of each calendar year and withhold taxes on the amounts he or she remits to you.
You do not have to be a U.S. resident to obtain a federal tax ID number -- you would apply for this on IRS Form SS-4 (www.irs.gov/pub/irs-pdf/fss4.pdf) just like anyone else. For more general information about the ITIN and the rules that apply for foreign companies importing goods into the US, you should download IRS Publication 515, "Withholding of Tax on Nonresident Aliens and Foreign Entities," at www.irs.gov/publications/p515/ar02.html.
Cliff Ennico (crennico@gmail.com) is a syndicated columnist, author and former host of the PBS television series "Money Hunt." This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.
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While you do have to be a U.S. citizen or "green card" holder to own shares of stock in a subchapter S corporation, you do not need to be a U.S. citizen or resident to own shares in a regular or C corporation, or an ownership interest (called a "membership interest") in a limited liability company. However, that does not mean you have the legal right to enter into contracts or otherwise conduct business in the U.S. on behalf of your company.
You should talk to your immigration attorney about this. There are several different types of temporary visa the U.S. grants -- some allow you to work in this country while you are here, some allow you to work in this country but with certain restrictions (such as the number of hours each week you can work, or the types of jobs you can hold) and some do not allow you to work at all. You will need to follow the rules that apply to your specific visa type.
Since you have applied for a "green card," you should be able to obtain a "work authorization," which would allow you to work temporarily for your company until your "green card" application is either approved or finally rejected. This "work authorization" generally issues 90 to 180 days after your "green card" application is filed, but you may need to apply separately for it so be sure to talk to your immigration attorney about this.
If it is not possible for you to get a "work authorization," then talk to your immigration attorney and ask if the following approach would be acceptable:
"I live in Mexico and would like to make a little extra money by drop-shipping goods to people in the United States. I import the goods into the U.S. via a fulfillment company located in Texas. I only use this company to ensure the passing of the goods to the U.S. without being stopped by customs agents. I have found a wonderful U.S. wholesaler who can sell the goods online to U.S. buyers, but he has asked me for a federal tax ID number. My question is this: If my fulfillment company in Texas ships the goods directly to my U.S. buyers, do I really need to have a federal tax ID number since I assume the fulfillment company has one of their own?"
It is difficult to answer this question without knowing more about the legal relationship between you and the Texas fulfillment company, but I will assume that you still legally hold title to the goods that are stored there, and that the fulfillment company merely holds them "on consignment" for you, as that is the way these companies normally work.
Since the fulfillment company is selling the goods only as your agent (you are legally the "seller" your buyers are buying from), then your drop-shipper is correct in insisting you have a federal tax ID number because he or she will have to send you (not your fulfillment company) a Form 1099 at the end of each calendar year and withhold taxes on the amounts he or she remits to you.
You do not have to be a U.S. resident to obtain a federal tax ID number -- you would apply for this on IRS Form SS-4 (www.irs.gov/pub/irs-pdf/fss4.pdf) just like anyone else. For more general information about the ITIN and the rules that apply for foreign companies importing goods into the US, you should download IRS Publication 515, "Withholding of Tax on Nonresident Aliens and Foreign Entities," at www.irs.gov/publications/p515/ar02.html.
Cliff Ennico (crennico@gmail.com) is a syndicated columnist, author and former host of the PBS television series "Money Hunt." This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.
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Copyright 2009 Creators Syndicate Inc.
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