Establishing a Subsidiary in USA
An S corporation is not subject to double taxation, but it is limited to only 100 shareholders, all of whom must be US citizens/residents, and it cannot be owned by another C Corp, S Corp, L.L.C., or partnership. As such, an S corporation is probably not an ideal option for foreign businesses.
Filing for authority to run a foreign corporation in New York requires an Application of Authority. A foreign corporation is subject to Branch Profits Tax and Branch Interest taxes, which requires complicated bookkeeping. It should be simpler to incorporate within the United States rather than to operate as a foreign corporation.
Are you a manager, executive, or "specialized knowledge" employed by a foreign business entity?
Have you been working abroad for at least one continuous year for the past three years?
Is your company abroad related to the U.S. business you will establish? Will the foreign entity continue to do business?
Will you be coming to the United States to open a new office location for your company?
- U.S. Citizen and Immigration Services: L-1 Visa
The employer must file a Form 1-129, with fee, on behalf of the employee. Spouses and unmarried children under 21 of an L-1 employee may apply for an L-2 visa.
The new U.S. office must have a corporate relationship with your foreign entity abroad where you have been employed as a manager, executive, or worker with specialized knowledge. This means that the new U.S. office must be a parent, affiliate, subsidiary or branch of the foreign entity, and that both the U.S. office and the foreign entity must continue to share common ownership and control.
· Any other evidence demonstrating ownership and control over the U.S. and foreign entities (i.e., stock purchase agreements, voting rights agreements, capitalization table, term sheet)
A subsidiary is an entity of which a parent owns, directly or indirectly, half or more of the entity and controls the entity. This includes 50-50 joint ventures that have equal control and veto power, as well as parent companies that own less than half the entity but in fact controls the entity.
To show that your overseas employment was in a qualifying capacity, USCIS suggests submitting evidence such as organization charts showing your position, patents or other evidence that the company's products are based on your work, performance reviews, loans/financing on behalf of the company, organizational job descriptions, and a resume describing your job accomplishments. This is not an exclusive list.
If you re filing for a new office, provide a copy of a business plan or executive summary that shows the size of the U.S. investment and your ability to commence doing business in the United States.
In addition to evidence showing you have secured a physical premise, explain how this location is sufficient for your business.
What makes an office active and operating will differ depending on the nature of the business. Typically it will involve factors such as hiring additional employees, fulfillment of contract orders, having a revenue stream, or holding inventory, if applicable.
After one year, the manager or executive is expected to be functioning as a manager or executive. If the manager or executive is still in a position where they are required to handle "hands-on" matters themselves, this requirement is probably not met. The manager or executive should be focusing on their managerial and executive tasks.
Position descriptions providing the roles and responsibilities of all current employees, or other evidence which clearly demonstrates how the manager or executive is relieved of non-qualifying duties
Jack Ding, a senior counsel at King & Capital Law Firm. His practice area includes capital market, M&A, overseas investment and high - net worth individuals’ wealth management and immigration, focusing on real estate, movie and entertainment, IT industries. Jack had previously worked with some top international law firms including Lovells LLP, Linklaters LLP, and Stoel Rives LLP, with working experiences in China, US and South Korea. His working language is Chinese and English and he can speak Korean. Jack is a voting member of Engagement Committee of University of Washington Law School Leadership Council and a member of Executive Leadership Committee University of Washington Alumni Association Beijing Chapter.