Optimal business structure???
I'm starting a business with my father who is not a US resident. I want him to be the full owner of the business- I don't want to have any ownership whatsoever. However, I want be fully involved in all operations- from signing checks to paying people. What is the best form of ownership for this situation? LLC? Corporation? Thank you
1 Answer from Attorneys
Re: Optimal business structure???
There are a lot of factors that go into deciding how to structure a business and not all of them are addressed in your post. What sort of business do you plan to open? What are your long term plans for the business? Will you be paid a salary or will you be sharing profits with your father?
Just based on the information in your post, I would think a manager managed LLC, with you serving as the manager would be the best choice. A corporation would probably not be a good choice, because your father is not a US resident, and therefore, the corporation would have to be a C Corp, not an S Corp, and so your father would be taxed twice. (The corporation would be taxed on its income, and then he would be taxed again on the profits he takes out. However, if you plan to go public, you will want to be a C Corp anyway.)
It really all depends on all the details of your situation. When you are forming a company is not the time to pinch pennies; you are laying the foundation for your business, and you are setting in motion processes that may have many unforeseen tax consequences or other unanticipated outcomes. Even if you want to do some or all of the formation work yourself, spend some time with an attorney to make sure you are creating the company you really want.
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