LLC with US Citizen (H1-B)

[woonhee]

I've been researching this subject for a long time. I totally understand that you can start your own business. However, you cannot work for your business in any form.

I need some advice from an expert like JoeF. I'm planning to form a LLC with US partner for a restaurant business. The US person will be a managing patner and I won't be particitating in any form of management including signing any business documents or checks although I will have to sign on LLC operating agreement.

My real question is this. In order to be considered as a passive income or investment, everybody including JoeF talks about getting your profit as a dividend. However, I will have to report and pay any tax on my profit based on K-1 schedule in case of LLC. Would it make a difference when it comes to complying my H1-B status?

I have another question, though. How would USICS (INS) know if one is working for his own business if they don't leave any paper trail? I'm just qurious.

 

[woonhee]

Re: Re: LLC with US Citizen (H1-B)

Thanks for the clarification, JoeF. I agree that the safest form of profit taking is dividend. The problem is that my partner wants to have the business to be set up as LLC rather than Corporation. It's simply to avoid the double taxation. Besides, S Corporation is not an option since I don't have a GC or Citizenship yet.

Originally posted by JoeF
No legitimate business can operate without leaving a paper trail.

That's true when your buisness is set up as Sole Proprietor or when you don't have any choice but to directly involve in operation of your business. However, in my case, my US partner will be managing every aspect of the business. I was just wondering how INS knows or decides that I'm working for the business if I will be there from time to time in order to learn how to run a restaurant business so that I can get directly involved when I get my GC later on. I wouldn't take any salary or compensation other than taking passive profit.

 

[woonhee]

Re: Re: Re: Re: LLC with US Citizen (H1-B)

Originally posted by JoeF
Well, with the immigration law, you are guilty until you prove your innocence...
They can ask you to provide evidence that you didn't work.
In your situation, if CIS gets to know that you hang out there in the manager's office that may well give them the impression that you may be involved more than allowed.

I totally agree. It just sucks to be treated like some kind of prospective law breaker until you get the GC. In case CIS questions my H1-B status and seeks the evidence that I didn't work for the business, then I will be screwed. They can ask employees of the restaurant if I was working there.

This is very good business case with more than 15 full-time US employees. If I have enough money ($1 Mil), I could get the GC right away. I just cannot pass this opportunity and will have to take a chance. While this has to be my own decision, I thank JoeF for your insight. I will let you guys know how my case proceeds.

 

[woonhee]

JoeF is right.

What JoeF says is true when it comes to S Corporation. I have checked the tax lawyer and reputable CPA firm and they confirmed it.
Everyone should be careful when enterpreting the tax law.