Foreigners Registering Nevada Corp


1

A California based investor will invest in a website developed and operated by a tech person in Europe.
Since the website is targeting U.S. visitors, they want to register a C-Corp in Nevada.

The CA person will be a passive investor owning 70% who will not participate in the operation of the business at all.
The tech person in Europe will run all the business and the website from Europe, owning 30%. He will be the only director and officer of the C-Corp.

Questions:

  1. Can the CA person use his SSN to get an EIN if he is not a director, an officer, or an employee?
  2. Can the CA person open a business bank account and a merchant account if he is not a director, an officer, or an employee? Can he use his SSN for this?
  3. Can the CA person open the business bank account using his residential address in California even if the company is registered in NV?
  4. They want to retain all earnings in the company in the start-up stage and not pay any dividend in the first few years. In this case, is there anything the CA person needs to report/reflect in his personal tax filing?

Incorporation California USA Nevada

asked Jul 20 '13 at 05:46
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User26315
6 points

2 Answers


1

Can the CA person use his SSN to get an EIN if he is not a director, an officer, or an employee?

Technically he probably can (check with a lawyer if legally it is allowed), but then he takes responsibility on filing etc. I would not advise doing that. Only a corporate agent is supposed to do that. Also, the CA FTB may come after the corp as doing business in CA, since a CA resident is acting on behalf of the corp.

Can the CA person open a business bank account and a merchant account if he is not a director, an officer, or an employee? Can he
use his SSN for this?

No. He has to have a signature authority, so he has to be in some capacity an agent of the corporation. Banks won't allow an unrelated person (even if a shareholder) act on behalf of the corporation.

Can the CA person open the business bank account using his residential address in California even if the company is registered in
NV?

Again, FTB will come after the company as doing business in CA. Why would you want this?

They want to retain all earnings in the company in the start-up stage and not pay any dividend in the first few years. In this case,
is there anything the CA person needs to report/reflect in his
personal tax filing?

Since its a C-corp - its a separate entity. As long as there's no income (including constructive), there's nothing to report. The corp will file its own tax returns. He should, of course, verify this with his tax adviser.

From your questions it doesn't sound like the CA resident is going to be passive. Passive = bought stocks and voted for a director once a year, that's it. Dealing with taxes, banks, registrations, whatever - is not being a passive investor. The fact that he doesn't draw salary is not what makes him passive.

I'm not a lawyer or a tax adviser, check everything with lawyers and tax professionals licensed in the respective jurisdictions (CA, NV, the European country).

answered Jul 20 '13 at 06:08
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Littleadv
5,090 points
  • Can the tech person travel from Europe to the U.S. to open the bank account, but using the CA person's SSN? >>No. He has to have a signature authority, so he has to be in some capacity an agent of the corporation. Banks won't allow an unrelated person (even if a shareholder) act on behalf of the corporation. – User26315 4 years ago
  • The foreign guy to use the American's SSN? That would be criminal. – Littleadv 4 years ago
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0

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answered Sep 10 '17 at 07:06
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Mehamood M
1 point

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