What are the legal potential issues here?

What are potential issues arising if one cofounder is not a US citizen or permanent resident?

• There is a lot of talk about the Startup VISA movement for founders that are not US citizens or permanent residents and potential issues of varying degree including not being able to stay in the US. However what other issues could occur, say if one founder is from the US and one is not (although they are trying to gain legal status).

• Answer:

  There are some restrictions on the ability of a person who is not a U.S. citizen/permanent resident to form a company.  Anyone (regardless of citizenship/residency) may create a C-corporation or an LLC. However, an S-corporation, a special type of corporation which features a special tax status and requires the corporation to have fewer than 100 stockholders, is only available to U.S. citizens and permanent residents.  As a result, a non U.S. citizen/permanent can form any entity except for an S-corporation. Additionally, there may be additional obstacles for a non U.S. citizen/permanent resident, because he or she may not be able to obtain a visa to do the work necessary to run the business.  Currently, there are no U.S. visas targeted at foreign entrepreneurs.  However, the Start Up Visa Act, which was recently introduced to the Senate, seeks to create a special visa for foreign entrepreneurs with the purpose of creating more jobs in the United States.  If the bill is passed, you will qualify for a visa if: (1) you are an entrepreneur living outside the United States, (2) your company has a U.S. investor providing an investment of at least $100,000, and (3) your company in the first two years has created 5 jobs and has either $500,000 of investment or yearly revenue. Alternatively, foreign entrepreneurs may also qualify if their business has $100,000 in sales in the United States and within two years has generated $100,000 of investment or yearly revenue. As a result, if the Start Up Visa Act passes, foreign entrepreneurs will have an easier time getting a visa than they do now, enabling them to more easily carry out business in the United States.This answer is not a substitute for professional legal advice....