Re: internet business - legal and tax questions

In article <[EMAIL PROTECTED]>, [EMAIL PROTECTED] says...
> 
> I am getting ready to form an service related internet business, which could
> not be profitable in the first year or 2. The revenue will most likely be
> coming from US businesses. I reside and work in New Jersey, although I am
> non-resident alien authorized to work for my employer only. Therefore there
> will be 1-2 partners extra in the business that are US citizens/residents.
> There will be no employees until the business is profitable. I would
> appreciate your opinion on several basic questions:
> 
> 1/ which entity to choose - because of my immigration status, the best
> entity for a service related business - S-corp is out of question -
> therefore LLC or C-corp are the only options (I only consider asset
> protecting entities and I want to take US tax advantages for myself)
> 2/ which state should I register this company ? does it make sense to
> register company off-state while living in New Jersey ? does it make sense
> to register the company off-shore ?
> 3/ will I have to pay NJ tax on the business income in case most of the
> business will be done out of state ?
> 4/ which company registration service do you recommend ?
> 5/ what are best newsgroups to post these type of questions ?
> 
> Thank you very much for any help.
> 
> Azzuri

If, when you say "my employer" you mean that you are in the US under an 
H1B, there is no way to do what you intend legally. If when you said "my 
employer" you meant "an employer", the following might answer your 
questions:

1. You will be an employee of the business. Other than out of the 
ordinary areas such as grants of certain stock options and the like, all 
of the money paid to you can be claimed as an expense no matter which 
legal entity that you choose. In other words, there are virtually no tax 
ramifications to you as to the legal form of the business. No form of 
incorporate will allow before tax profit to flow to passive participants 
(the company will pay taxes before it yields anything to the owners of 
the company - your "1-2 partners") so again, no difference. 
2. You may read on the internet about "incorporate here" (or there). The 
truth is that legally you will owe taxes to any state in which you have 
a physical presence. If you are operating from NJ, you owe NJ. You can 
incorporate in Nevada to try to claim a Nevada only presence and avoid 
taxes. You can incorporate in Delaware (like much of the Fortune 500) to 
gain the benefit of corporation friendly laws and Chancery Court. None 
of these gambits are worthwhile to anything other than very large 
corporations with massive potential tax liabilities and legions of 
lawyers to argue their cases. If you incorporate, do it in your home 
state.
3. See #2
4. I don't know what you mean by "company registration". If you mean 
"incorporate', you can learn how on the NJ State web site. If you need 
help, contact a lawyer.
5. If you get answers, it's a good group. If you don't want to wade 
through spam, choose moderated groups.

Dave Miller
Strategic Services Group, Inc.
creators of FundablePlans.com
http://www.fundableplans.com
A commercial online tool for the creation of business plans.