Re: internet business - legal and tax questions

Maren Purves wrote:

> azzuri wrote:
> > 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:
>
> I have always wondered about that, having been a non-resident alien once
> myself:
>
> - If you're in business for yourself (self employed or owning a business),
> meaning you're not employed by somebody else, is that legal with a social
> security card marked "not valid for employment"? (Not that mine ever was)

I'm not a lawyer so some of what I suspect about how one gets around the rules
may
not be correct, or may have been changed, but here's my opinion on how they get
away with this.

If you don't hire yourself then you're not working for wages.  If you are an
owner
of the company, supposedly you would get either dividends or the remaining
profits
through pass through as an S corporation or directly as (one of) the owner(s) of
an LLC.  Since you're not working for wages the rules against employment don't
apply.

> - and: if you write a book, can you be paid royalties in spite of not being
> allowed to work?

Yes.

> Where is the boundary?

Receiving wages as an employee of an American company.  If you are provably an
independent contractor you're a private business and are not an "employee" of
the
other company.

Now if it's not an American company then the rules don't apply.

If someone was a citizen of, say, Mexico, snuck into the U.S., came to
Washington,
D.C. and got a job at the Australian Embassy it wouldn't matter whether they
were
authorized to work in the U.S. because they are {de jure} working in Australia
even though the building is physically inside the united states, it is as a
matter
of law Australian soil.

It's only if you become an employee of an American company - or a foreign
company
that has an office in the U.S. - that the issue of illegally working if you're
not
authorized to do so.

This is one of the reasons why it's kind of unfair, because those who are
non-resident aliens without authorization to work would otherwise work low-level
jobs (cooks, dishwashers, cleaning people, farm workers) but are in a position
where it is illegal for them to do so and thus are mercilessly exploited.

On the other hand, those who are at the higher end can set up their own
corporations, have the corporation contract with the other party and then work
for
their own corporation as an independent contractor.  Or incorporate in their
country, be a legitimate employee of that company and then do work here as an
employee of the other company which has contracted with the local company. 
(That,
however might not be legal, I'm not sure, but if there's no paperwork filed the
federales won't know about it.)

> I know there are lots of foreign non-resident investors who own real estate
> (certainly with the purpose
> of making money, not losing money) or US stocks.

They again, are not working for wages.  The system is rigged to make it illegal
for the little guy (who isn't a citizen) to make money but the big boys who
collect rents ("rents" meaning unearned income) and royalties win big time.

--
Paul Robinson  "Above all else... We shall go on..."
"...And continue!"
"If the lessons of history teach us anything it is
that nobody learns the lessons that history teaches us."