Should I be listed as Officer/Director of my new US company?

[seekersharer]

Question. I am moving to the US on a K1 visa hopefully by spring 2009.

I need to set up my company in the US. I would like to do so well in advance of my move in order to begin to transition my clients from the Canadian company to the US company and give it some traction before I obtain my greencard.

Based on all my research, my business type and other related details a C Corp is the way to go. I will be it's primary shareholder.

Is it appropriate or prudent from an immigration perspective for me to be an officer/director of my new company. I realize I can't pay myself out of the company until I have my greencard. But I am wondering if being listed as an officer/director (which is public record) would have any impact on my k1 immigration process or could potentially be a detriment.

Any thots would be helpful.

Cheers!

[Reba]

Well, here is the conundrum. A K1 is authorized to work for the validity of the 90 day I-94 after entry. IF you can get an EAD stamp at the POE (which are difficult to get at Canadian airports and Can/Am land crossings). In most instances, you will not be legally able to work until you get your EAD, which you cannot even apply for until after you're married and send in the AOS package. EADs usually take about 3 months to process, so unless you get married the day after you arrive, plan to be unemployed for at least 4 months or so after you get there.

Even if you were to get the temp EAD stamp at the border, its only valid for the 90 days of your K1, and once it expires, I don't think you can legally work.

For info on the K1 EAD and such, see http://www.visajourney.com K1 forum.

Perhaps Steven will have some other information?

[seekersharer]

Not so much worried about my ability to work or to get paid. The issue is more related to my status in my company. I can be a shareholder. just concerned about officer or director. I will not be paid as I cannot be. That I understand.

If necessary, my company can pay my wife while I am unemployed and without EAD.

But I am in fact getting married the day I arrive. whenever that may be.

[Steven]

It won't have any impact on your visa, they don't check and there's nothing illegal about a Canadian citizen owning a C corp anyway, Ted Rogers did it.

It's entirely lawful to run money through it and pay yourself from it as well, you report your personal income on 1040NR until you become a US resident. The immigration issue is only relevant insofar as where you physically are when the work is performed; where the corporation you work for is doesn't matter as far as immigration goes.

But bear in mind if you work for a US corporation it must be registered in Canada and have a business number and perform Canadian payroll withholding in order to be able to pay you, because you live in Canada.

Your real problem isn't the US end anyway, it's the Canadian end. If you own a Canadian corporation that is a CCPC, the CCPC status depends on your Canadian residency. If you cease be a resident of Canada you run into two big problems: (a) all corporate income becomes subject to the full rate of corporation tax - you can get out of this one by paying yourself more so the corporation has no retained earnings; and (b) the bigger problem is that you will be subject to departure tax.

Departure tax is a 25% capital gains tax on gains over $50,000 that are subject to the tax; (principal residence in Canada is exempt). So if you have a corporation that you started from zero and the balance sheet now says it's worth, say, $120,000, you are the only shareholder and if that's your only asset subject to the tax, you owe the CRA 25% of $70,000.

The way around it obviously is to reduce the value of the corporation so you don't get hit with it, but money you pay out will be subject to income tax so you have to time it carefully and also plan it carefully.

Read: http://www.cra-arc.gc.ca/tx/nnrsdnts/nd ... n-eng.html