This post is about employment law. It is directed particularly to people from other countries who are not familiar with U.S. employment practices.
It is based on my answer to a Quora question. Â Please seeÂ What are the most important aspects of American labor law that a foreigner trying to make a terrestrial logistics company in (any state of) the U.S. should take into consideration?
I am providing this answer based on my experience helping dozens of international clients conductÂ businesses in the U.S.
This post answers a question I have heard many times: How can a foreigner open a bank account in the U.S.?
Foreign entrepreneurs often ask this question. Because of the large market here, they want to start a business in the U.S.Â And because they want to do so effectively, they usually needÂ a U.S. bank account. (more…)
Je suis Charlie (French for “I am Charlie”).
This post supports freedom of expression, generally, and more particularly Parisian satirical weekly Charlie Hebdo, which was the victim of a massacre by Islamist radicals on January 7, 2015.
Being a bit of a francophone and francophile (see Paris: What a Difference a Decade Makes), and having relatives in Paris, I feel it is especially important to join millions of people throughout the world proclaiming that we value freedom of speech and that we will not be intimidated by thugs. (more…)
This post about limiting directors’ voting rights is based on my answer to a Quora question. (See Can a business owner draw up bylaws/articles of an organization that limit voting rights of directors?)
The incorporator or shareholders may approve a certificate of incorporation or bylaws that limit directors’ voting rights. (more…)
A friend recently showed me a ridiculous article that RBS posted on its website last year. (Please seeÂ The five trends shaping Germany to 2030.)
That post isn’t ridiculous because of the article’s content. It is ridiculous because the disclaimer RBS provided following that article, at 994 words, is almost twice as long as the article, itself!
RBS Disclaimer Details
Furthermore, if one reads the mind-numbing disclaimer word-by-word, one finds some interesting content.
I recently have received several inquiries about whether a foreign company or its owners need an ITIN (Individual Taxpayer Identification Number) when they bring their business to the US. The answer is, “No.” The rest of this post explains why that is the case.
When a company wants to do business in the US, it needs an EIN (Employer Identification Number).
For a foreign or foreign-owned company, obtaining an EIN can be intimidating. This is especially true if the principal officer lacks a US social security number. (The EIN cannot be obtained quickly and easily online.)
In a recent article (Foreign Entrepreneurs Learn Art of the American Pitch), the Wall Street Journal discussed the role of “pitch coaches” who help foreign entrepreneurs promote themselves in the US. While the article focused primarily on pitches to investors, it applies to selling one’s business to clients and colleagues, as well.
The thrust of the article is that selling in the US is different from selling in other countries. In my work with international clients, I have seen the same thing.
Here are some of the ways that pitch coaches say pitches need to be tailored to work best in the US.
Frequently, an international prospect or client will tell me that he wants to create an Inc. to run his business in the in the United States. This post explains what an “Inc.” is and where the term comes from.
History and Other Countries
For centuries, in the interest of fostering economic activity, governments have recognized certain types of businesses as separate legal entities. Investors’ liability is limited to the amount invested (“limited personal liability”). Investors’ other assets, beyond the amount invested, may not be taken to satisfy the business’s debts or other obligations.
Last week, global management consulting firm A.T. Kearney released its 2013 Foreign Direct Investment Confidence Index. The major surprise: For the first time in more than a decade, senior executives in large companies chose the US as the most favorable place to make foreign direct investment (FDI).
According to Kearney, the US rose to the top for the following reasons:
- After downturn-induced cutbacks, companies are investing in productivity-enhancing tools and equipment.
- The dollar has weakened, while wages in developing countries have risen.
- Most notably, China slipped to second place because increasing labor costs raise questions about the long-term attractiveness of China’s development model.
While working with one of my international clients several months ago, I re-learned a lesson that I already knew: The meaning of a word (in this case, the definition of Director) may depend on the context.
I duly prepared a Statement and Designation by Foreign Corporation and had it signed by the client’s most senior officer. That officer’s title, translated as “Director,” was entered onto the form.
This post is based on and expands upon an answer I provided on Quora. Q. Which company suffix to choose: “Inc.”, “Corp.”, etc? What are the criteria?
Many states – notably including Delaware (General Corporation Law Section 102(a)(1)) but, under most circumstances, excluding California – require that the name of a corporation include a word or abbreviation designating corporate status. Those that are used commonly include Corporation (Corp.), Incorporated (Inc.) and Limited (Ltd.).
The choice is totally a matter of style. This is more a marketing issue than a legal issue.
In my experience, “Inc.” is most popular – typically without a preceding comma, nowadays, for a cleaner look. Indeed, most of my foreign clients say “an Inc.” when they mean “a corporation”!
Related post: What is an Inc. and Why Should I Want One?
Dana H. Shultz, Attorney at LawÂ +1 510 547-0545Â dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
This post is adapted from an Avvo question that I answered. The questioner was having trouble figuring out how to enter foreign addresses in the Statement of Information form that California corporations file with the Secretary of State each year.
Q. I need to file Form SI-200 for a California corporation. The officers are foreign persons living outside of the US, but the form does not have a field for country. How can I solve this Problem?
Generally, when a foreign client starts a new business in the U.S., we form a new corporation for both business and legal reasons. Recently, however, I had an interesting experience helping a foreign client set up a branch office without forming a new legal entity.
The client acknowledged the benefits of a new corporation. However, procedural issues for the client (located in Southeast Asia), would result in the necessary approvals taking too long. As a result, the client asked that I first provide help setting up a branch office in Silicon Valley. That branch office later would be used by a new California corporation that we would form.
I found a recent Quora post concerning Interesting Infographics about the U.S. quite entertaining. I realized it could be a quick way for international readers of this blog learn about Americans’ perceptions of the most important issues that they face.
The infographics address topics as diverse as: (more…)
Several weeks ago, the Netherlands Consulate’s Holland in the Valley staff interviewed me about incorporation for international companies.? Excerpts from our conversation recently were posted at the Holland in the Valley website.
Among the topics we discussed were:
I have been in Paris for several days, and I am surprised by many changes that have occurred in the more than ten years since I was last here. If there is a theme that ties most of those changes together, it is that the world is a much smaller place. Between the Internet and international travel, foreign influences cannot be excluded.
I am fascinated by this topic, because for many years I have been somewhat of a Francophile and Francophone. The great attractions – the Eiffel Tower, Arc de Triomphe, Luxembourg Garden, etc. – make Paris as beautiful as ever and should not be missed. However, I have seen a number of changes in the city’s everyday life: (more…)
I have helped dozens of foreign clients launch their businesses in the U.S. Almost every impediment to forming a corporation and running the business under that corporation can be overcome. But there’s one problem I have not been able to solve: Opening U.S. merchant accounts (for processing credit and debit card transactions) if companies does not have personnel in the U.S.
The first potential stumbling block isÂ opening a bank account if the client has no U.S. personnel (and no home-country bank with an affiliate in the U.S.). SeeÂ Post-formation Issues for Foreign Companies Coming to the U.S..
An article, “For Europe?s start-ups, Silicon Valley still calls”, was published yesterday by MarketWatch, part of The Wall Street Journal Digital Network. It discusses why the tech entrepreneurs behind Europe’s start-ups continue to flock to the San Francisco Bay Area.
The article’s theme:
Divided by geography, language, regulation and, in some cases, just old-fashioned cultural prejudice, the region has struggled to shed fully its image as a place where men and women with ideas are born, but where they do not necessarily stay, prosper or secure funding.
Yesterday, in San Francisco, I talked to one of the many foreign attendees at the Game Developers Conference. He told me about a game he had developed, which featured a giant rooster.
In the developer’s native language, the word for “rooster” is similar to the English word “cock”, so he called the game “Giant Cock” and submitted it to Apple’s App Store. Apple rejected the game without explanation. (more…)
Forming a corporation for a foreign client is a lot like forming a corporation for a domestic client. (See Foreign Companies: Form a Corporation when You Come to the U.S.) Having gone through the process dozens of times, however, I realize that there are three important post-formation issues that foreign clients often need help addressing: (more…)
In Act II, Scene II of Shakespeare’s Romeo and Juliet, Juliet wishes that she and Romeo could simply set aside their warring families, famously asking, “What’s in a name?” I thought about this question recently as I was helping a foreign client set up a corporation here in the U.S.
The foreign client is based in the U.K. It wanted to form a U.S. subsidiary with a similar name for brand-identification purposes. To avoid revealing the identity of the client, I will refer to it as “Amalgamated Widget Solutions, Ltd.” and the desired name of its U.S. subsidiary as “Amalgamated Widget Solutions, Inc.”
In Visa Basics for Foreign Entrepreneurs Coming to the U.S., I discussed certain immigration statuses (visa waiver, B-1 and H-1B visas) that permit a non-resident alien to take a passive role in a business (such as forming it) but not to work for it. This post discusses the boundary between permissible passive activities and prohibited work.
This post reproduces, almost verbatim, a Quora question and my answer. Q. How effective and enforceable are contracts between parties located in the United States and England?
A. Such agreements can be effective and enforced – agreements between parties in different countries are entered into routinely. (more…)
This post concerning international contracts is based on an OnStartups.com question (edited here) that I answered a few minutes ago. Q. I am drafting a website-development agreement with a firm in India. I am in Australia. I prefer that the agreement be governed by Australian law, but the developer prefers Indian law. What is normally done in similar circumstances?
A. Several thoughts based on my experience international contracts: (more…)
I have seen a recent increase in the number of foreign companies inquiring about doing business in the U.S. Their most frequent question: Should they just open a branch office here, or should they form a corporation or other legal entity? They almost always form a corporation. Here’s why: (more…)
I have helped dozens of foreign companies establish subsidiaries here. Sometimes, the foreign company asks, “Do we really need to form a separate company in the U.S.? Can’t we just hire some people in the U.S. to work for our existing overseas entity?”
In responding, I make the following points: (more…)
Non-immigrant foreign entrepreneurs who want to start businesses in the U.S. often – and rightly – have visa-related concerns. A typical question: “What kind of visa do I need to start my business?”
This post provides a brief answer to that question.
A couple of months ago, I posted International Business and Agreements: Learning about Legal Culture. This is a follow-up that discusses certain common problems when foreign suppliers bring their standard-form agreements to the U.S.
Filling in Gaps
During the past several years, I have helped quite a few foreign technology suppliers adapt their standard-form agreements for use in the U.S. The agreements that they use back home (translated to English, as required) are quaint by U.S. standards. There is a lot of white space, and fonts tend to be large. Furthermore, while the agreements specify business terms in detail, they address many legal provisions in a cursory fashion or not at all. (more…)
Having helped more than a dozen foreign companies set up operations here during the past few years, I am pleased to offer “Ten Tips for Success in the U.S.” on the Downloads page – just Sign Up for Free Downloads using the drop-down list in the sidebar.
Here are the titles of the ten tips, which are discussed in greater detail in the document:
- Work with complementary businesses that are already established here
- Manage overseas personnel on the principle “trust but verify”
- Form your corporation or limited liability company properly
- Be ready for a legal system that is different from the one back home
- Identify and protect intellectual property (IP) that is used here
- Develop detailed employee and independent contractor agreements
- Choose an accountant with international tax experience
- Be prepared to obtain a federal employer identification number
- Conduct due diligence on potential investors
- Agree on business terms before you prepare a written agreement
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
Twice within the past 24 hours, a client has contacted me with concerns about trademark protection. In each instance, the concerns were caused by an e-mail that offered specified domain names in Asia. I will describe the e-mails in detail so you will know to be on guard if you receive anything similar:
- The subject line includes terms such as “copyright” or “intellectual property.”
- The text indicates that the sending company, an Internet domain registrar located in Asia, has received a request to register domain names with country codes in Asia that are similar to a “trademark” (more precisely, a domain name) that you own. For example, if you own <universalwidgets.com>, the e-mail might state that there are requests to register <universalwidgets.cn> and <universalwidgets.asia>.
- The e-mail then offers you an opportunity to protect your trademark by buying the Asian domain names yourself, rather than letting them be purchased by the third party. However, to take advantage of this opportunity, you must act quickly.
- The individual ostensibly sending the e-mail has an Americanized name, such as “John Zhou” or “Adam Hao”.
Over the years I have negotiated a number of international agreements, typically representing domestic clients. My more recent work with EU-based clients, however, has given me additional insights about the U.S. and other legal systems.
These clients have established technology businesses in Europe. Each recently set up operations here in the Bay Area and asked that I adapt existing agreements for use in the U.S. As I work with these clients, two differences between the U.S. and the European Union jump out at me.
Length of Agreements
First, in the U.S. we often have longer agreements. European contracts tend to rely on, and implicitly or explicitly incorporate, detailed statutory provisions that do not exist here in the U.S. Furthermore, agreements here tend to include more business details and legal protections in case the relationship sours and ends up in litigation. For example, one client shared its existing reseller agreement. I found the document charming in its brevity and the abundance of white space on the page. By the time I added everything that is considered normal here in the U.S., the new version had four times as many words!