Can a Non-US Citizen Own a C Corporation?

A C Corporation is a popular company structure in the United States. This entity is a common option for non-residents who want to set up a company in the United States.

Luckily, foreign investors can own a C corporation, even if they are not a US citizen or resident. However, it is crucial to understand the tax and legal implications.

Can a Non-US Citizen Own a C Corporation?

Non-US citizens can only own certain types of companies, and the laws surrounding each vary.

So can a Non-Us citizen own a C corporation?

Luckily, there are many ways for a Non-US Citizen to own a C Corporation.

Eligibility of Non-US Citizens to Own a C Corporation

Non-US citizens, including non-residents, can legally own a C Corporation.

Consequently, non-residents may prefer to own a C corporation rather than indirectly owning shares of an S corporation through an Electing Small Business Trust (ESBT).

Legal Status and Immigration Requirements

You do not need to be a resident of the United States to own a C corporation. However, you may be eligible for certain types of visas after you file a C corporation:

• E-1 Treaty Trader Visa: This visa is available for citizens of certain countries and allows you to live and work in the United States for 2 years.

• E-2 Treaty Investor Visa: This visa allows you to work in a business that is your primary investment. It is valid for 2 years, and you can also bring relatives and/or your spouse.

• EB-5 Immigrant Investor Visa: You can receive this visa if you invest $1.8 million and hire 10 or more workers.

• L-1 Multinational Executive Visa: This visa allows you to transfer certain employees, such as managers, to the United States.

• H-1B Visa: This visa is a 3-year visa that is granted to companies that hire foreign applicants. The company needs to prove that they can’t find an equally qualified local candidate.

It’s important to note that you need these visas to live and work in the United States. Forming a C corporation is not enough to legally be able to live and work in the United States.

Key Considerations for Non-US Citizen Ownership

If you are an owner of a C corporation, there are many tax issues you need to consider.

Tax Implications for Foreign Owners

C corp foreign ownership is allowed, but filing taxes can be more complicated.

One important issue to consider is double taxation. If you own a C corporation, you will need to pay taxes on US sourced income. However, you also may need to pay taxes in your home country if you are a tax resident there.

It may be a better idea to have multiple accountants, or accountants who are familiar with tax laws in both countries.

⚠️ This should not be taken as official tax advice. When dealing with taxes, it is always recommended to seek information from a professional tax advisor.

Personal Liability and Asset Protection

One of the benefits of filing a C corporation is that the corporation provides you with asset protection and protects you from legal liability.

Once you file a C corporation, the company, rather than the shareholders or owners, are liable for the company’s debt and/or any legal issues.

The C corporation structure helps create a veil between your company assets and your personal assets. If your business runs into any issues, you do not have to worry about losing personal assets if they are separate from the corporation.

Establishing a C Corporation as a Non-US Citizen

Incorporation Process and Documentation

You can complete the following steps if you want to set up a C corporation:¹

Choose a name and ensure it’s not taken Choose a state for your business Draft the articles of incorporation File Form SS-4 to receive an employer identification number (EIN) Apply for other business licenses or other documents as needed

Registered Agents and Legal Representation

When you draft your articles of incorporation for your C corporation, you will need to choose a business address and a registered agent.

The registered agent can receive mail and other legal notices sent to the company. The business address and the registered agent address can be the same.

Federal and State Laws Governing Non-US Citizen Ownership

C corporation owners need to comply with federal and state regulations. This may entail filing multiple forms every year.

Compliance with Federal Regulations

C corp foreign ownership can open businesses up to more ongoing filing requirements.

Federal regulations do not prevent non-residents from owning shares of a C corporation. Moreover, you do not need to be a resident of the United States to be the sole owner of a C corporation.

The main factor to note is that you will be required to file forms to stay compliant. Some of these forms include the following:²

• Form 4752: C corporations with more than 25% foreign ownership need to complete this form.

• Form 1024-S: C corporations complete this form if they paid dividends to non-residents.

• Form 1120: C corporations also need to complete Form 1120, which is a corporate tax income form. C corporations are responsible for paying a 21% corporate income tax.

State-Specific Ownership Rules

C corporations need to follow state specific rules as well.³ It is important to understand various state regulations before choosing a state.

C corporations that register in one state, but conduct business in another state, may need to register as a foreign corporation in another state. Each state also has different tax laws, including different state income taxes and franchise fees.

Although non-US residents are not restricted from owning C corporations, certain state laws could impact a C corporation’s operations. For example, the Texas Senate recently approved a bill that bans citizens from certain countries from purchasing land in Texas.⁴

Funding and Financing Options for Non-US Citizen Owners

Once you successfully register a C corporation, there are plenty of banking options available for you.

Opening a US Business Account

C corporation owners can set up a US bank account, even if they are not a citizen or resident of the United States of America. It can be tricky to set up a business account as a non-citizen, however.

The Wise Business Account can be an excellent option for non-citizens with a C corporation who need to manage international payments.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in 40+ currencies. You can also get 9 major currency account details for a one-off fee to receive payments like a local.

You can open a US Wise Business account if you have a registered US business and US operating address. Alternatively, if Wise Business is available in your country of residence, you can register with your local address and get US account details to receive payments like a local.

Opening an account is simple, read the guide on how to open a Wise Business account and register today!

Some key features of Wise Business include:

Better visibility and organization of business finances. This is helpful for account reconciliations and audits. Administration controls for users. It’s possible to allow team members to carry out specific tasks. Receive payments from e-commerce platforms (such as Amazon or via Stripe). Create invoices using the Wise invoice generator or invoice templates. Features for bill payment, including a QuickBooks Bill Pay connection. Bill payments will be synced, matched, and categorized in QuickBooks for simple reconciliation. Batch payment options. This allows the fast payment of up to 1,000 people, by simply uploading a spreadsheet.

Open a Wise Business account online

Accessing Business Loans and Capital

C corporation owners are also able to access loans from banks in the United States. Doing so can be an alternative to equity financing.

Tax Planning and Reporting Obligations

There are also some benefits that you can take advantage of, such as deducting health insurance premiums.⁵

Understanding US Tax Residency Status

It is important to understand that all C corporations are classified as domestic entities, and need to pay US income taxes.

C corporation owners who are residents of another country still have to pay federal income taxes on the C corporation’s profits.⁶

Reporting Foreign Income and Assets

Certain corporations and partnerships that hold foreign assets may need to report these assets to the IRS and complete Form 8938.⁷

Pros and Cons of Non-US Citizen Ownership in C Corporations

A C corporation can provide foreign owners with more flexibility than an S corporation. The structure can also make it easier to attract investors. However, these benefits come with the costs of stronger regulations and more filing requirements.

Advantages of Global Business Expansion

Forming a C corporation has some advantages that can help your business expand:

• More shareholders: While S corporations can only have 100 shareholders, C corporations can have an unlimited amount of shareholders. C corporations can also create different share classes.

• Taxes: C corporations are taxed at 21%. Moreover, C corporations can deduct other expenses like health insurance, rent and salaries.

• Longer life: C corporations continue to exist even if the owner changes.

Challenges and Risks for Foreign Owners

Foreign residents who file a C corporation will generally have to pay more to incorporate and maintain the company. They will also have to deal with more ongoing filing requirements.

Taxation can be complicated, as non-residents still have to pay US corporate taxes and state taxes. Residents of other countries will have to pay taxes in both the United States and their country of residence.

The IRS also requires foreign owned C corporations to file additional forms. A C corporation owner can be fined if they fail to file these forms.

Frequently Asked Questions

Below are some FAQs that potential foreign C Corporation owners may have.

• Can a non-US citizen be a sole owner of a C Corporation? Yes. Non-US citizens may own up to 100% of a C corporation.

• Are there any nationality-based restrictions on C Corporation ownership? There are not any restrictions, but there are laws that may restrict ownership of certain assets. It is crucial to continually monitor changes at the federal and state level.

• What are the tax implications for non-US citizens owning C Corporations? C corporations always pay taxes, regardless of the source of income.

Conclusion: Can a Non-US Citizen Own a C Corporation?

Non-citizens and non-residents can fully own a C corporation. However, it is crucial to follow the appropriate filing and maintenance steps after you set up the company.

Owning a C corporation can offer you more flexibility and even make it easier for you to get a visa to live and work in the United States. Moreover, this corporation is better if you want to attract more shareholders.

However, it is also important to consider the additional filing and maintenance requirements.

Managing an international business? Wise Business can save you time and money

Wise Business can be a great option for non-US citizens who own or manage a C corporation.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks.

Non-US citizens can open a US Wise Business account with a registered US business and US operating address. Alternatively, where Wise Business is available, you can open an account and get US account details to receive payments like a local. You can also send, exchange and hold USD and 40+ currencies all in one place.

Discover Wise Business today

The Wise Business account offers a stress-free way to make international payments and hold funds in foreign currencies. You can also get local account details for a simple one-off fee to help you easily receive payments in other currencies.

What’s more, exchanges are made at the mid-market rate, to ensure that you don’t lose money on bad exchange rates.

Read the next guide to find out if you can have S Corp Foreign Shareholders

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Sources

1. What is a C Corporation | incorporate.com
2. An Overview of Tax Implications for Foreign-Owned Businesses in the U.S. | Bench Accounting
3. C Corp Requirements: Everything You Need to Know (upcounsel.com)
4. The Texas State Senate – News - 20230426a
5. C Corporation: Higher Taxes, More Flexibility - NerdWallet
6. United-States-Tax-Residency.pdf (oecd.org)
7. Do I need to file Form 8938, Statement of Specified Foreign Financial Assets? | Internal Revenue Service

All sources checked August 2023.