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socrateaser
socrateaser, Attorney
Category: Business Law
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Experience:  Retired (mostly)
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Question Can we keep or nominate a minor child as a member

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Question:
•Can we keep or nominate a minor child as a member of the LLC business? Can a minor own 100% of the business interest? Is it legal and complete? What is the procedure?

Background History:
I am a resident alien (visa holder) working in USA for 5 years. Since I completed my postgraudation studies in business management and business is my passion, one day I started (in 01/2008) LLC business as per AZ law. The business has only a single member, so it is a single member LLC per the business law. The AZ statues and taxation rules never discriminate and separate “Resident alien VS a Citizen”. The entity setup is correct as per the business law and taxation but, not immigration perspective as we are in USA on working visa. Per the law, all the basic documentation formalities are filed with different agencies and also the 2008 tax returns filed successfully.
Later on realized that, I failed to understand and recognize the impact of immigration rules on my business. Now due to restriction from immigration, I would like to have the LLC business set up to be modified and restructured so that it is also complete from the Immigration law also.
I have a minor child of 2 years who is born in USA . Can I transfer ownership rights on his name .Can a guardian be appointed as a financial advisor and nominee for a minor child and run the same business?

Please share your ideas.

Thanks,

There's no immigration law that says you can't own a business while being employed in the USA. What you cannot do is be an "employee" of your business without satisfying the immigration laws. But, you don't need to be an employee of an LLC, because you can be the sole owner, and pay yourself distributions, rather than wages.

 

So, I think you're trying to get around something that's not illegal.

 

Hope this helps.

 

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Customer: replied 7 years ago.
Dear Attorney,
Thanks for response. Glad, your experience and valuable suggestion is very helpful and convinced. Still, would you mind to have more clarity of my understaning based on the below supplementary information.

1)
I am not drawn wages from my own business, but still acting as a sole member and manager under the designation PRESIDENT. Performed financial transactions and daily business operations required for the business .It includes execution of agreements, hiring and termination.

2)
Revenue from business has been shown on my 2008 personal return while I filed as a combined tax return.

3)
I am working in USA on H1B visa. The H-1B is a non-immigrant visa in the United States under the Immigration & Nationality Act, section 101(a)(15)(H). It allows U.S. employers to temporarily employ foreign workers in specialty occupations. If a foreign worker in H-1B status quits or is dismissed from the sponsoring employer, the worker can find another employer, apply for a change of status to another non-immigrant status, or must leave the US.

Being H1B visa is a employer specific, can we own the business and do the job parallel.
Thanks,

If you are here on an H1B in some specialty capacity, then the visa permits you to maintain employment in that capacity. The visa does not prohibit you from owning your own business on the side. However, what you are describing appears to be something considerably more than a side business. Your facts suggest that the "side" business is the real employment and the H1B specialty employment is just a means of maintaining legal status.

 

If what I'm describing is true, and you get caught, your visa may be cancelled and you may be removed on grounds of fraud. On the other hand, if your business is just a minor portion of your income and you are engaged full time in your specialty employment, then that would show you as not materially misrerpesenting the reason for your presence.

 

 

Customer: replied 7 years ago.
Thanks Attorney, Yes,I was on full time employment with other sponsoring employee and maintaining legal status in USA all the time while I was running my business. The business income is less compared to my fulltime job income as shown in tax returns.I consider my business as a a part time but,active share on it(I own 100% share). I wrongly assumed things on my own on Immigration front before starting the business.I did clarify and got the expert advice from Business Law and Tax Law. Had I anticipated so many complications,I would not have ventured at all in business in USA.Anyhow it is good experiance. Now it is late,either to exit or survive.So,considering all options. Once again thanks for your time. Warm Regards, xxx

You're welcome and good luck.

socrateaser and 3 other Business Law Specialists are ready to help you
Customer: replied 7 years ago.
Dear Attorney, I understand your answer,and therefore accepted your answers regarding the issue and given my feedback on the forum. Can you share your toughts regarding same question above 1)Is it possible another person of USA orgin to be a manager?Can he enter leagl contracts on behalf of a minor child related to business? At this time, I just think of 2 alternatives.   a)Forming a trust on minor child.AS parents,we can act on his behalf as trustees until, he attains or cross 18 years .I don't know how far a resident alien is a Trustee of the Trust?Possibility of this solution?   b)Converting LLC business in to a Corporation and minor child should be a major share holder and we as a parents hold minor share holding in the Corporation,authorised to take daily operational decisoins of the business. Looking forward your answers.   Which option do you think the best in given circumstances ? Thanks, xxx

1)Is it possible another person of USA orgin to be a manager?

 

A: yes.

 

Can he enter leagl contracts on behalf of a minor child related to business?

 

A: The LLC is a separate legal "person." The manager acts on behalf of the LLC, not the individual partners/owners -- whether minors or adults.

 

At this time, I just think of 2 alternatives.

 

a)Forming a trust on minor child.AS parents,we can act on his behalf as trustees until, he attains or cross 18 years .I don't know how far a resident alien is a Trustee of the Trust?Possibility of this solution?

 

A: The child's ownership interest can be assigned to a trust, and you can be named trustee. I'm not sure what you're trying to accomplish here, but you can do it if you want.

 

b)Converting LLC business in to a Corporation and minor child should be a major share holder and we as a parents hold minor share holding in the Corporation,authorised to take daily operational decisoins of the business. Looking forward your answers. Which option do you think the best in given circumstances ?

 

A: Your goal, is no longer clear to me. I thought you were trying to avoid violating the terms of your visa, and I further thought that you had determined that since the LLC does not represent the primary source of income, that you are not at risk of having your visa revoked.

 

If what you are now trying to do is construct a business where your U.S. Citizen son is the owner, and the trust is the beneficiary of any income, such that you can manage it for your son's benefit, and avoid the possibility that USCIS will determine you to have violated your visa, because this is the only/primary source of your income, then this won't work, because as trustee, you would be managing the business in fact, and receiving compensation for your management.

 

Re the corporation choice, a corporation can only be managed by employees. So, you can forget about this option.

 

 

Customer: replied 7 years ago.
Great!!I am clear now.Thanks once again.xxx