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My name isXXXXX going to try and help.
Have you already organized a business and registered with the Secretary of State?
Reply when you can. I may be offline or with a customer, please be patient, I will respond as soon as possible.
My colleagues and I are in the process of forming a Texas C corp which will be wholly owned by non-US citizens. I am a US citizen and the owners have asked me to serve as the corporation's Responsible Person. What are my duties and liabilities?
Any particilar reason you are chosing a c corp? What type of business will the company be doing?
The owners have engaged a US legal firm and a CPA firm to help them with that decision -- I have not been involved with that process as I am not an owner.
Ok, so when you say responsible person, do you mean registered agent?
Usually, when you organizae a business, it has to be registered with the secretary of state and there needs to be a designated registered agent to be responsible for service of process.
The new company will be importing Egyptian canned vegetables into the US. Yes, we have already chosen Capitol Services, Inc. of Austin, TX as our Registered Agent.
Ok, so the corp has a registered agent and you are not an owner. Not sure what is expected of you but you technically have to personal responsibilty mandated by any laws. Any responibilty you have is granted by the owners.
And as far as your second question is concerned, an independant contractor gets paid with a 1099 and maintains intellectual property rights for any works created. Basically, you work for yourself. An employee gets paid wages, and the corp pays payroll tax.
The owners' attorney's opinion is that as the company's responsible person, I have no duties other than being a US citizen with a home address where I can receive official mail. Is that correct?
Sure, but that is not mandated. You are doing in voluntarily.
Not sure how the attorney is using your address.
OK -- concerning my question as to what my liabilities are, the owners' attorney has said, as a practical matter, that my liability is limited to any unpaid payroll taxes. Is that correct?
Possibly. But I cant tell without knowing what the attorney is doing with your personal info. Sounds like he is using your information to get a tax ID number for the corporation. If that is the case, you could indeed be responsible for taxes.
Or at least be the contact person for the IRS if any problems arise with taxes.
OK. So if I want to be the Responsible Party, should I get the owners and/or the new US corporation to indemnify me? Or have them provide liability insurance for me?
I dont think that is necessary. You can get a tax ID number form the IRS website easy. They ask who is the responisble party and want a US citizen and address to get one. This doesnt create liability for you personally. But if anything goes wrong, the IRS will be contacting you to try and get to the corporation.
Truthfully, I would be cautious about this. With you being the only US citizen, you will have a hard time enforcing indemnity agreement. An insuranc policy would be better protection. But if the corporation does not act in accordance with IRS regs, the attorney is using your info as the responsible pary for the tax ID. Quite frankly, I would tell the attorney to do it. Or a CPA.
OK -- that squares with what the owners' attorney is saying -- thank you. As to my question about independent contractor vs employee, my agreement with the owners is to receive $5000 per month; reimbursement of travel expenses, and a commission on all products the new company imports into the US.
This agreement has a 6-year term.
Sounds like an independant contractor.
Does my compensation agreement still allow me to be an independent contractor? I am a retired 22-year senior executive of a Fortune 100 company with a handsome pension that constitutes all my current W-2 income . Other than that and investment earnings, all my other income is 1099, derived from corporate board fees and occasional consulting amounting to less than $100,000 annually. My expected income from the new company will likely generate much more income (1099 or W-2) than my other non-pension income, and perhaps more than my pension income as well.
Yes, the agreement still allows you to be an independant contractor. Just make sure they are paying you with a 1099.
OK -- Thank you very much!