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Kenneth Allyn Sprang

Kenneth Sprang’s Answers

766 total


  • I'm starting a LLC with a foreign national planning to get a visa to move to the US. What steps should I take to protect myself?

    Are there any legal implications other than the obvious tax liabilities associated with running a business with someone located outside of the country? We are both putting equipment as initial capital into the business and are going 50/50 partners.

    Kenneth’s Answer

    There are two fundamental issues at hand. First, is how best to structure your business, where to organize it, etc. That decision should be informed by multiple factors including your target market, long term goals, etc. Second, how will you assure that your foreign colleague is taxed only once. His or her earnings from the U.S. entity will be taxed here, but he will likely get a credit at home.

    Immigration comes to play if your colleague wishes to come to the U.S. from time to time with respect to the business, and even more so if your colleague desires to emigrate to the U.S. at some point.

    One significant niche of our practice is assisting clients who have a co-owner abroad, as well as foreign nationals or companies wishing to do business in the U.S. and U.S. individuals or companies wishing to do business abroad. I would be happy to speak with you without cost or obligation if that would be helpful.

    Best regards,

    Kenneth A. Sprang

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  • What entity filing status is best for our business formation to achieve asset protection and limit taxation?

    I'm about to form a 3 person business partnership and would like personal asset protection. I am a married female (husband will not be involved in the company) living in the state of CA. My partners are a married couple (married to each other) l...

    Kenneth’s Answer

    Let's begin by abandoning the terms "partner" or "partnership." I understand what you mean, of course, but a partnership is a particular kind of legal relationship which generally does not provide the protection you are seeking. Your choices are (1) a limited liability company (LLC), (2) a C corporation or (3) an S corporation (which is a C corporation for which the shareholders elect taxation under Subchapter S of the Internal Revenue Code). Assuming you are all citizens of the U.S. or resident aliens, and depending upon your income from other sources, the S corporation may have some tax advantages for you.

    Any of those three structures will insulate the members of an LLC or the shareholders of a corporation from personal liability so long as (1) the company is adequately capitalized and (2) you operate it like a business with minutes, separate bank accounts and similar formalities.

    Where will your nominal business center or headquarters be? You can register your company in NE or CA. If you register in NE and do business in CA, you will still have to register as a foreign entity in CA, subjecting you to a minimum $800 annual fee. If you register in CA and are doing business in NE, you will likely have to register in NE as well and face a likely annual fee, hopefully less than the fee in CA. I have a strong preference for registering companies in Delaware, but given your potential presence in NE and CA, it is likely preferable for you to choose one of those states.

    Finally, whether you have an LLC or a corporation, generally members and shareholders have no right to assert claims against one another, unless one member or shareholder breaches her duty to other members or shareholders, e.g., takes money from the company, keeps a corporate opportunity for herself, etc.

    A final note. With an LLC you have to determine whether you will be member managed or manager managed. With a corporation, the Board of Directors has primary authority. Those decision should reflect the nature of your relationship with the couple in NE. You might want to consider a 51%-49% structure to give you control. Otherwise you need to devise a way to break any deadlock in decision making.

    In sum, you can protect your assets with a properly run LLC or corporation. You will likely wish to from the company in CA or NE. In choosing the LLC or the corporation, give thought to governance and decision making so that you avoid internal conflicts going forward. Those details must be in a well crafted operating agreement, if an LLC, and well crafted bylaws and a shareholders' agreement if a corporation--a task for an experienced business lawyer.

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  • Do I charge sales tax from purchaser from other states if I set up LLC at Delaware and run e-com store?

    for e.g: customer buy product from my e-com store from Ohio and I set up LLC at elaware, do I charge sales tax?

    Kenneth’s Answer

    I can provide you a general answer, with the caveat that this is an area of law that is in flux. First, is your Delaware LLC operating in Delaware, or are you organized in Delaware and operating elsewhere. You will have to collect sales tax if you sell goods in the state where you do business. Of course, if you are doing business in Delaware, you have no sales tax so it is a moot issue.

    Generally speaking, you do not need to collect sales tax when selling out of state. The buyer of products should pay the state a "use tax" in lieu of a sales tax, but few consumers pay the tax in reality. There has been some pressure in Congress to force web based retailers to collect sales tax from customers in the various states in which they sell.

    In sum, you are not likely to have to collect sales tax from persons outside of Delaware who buy your products.

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  • Filing lawsuit against LLC

    We are a Virginia Based Corporation (C Corp) and providing professional services to a LLC (Delaware Corporation). We have always faced major delays in getting payments for our services and we are afraid that they may not pay us for our last month ...

    Kenneth’s Answer

    Assuming your contract with the Delaware LLC is silent as to which court has jurisdiction, you are precluded from federal court because the amount at issue is less than $75,000. Unless the Delaware company has had "minimum contacts" with Virginia so that it could reasonably be expected to be brought into court there, you are almost certainly going to have to sue in Delaware. Generally you must sue where the defendant resides or where the cause of action arose.

    Regardless of the state, you really should have a lawyer. In Virginia in particular, the court procedures are a world unto themselves.

    You may wish to seek out a Delaware firm that does collections on a contingency. Typically that will mean paying the attorneys as much as a third of your recovery. Before that, however, having counsel write a demand letter might bear fruit.

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  • I am a foreign national currently in California with a company in South Africa. I would like to open a subsidiary in California.

    I was told this has to be a c corporation not a LLC. I have contacted a few companies to help with the registration but received so many conflicting suggestions. Many suggested I register in a different state but it seems pointless if I have to tr...

    Kenneth’s Answer

    There are two major consideration for you. First is the issue of corporate organization and structure. Second is the issue of what profits are taxed in which country.

    As to your fundamental question, as a foreign national you have two choices of organization, a limited liability company or a C corporation. Unfortunately you cannot take advantage of the S corporation option, which provides some tax advantages.

    Whether you elect a corporation or an LLC depends on both tax considerations and several other factors. If your South African company will own this subsidiary, then an LLC might work. If there are multiple owners of the U.S. company I would strongly suggest a C corporation.

    The tax issue is simple if in fact you are the sole owner of your South African company and all of your profits are reported in the U.S. Things are a bit more challenging when you seek to repatriate some profits made in America back to South Africa.

    Personally, I always prefer Delaware for incorporation. Their service is fast, professional,and reasonable in cost, they are known around the world, and converting a company from an LLC to a corporation and similar actions are relatively simple. They also provide real expedited service.

    When the filing fee in your home state is modest, registering in Delaware at a cost of a few hundred dollars and paying an annual fee of $250 for an LLC or $400 for a corporation may make sense. Unfortunately, however, the minimum annual cost in California is $800. Therefore, you may wish to organize in California. Registering in California is not as simple as in many states, but if one jumps through the right hoops it is not a problem.

    If you organize in another state, e.g., Delaware, you must still register in California and pay the annual fees.

    There is another question and that is whether you are actually doing business in California. The answer depends upon the nature of your business. For example, sometimes a company has an address in one state and is registered in another, but the company really does not transact business in the home state. The activity is virtual or there is another factor. Every state defines "doing business" differently, but depending on your operation, it is worth investigating whether registering in California is required.

    Finally, you mentioned companies. May business persons go to the various on line companies to have their companies created. For a one person small company doing business in one town or a small region, that may work. However, any sophisticated business person like yourself is really well served by hiring counsel to work with you. Our job is to provide you reliable advice as well as to get the job done. For what it is worth, I have found that our fees are only nominally higher than those charged by Legalzoom and its competitors.

    I do a great deal of this work, representing clients around the country and abroad, often in situations like yours where one enterprise or person is in another country. I also work with an accounting team who has expertise in the international tax issues, who provides that advice at reasonable cost.

    I would be happy to speak with you regarding your needs without cost or obligation.

    With kindest regards

    Ken Sprang

    Kenneth A. Sprang
    Washington International Business Counsel, LLP
    Washington, DC
    Chevy Chase, MD 20815
    ksprang@wibclaw.com

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  • What limitations/speed bumps do I face trying to do business in Germany?

    I am a restaurant owner (US citizen) with close friends in Germany and I am interested in opening a restaurant over there (I do not have German citizenship). I would like for the business to be in my name and all business done with me as the owner...

    Kenneth’s Answer

    Initially I am curious about your restaurant in Dayton. I lived in Dayton for several years while teaching at the University of Dayton law school and later practicing in Dayton.

    To your question, however, whether you can open and operate a restaurant in Germany is a question of German law. I assume you will emigrate to Germany to operate the restaurant. There is certainly no prohibition in U.S. law with regard to your proposal.

    Our firm does a great deal of work with American companies doing business abroad and foreign companies doing business here. We are not admitted to the German Bar, but we do have relationships with lawyers in Europe to whom we would be happy to refer you.

    One thing to consider is the totality of the taxation issues you will face. A substantial portion of income earned abroad is taxed only in the country where it is earned. However, you could face some taxation here in the U.S. We refer clients to an accountant who deals with such matters to answer those tax questions.

    I am happy to speak with you briefly and to assist in finding you German counsel to assist you, if you like.

    Kindest regards,

    Ken Sprang
    ksprang@wibclaw.com

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  • Can I add non-us member to my LLC, if that non-US member is LLC Company from India?

    I just formed LLC Software development company in IL, USA and i am the only member - Now, I want to add another member to LLC. That member is NON-US and is LLC Company from India? Can I do this and what documentation does LLC from India need to pr...

    Kenneth’s Answer

    Yes, you can add the Indian company as a member of your LLC. The process is relatively simple.. You will, of course, need to amend your Operating Agreement and you may have to modify your Articles of Organization, though usually that is not necessary.

    You have to factor in tax consequences for your Indian member, as the member will be taxed on U.S. profits, though there should be a setoff in India.

    We do a great deal of this kind of work and would be happy to speak with you without cost or obligation if you like.

    Kindest regards,

    Ken Sprang

    Kenneth A. Sprang
    Washington International Business Counsel, LLP
    Washington, DC
    ksprang@wibclaw.com

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  • Can a US LLC serve as a flow entity for a German contractor, i.e. nothing retained by the US LLC and no tax liability to the LLC

    Germany based contractor wants to do business with US government agency and needs to be affiliated with a US based company for this. Is there a way to set things up that the US LLC serves as a flow-through entity for the Germany based contractor, ...

    Kenneth’s Answer

    There are three issues integrated into your question. (1) the details of how you set up the U.S. company and whether you opt on an LLC or a C orporation. (2) Minimizing tax consequences and assuring that taxes are not paid twice; and (3) Being certain that your structure is compliant with all of the regulations governing government contractors.

    Our firm does a great deal of this kind of work and we would be happy to help you. We work with an accounting firm that is reasonable and cost and provides expertise in the tax area. For unusual matters I turn to my partner who is a tax lawyer. We represent companies around the U.S. and abroad in a variety of different structures.

    I would be happy to speak with you regarding your needs without cost or obligation.

    With kindest regards,

    Ken Sprang

    Kenneth A. Sprang
    Washington International Business Counsel, LLP
    Washington, DC
    ksprang@wibclaw.com

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  • How a Startup from Non-US state be incorporated as Delaware C?

    I want to run a Startup and incorporate it in US. We operate from India and none of us are in US and there is no to transfer to US in near future. Our service is meant for everyone all over the world. I did a little research online and I...

    Kenneth’s Answer

    I do a great deal of this kind of work. I regularly incorporate companies in Delaware and, in fact, prefer
    Delaware whenever I can organize a company there.

    There are two issues that face you when organizing here. First are the corporate issues at hand which include organizing the company as a corporation or as a limited liability company and second is the issue of taxation. It is important to avoid double taxation of profits of the company.

    I would be happy to speak with you regarding your needs without cost or obligation.

    With kindest regards,

    Ken Sprang

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  • Setup business on L1 visa

    I am currently partner and a board of director for a company in india. The company has other partners and employees who take care of daily business. Currently me and my wife both are on h1b. I want to setup/buy a business in usa, maybe on a...

    Kenneth’s Answer

    Our firm does a great deal of this kind of work, representing businesses throughout the U.S. and abroad. Many of our clients have businesses in India as well as the U.S. and they face the issues you raise.

    My partner Vonda Vandaveer is an experienced immigration lawyer and addresses immigration issues.

    We can identify brokers to help you acquire a U.S. business and/or assist you in setting up a new business.

    I would be happy to speak with you regarding your needs without cost or obligation.

    Kindest regards,

    Ken Sprang
    Washington International Business Counsel, LLP
    Washington, DC
    ksprang@wibclaw.com

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