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What is the best option in incorporating with an African company?

San Francisco, CA |

We want to setup a California LLC (taxed as a C-Corp) and we need to figure out the best option to do it.

Which of the two scenario is the best for us (the CA LLC taxed as S-Corp) and why?

1. This CA LLC will be owned 100% by an African Company and in turn this African company is owned 50% by a CA LLC taxed as S-Corp (this is us) and 50% by African individual/s.

2. This CA LLC will be owned 50% by a CA LLC taxed as S-Corp (this is us) and 50% by an African Company which is owned 100% by African individual/s.

3. Which country in the central and eastern part of Africa (Mauritius or Ghana) is it best to incorporate in terms of business ease, low taxes, and paper works?

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Attorney answers 4


In order to address the African component of your question, you are going need to consult with an attorney in Africa. I don't think Avvo covers this jurisdiction. Otherwise, to answer your question, I advise speaking with an experienced international tax professional, as they will be best situated to advise on the tax implications of your two scenarios above.

Best of luck to you in your endeavor.


Your question is why attorneys have to interview clients. Why you want to set in in central or eastern Africa at all is unknown. Instead of simplicity, the normal answer is "where the actual business is". Your first two options are unclear because your objectives are not defined. Management goals, tax goals?

The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here.



The main reason why we want to set up in Africa is because our partner is an African and he wants to set it up there. The CA LLC will do business in California. However, this CA LLC will be partly owned by this African guy. Now, we want to know, which is the best option for us to take.



Either this CA LLC will be 100% owned by the African company (50% of this African company will be owned by us) or we directly own 50% of this CA LLC and 50% will be owned by the African company.



These questions are way too complex and involve so many moving parts no one could add anything of value here other than to tell you to discuss in detail with your own lawyer.

I think you should use Avvo to help locate a lawyer that you can work with, but don;t expect one to address all these issues in specificity.

All the best,
Natoli-Lapin, LLC
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I agree with my colleagues that (a) consulting with a knowledgeable tax advisor is essential and (b) you are unlikely to find an answer to question #3 on Avvo.

That said, I'm going to take a stab at part of the answer based on basic legal and business principles:

With #2, you have a more-direct direct ownership stake, and both you and the target LLC are in CA, so you will have greater control if problems arise.

With #1, you have an intervening African entity, which could cause uncertainty, less control and other unpredictable problems. Is there a business scenario that would make #1 a better choice?

I have blogged extensively about the challenges that my international clients face building businesses in the US. I recommend that you start at the page at the link below and read whichever posts you find helpful.

This information does not constitute legal advice and does not establish an attorney-client relationship.