Learn me a non American setting up an LLC or Corporation in the US.

I am forming a partnership with two Japanese gentlemen to do business in the US. I would be the majority owner at 51 per cent in order not to be double teamed into the poor house. Not sure it would happen but it seems smart. In for a penny in for a pound. So this is a pretty new thing for me.

I am researching exactly how the new business should be structured, and how to protect myself from both my partners and from future liability. Not saying I have concerns, but i just need to take the appropriate steps. I will retain a lawyer to get me there, but I would rather inform myself before hand rather than following blindly and signing where I am told. Any sage advice is appreciated if any of you have gone before. And I suppose the first question is the structure. There would be three shareholders, the company would pay dividends (the two investors are older and view this as a retirement plan). The plan is not to attract outside investors or capital. We are just going to sell a specific product to a specific group of companies in the US and Canada.

Look up "Shotgun Agreement" or Shotgun Buyout Clause". Keeps your partner honest in case he should want to buy you out.

You setting this up as a Delaware company?

What's wrong with them having a company and you having a company and their company selling your company stuff that you then sell?

I don't know the answer to this question, but I know enough to ask it: how do the two Japanese individuals propose to get their dividends into their hands in Japan without paying withholding tax in the US AND income taxes in Japan? Also, it sounds as though you and they have fundamentally different reasons in mind for entering into this venture. That's not a bad (or unusual) thing by any means, but it does argue against making the three of you the same kind of shareholder in one entity. I think the Doctor's advice is worth listening to, although you'll obviously want a second opinion from a lawyer who routinely deals with this stuff. (Your local small business association will have a list of names.)

NOHOME wrote: You setting this up as a Delaware company?

If you do, get a hold of me. DD#1 works for a company that specifically assists with Delaware incorporations.