My cofounder and I have incorporated our startup in US. I am a US citizen and my cofounder is not a US citizen, neither lives in US. He had a valid green card but he gave that away and moved to the home country. My cofounder has majority share and also needs to draw a salary soon whereas I can wait for some time.
We are unsure of how my cofounder can be compensated without living in US and having an active work visa. We do not want to create a subsidiary company in his home country. We also do not think he can be on 1099 as he is part of the executive team and we are told that CxOs cannot be a contractor. As of right now my cofounder does not plan to return back to the US, else we could find a way to sponsor a visa for him.
Have you considered using an Employment of Record solution (EOR)?
Utilizing an EOR can streamline the process of compensating an international cofounder, ensuring legal compliance and reducing the administrative burden on your startup. This approach lets you focus more on growing your business while maintaining global operational flexibility.
Just make sure that the EOR is compliant with the country of resident of your cofounder.
Based on your response I am assuming EOR is compliant with US laws, allows compensating individuals that do not reside and do not have legal status in US and people employed through this can be considered an employee of the company. Is that correct?
Yes, an EOR can help you set up compliance with a US Laws, especially when it comes to reporting and tax obligations related to foreign operations. An EOR is particularly useful for compensating individuals who do not reside in the U.S. or do not have a U.S. work visa.
Individuals employed through an EOR can indeed be considered employees of your company in a functional and operational sense. However, legally, they are employees of the EOR. This means the EOR is responsible for their employment rights, payroll, taxes, and adherence to local labor laws. Your company directs their day-to-day activities and integrates them into your team as you would with any employee.
From a purely immigration standpoint, your cofounder can be a direct employee of the U.S. company or a contractor without having any U.S. work authorization as long as he is living and working outside the U.S.
Thanks for taking questions.
My cofounder and I have incorporated our startup in US. I am a US citizen and my cofounder is not a US citizen, neither lives in US. He had a valid green card but he gave that away and moved to the home country. My cofounder has majority share and also needs to draw a salary soon whereas I can wait for some time.
We are unsure of how my cofounder can be compensated without living in US and having an active work visa. We do not want to create a subsidiary company in his home country. We also do not think he can be on 1099 as he is part of the executive team and we are told that CxOs cannot be a contractor. As of right now my cofounder does not plan to return back to the US, else we could find a way to sponsor a visa for him.
Any thoughts on this would be highly appreciated.