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How does a US based entrepreneur start a company with an India based co-founder?

The best advice is to hire a lawyer. Unfortunately, the different issues that can come up in this situation are far too complicated to be addressed here. That being said, I can hopefully clear up some things for you to paint a better picture of what you will need to do.

LLCs are a wonderful business entity that have exploded in the past 20 years. They afford their owners a great deal of flexibility while still possessing some basic standard corporation features that give owners protection. Aside from this, LLCs have very limited restrictions in terms of their ownership, as in who and what can have an ownership interest in the company.

However, LLCs will have somewhat complicated tax issues. The regulations vary state by state, and what an LLC is considered in one part of the US may be something entirely different somewhere else. Most notably, many states will consider LLCs owned by one or two individuals as partnerships or sole-proprietorships, and thus have different applicable tax regulations.

From the sound of your post, it seems like it will be simply a joint-venture between you and one other person. That being the case, you should definitely look into your state laws and regulations to see if there are any additional steps you will need to take to file.

The beauty of LLCs is that they allow their owners (“members” once you become an LLC) the ability to be creative when forming the corporate structure of their company. Founders can include features of partnerships, corporations, or other legal entities, as long as it is included in the certificate of incorporation and placed in the by-laws.

Conversely, because LLCs are somewhat “new” in the legal world, the law is still developing around these entities. So many states have incomplete or contradictory legal approaches to LLCs. When forming your LLC, you should really look into the state you are operating in and do some preliminary research.

Realistically, a lawyer will be your best bet. You should check out LawTrades. Finding a lawyer in your jurisdiction who has experience forming LLCs for startups will have a great deal of knowledge that can seriously help you in your early stages. I have founded two different startups and my lawyer has been invaluable to both companies. I have avoided so many issues and have been able to maximize corporate opportunities with sound legal guidance.

My best advice would be to find an attorney who has experience with international business or startup expertise. Finding a lawyer who has helped other companies get off the ground with international owners can be so beneficial for your company. That way, you can be certain that the advice you are receiving will ultimately save your business money and that your attorney has a good understanding of potential legal issues and help you avoid these problems.

I hope this answer is somewhat helpful. If you want to take a look at the IRS website regarding LLCs, here is a link to their site; Limited Liability Company (LLC). At least that will give you a starting point. If you need any help with anything else, please don’t hesitate to reach out. Good luck!