Discussion:Starting a LLC with a foreign Partner.

I am planning to start a partnership or LLC in the US, with a foreign partner(my cousin who's a Uk citizen) in the UK (50-50% partnership). The company would be divided equally between the foreign partner and me(US permanent resident) . I would be entitled to a salary, after which the profits would be divided equally. The UK office will receive 5% commission on all sales (this commission to be built into the price to be quoted to the customer. Capital to be introduced 50 - 50 by both the parties.

At present, UK office buys from US based resellers who in turn buy from US distributors. They would normally work on 7 to 10% margin. The UK office then add its margin and resells it to its customers. Normal margin that UK office puts on is between 5 to 10% depending on the product. It also costs for the goods to be shipped from US to UK, adding to the selling price. By getting an US office to buy from US distributors and ship it directly to the customerr, it would save on freight costs. This would be profit for the company. The price that the US office would Invoice to the customers would include 5-7% commission that would be paid to UK office. This would be inbuilt into the prices quoted to the customers. From the profits that US office would make (after paying the overheads, commission & expenses) there would be an allowance made to pay a salary to me (US Partner) Both parties concerned would fix this. Any surplus left over after this would be divided 50% for partner in US and 50% for partner in UK.

I wanted to know the following:

1) Whether to start up as Partnership or a Limited company - what are the the tax implication, liabilities involved and the ease of setting up. 2) Are there any problems associated with having a non resident as a partner or LLC member 3) What are legal requirements for sole propertier, partnership and an LLC?

Alternately, can I start it as a sole propertiership, then ask UK office bill me for its sales service. Can I pay them a sales commission and would this be part of my expense. How do I need to report this on my taxes?

Please advice.

Thanks