Yes, you can start a business with a foreign national. Keep in mind though, that this will impact your tax filings because you'll need to make all kinds of declarations. Regarding registering in one state or another - you can register in whatever state you want particularly since you are web based. Most people choose based on tax considerations and location. Given that you do not have a physical location, your main concern would be corporate taxes. So, figure out the form of business you want (e.g., LLC, corp.) and then see how each state treats the taxes (e.g., are their special write offs, is a there a new business credit, how much do you have to make before you start paying taxes, etc.). Good luck!

Hi pterbrack, It's definitely legal to start a business with a foreign citizen! We blogged about Starting a Business in the U.S. as Foreign National that has great information and resources that you should definitely take advantage of. Since you are planning to start a business in the US, you should go through the 10 Steps of Starting a Business. It has information about registering a business as well. Please also visit our Online Business Guide for more information about legalities and taxes. I hope this helps! If anyone else has experience in this area, please feel free to add!