Israel to USA: How to Set Up a US Company
The USA continues to attract businesses from across the globe, as entrepreneurs and investors seek opportunities for commercial growth, while gaining the personal experience of living in America. The US Government has also moved to add further momentum, offering highly attractive financial incentives, subsidies and tax reductions for qualifying companies to pursue opportunities Stateside.
If you’re looking at developing your business interests from Israel to the USA by setting up a US-based company, there are many factors you’ll need to consider. In this guide, we look at the key considerations for you as a business owner, from visa options to how to set up a business in the US.
E2 Visa to start a US business
As an Israeli citizen, you’ll need permission to relocate to the US and set up your company.
The E2 visa is open to citizens of treaty nations such as Israel to come to the US to direct and develop US-based business interests.
Your company must first be registered with the E2 visa unit at the US Embassy or Consulate in the country you will be applying from. In Israel, the E2 visa unit is based at the US Embassy Branch Office in Tel Aviv.
For your E2 visa application, you must be able to demonstrate at least 50% ownership of the US company or operational control over it, such as through holding a managerial role.
You must be traveling to the United States in order to establish and oversee the operations of either a new or existing firm in which you have already invested, or are currently investing, a substantial sum of money.
Although there are no set capital requirements, the investment must be sufficient to guarantee your business’s effective development and operation, as assessed in a proportional sense. Practically speaking, a variety of factors should be taken into account when estimating the amount of investment that will need to be demonstrated. The investment sum may not always be as large as you might first think. Businesses that provide consulting services, for instance, won’t have to demonstrate a significant investment compared to those that manufacture goods. Our E-2 visa consultants are experts at advising on investment amounts and creating E2 business strategies and business plans.
As a treaty investor, you may go to the United States to manage your company for a period of two years. The E2 visa can be extended, and there is no limit on the number of extensions that can be granted, provided the visa conditions continue to be met. However, the E2 visa does not directly lead to US permanent residence. Take professional advice if you require advice on long-term relocation options.
Setting up your US company
To set up US operations, you will need to determine the most appropriate company structure for your organization.
The choice of business model will have an impact on every aspect of your venture, including your everyday operations and your legal responsibility for any losses. You must therefore carefully choose the structure that will provide you with the ideal combination of legal benefits and protections. For instance, creating an LLC can shield you from any personal liability if your LLC is the subject of legal action or becomes insolvent. However, compared to, say, a partnership or a sole proprietorship, the LLC is more complicated and highly regulated.
A partnership typically offers the most straightforward structure for two or more people to operate a business together, whereby you can select between a limited partnership (LP) and a limited liability partnership (LLP).
If you plan to operate your US company on your own, a sole proprietorship would usually be the simplest option with the fewest regulatory restrictions. Although you will be individually liable for all of the company’s debts and responsibilities, you will also have complete control over how the organization is handled.
Taking professional advice can help you to understand your options and the best approach for your needs.
Registering your US business
You must register your company with the federal government, and in some cases the state government, if you plan to operate under a name other than your own. You will be regarded as a sole proprietor if you do not register as a particular type of business.
If your company is an LLC or partnership, you’ll typically need to register with every state where you intend to conduct business. In most cases, you will be categorized as engaging in business operations if your company has a physical location, you often meet with clients there, or a sizable amount of your income is generated there.
You may be able to register your business online in some states, but you may also need to post the required documentation or physically submit it to the Secretary of State’s office or a business bureau. You will also require a state-registered agent to receive official paperwork and legal documents on your behalf if you’re a partnership or LLC.
Your company may need a combination of licences and permissions from federal and state entities when moving to the USA. Your projected business activities and business location will determine the various requirements and fees for these.
You must obtain a federal licence or permission if a government agency will be controlling your business operations. States tend to regulate a much wider variety of commercial activities than the federal government when it comes to state licences and permits. For instance, commercial activities that are frequently regulated locally include farming, restaurants, and retail, though specific industry requirements can frequently vary by state when it comes to licensing.
Investment & relocation costs
Consideration will need to be given to all of the costs associated with setting up a business in the US.
As well as the logistical costs of relocating your family, you’ll also need to have a clear understanding of the investment costs needed to make your business operational and viable. You should also take into account any additional expenses related to the type of business you intend to operate in the US, as well as any fees for registration and/or licencing.
Importantly, choosing where to transfer your firm can have an impact on all these factors, so carefully considering the best US site is necessary first. The location of your US company will also affect the taxes that your company will be required to pay, the cost of renting or purchasing office space, the cost of utilities, the cost of regular salaries, and the minimum wage regulations.
Arguably one of the more complex aspects of setting up in the US will be the tax implications. You’ll need to consider the tax laws of the state, county, and city where you decide to base your firm. You will always need to account for personal and corporation taxes, as well as sales and property taxes.
You must obtain both state and federal tax ID numbers in order to make sure that your company is set up to pay the appropriate taxes. For your business, these function like a personal social security number so you may pay both state and federal taxes.
For new business owners, the US tax system, especially for LLCs, can provide a number of difficulties, especially if you are unfamiliar with how US tax rules operate. As a result, it is always recommended to get professional guidance and support when relocating your company to the USA so that the specialists can guide you around any potential difficulties.
Scoping out: business travel to the US
Visiting the USA can of course be extremely valuable in helping you to further your plans, prior to making your E2 visa application.
Under US immigration rules, Israeli nationals do not qualify for ESTA visa-free travel to the USA. To visit the US for business, you would need to apply for a B1 business visitor visa. The B1 visa allows you to carry out certain business-related activities, such as scoping out business premises, but there are limitations. You cannot, for example, run your business while in the US as a visitor, nor can you undertake paid employment. During your B visa interview, you will be asked about your planned activities while in the US. If the consular officer is not satisfied that you will adhere to the visitor visa conditions, your application can be refused.
We can advise if you are unsure how best to prepare for B1 and E2 visa applications, while ensuring compliance with US immigration rules.
NNU Immigration are US visa experts, advising companies, business owners and investors seeking to launch, invest in, or grow US-based businesses. We have specific expertise in managing E2 visa applications filed at the US Embassy in Israel.
For specialist immigration advice to help you achieve your US goals, contact our US attorneys.
Setting up A Business in the USA from Israel: FAQs
Can an Israeli citizen open a business in the US?
Yes, Israeli citizens are eligible to apply for an E2 visa to start up or make investments in US-based enterprises, provided they meet the visa requirements.
If I purchase a company, can I obtain a US visa?
Making investments in the United States does not, in and of itself, entitle you to any immigration or visa rights. However, the E2 visa is open to foreign nationals of Treaty Countries who have made a substantial investment in a US-based enterprise, as well as meeting the additional visa criteria.
How much money are you going to need to move to the USA?
The type of visa being applied for is just one of many variables that will affect how much it will cost to relocate to the USA. For an E2 visa, for instance, you have to show you have made a “substantial investment” in a US startup or established enterprise.
Can a non-resident start a business in the United States?
Foreign nationals and non-residents of the US can set up a new business in the US, but you will need an appropriate visa, such as an E2, to manage the company personally. These visas have a number of stringent eligibility requirements that must be met.
This article does not constitute direct legal advice and is for informational purposes only.