What are the visa options to set up a company in US?
If you have ambitions to start a business in the US, you will need to understand what is required of you to establish the company in the USA and what your options are to travel and stay in the US to make your business a success.
In this guide for non-US nationals, we outline some of the key considerations for you when looking to set up a company in the US. As a firm of US attorneys we can advise on visa options, requirements and applications to help you get to the US, and make your business vision a reality.
The E-2 visa will allow a national of a treaty country, including the UK, to be admitted to the United States when investing a substantial amount of capital in a US business. To be eligible, the applicant of an E-2 visa must be coming to the US to solely develop and direct the operations of an existing or new business in which the applicant has already invested, or is in the process of investing, a substantial amount of capital. This will need to be established by showing either at least 50% ownership of the investment enterprise, or possession of operational control of that business, such as through a managerial position.
To apply from overseas, treaty investors must first register their company with the E-Visa Unit. An application should be made electronically using Form DS-160, and by submitting your supporting documents and business plan. Once this review is complete, the E-Visa Unit will contact the applicant to arrange an interview date. If the treaty investor is already in the US, they can instead file Form I-129 to request a change of status.
If your application for an E-2 visa is successful, this will allow you to oversee the running of a business in the US which you have recently acquired or started. As a temporary nonimmigrant visa, you cannot obtain a green card directly under this route, but it can be renewed indefinitely, provided you and your investment continues to meet all the relevant requirements under US laws.
In contrast to the E-2 visa, the EB-5 visa provides a more long-term solution, allowing foreign investors to obtain permanent residency in the United States. However, this will currently require a direct investment of at least $500,000 in a new or existing US company, with the ability to create or preserve 10 permanent full-time jobs for qualified US workers.
To apply, the immigrant investor would need to file a petition using Form I-526, followed by either Form DS-260 to seek admission to the US from abroad, or Form I-485 to adjust their immigration status to a conditional permanent resident, for example, from an E-2 visa.
If the application for an EB-5 visa is successful, you’ll be granted conditional permanent residence for an initial two-year period. Shortly prior to the second anniversary of being in the US as a conditional permanent resident, you’ll then need to petition to have the conditions on permanent resident status removed using Form I-829.
Starting a new business involves a great deal of planning, as well as making key financial and strategic decisions, including what business structure will be best for your business.
The type of business structure that you choose will influence everything, including your day-to-day operations, your personal liability for any losses, how much tax you’ll need to pay and how much paperwork you’ll need to file. This means that you must carefully select a business structure, one that gives you the right balance of legal protections and benefits.
Setting up a limited liability company (LLC) will protect you from any personal liability if your LLC faces bankruptcy or lawsuits. However, this type of business structure is more complex and much more highly regulated than, for example, a partnership or sole proprietorship. A partnership is the simplest way for two or more people to own a business together, with the choice of two common kinds of partnerships: limited partnerships (LP) and limited liability partnerships (LLP). However, if you’re starting a business on your own, sole proprietorship is the easiest option, giving you complete control over the way in which that business is run and the least number of regulatory requirements. You will, however, be personally liable for the debts and obligations of the business should it run into trouble.
There are also other more complex options, such as a c-corporation, which is owned by its shareholders. This is a separate legal entity, offering the strongest protection from personal liability, although the cost to form a corporation is much higher than other business structures. Corporations also have more extensive record-keeping and reporting obligations.
Registering your company in the US
Once you’ve decided on a legal structure, and if you’re doing business under a name different than your own, you’ll need to register with the federal government, and in some cases the state government as well. You’ll be automatically considered to be a sole proprietor if you undertake business activities but fail to register as any other kind of business.
Most businesses don’t need to register with the federal government in order to become a legal entity, other than obtaining a federal tax ID number, although small businesses can register with the federal government for trademark protection. If you want to trademark your business, its brand or product name, you’ll need to file with the US Patent and Trademark office once you’ve formed your business.
If your business is an LLC or partnership, you’ll probably need to register with any state where you conduct business activities. Typically, you’ll be regarded as conducting business activities in a state when your business has a physical presence in the state, you have regular in-person meetings with clients and a significant portion of your company’s revenue comes from there.
Some states will allow you to register online, while some will make you file paper documents in person or through the mail. Most states require you to register with either the Secretary of State’s office, a Business Bureau or a Business Agency. If you’re an LLC or partnership, you will need a registered agent in your state before you file. A registered agent receives official papers and legal documents on your behalf of your company.
Accounting & tax implications
There are various tax implications when starting a new business, where much will depend on the tax landscape of the state, county and city where you choose to base your business. You’ll need to factor in personal and corporate tax, as well as sales and property tax. To ensure that you’re set up to pay the right tax, you’ll need to get state tax ID and federal tax ID numbers. Commonly known as an employer identification number (EIN), these work like a personal social security number, but for your business, so that you can pay state and federal taxes.
Once you’re ready to start accepting or spending money as your business, you’ll then need to open a business bank account. This will help you to handle various legal, tax and day-to-day operational issues, in this way helping you to remain legally compliant and protected. To open an account, you’ll typically need either your EIN, or a social security number if you’re a sole proprietorship. You’ll also need your business’s formation documents, any ownership agreements and any business licence or permit. Provided you have the right registration and paperwork ready, a business bank account is relatively easy to set up in the US.
Choosing your location
Your business location is one of the most important decisions you’ll make, although you may need to choose a targeted employment area in the US, or what’s known under the visa rules as a TEA, to be eligible for the lower investment threshold of $500,000 under an EB-5 visa. The high employment area investment amount is currently set at $1 million.
As your business location will determines the taxes, zoning laws and regulations that your business will be subject to in the United States, this means that you’ll need to make a strategic decision about which state, city and neighbourhood you choose to start your business in. In part, where you locate your business will depend on the location of your target market and any business partners, although you should also consider the costs and benefits, as well as the restrictions of different government agencies, when making this decision.
When you calculate your startup costs, you will need to take into account the way in which different expenses might cost more or less depending on your location. Costs that can vary significantly by location include rental rates, property values, business insurance rates, utilities, standard salaries, minimum wage laws, and government licences and fees.
If you rent, buy, build or otherwise plan to work out of a physical property for your business, you must also make sure it conforms to local zoning requirements. In the US, neighbourhoods are generally zoned for either commercial or residential use, where zoning ordinances can restrict or entirely ban specific kinds of businesses from operating in an area.
Licenses for US companies
Most small businesses in the US will need a combination of licences and permits from both federal and state agencies. The requirements and fees for these will vary based on your business activities, location and relevant government rules.
You’ll need to get a federal licence or permit if your business activities are regulated by a federal agency. This could include if your business operates an oversize or overweight vehicle, the manufacture or wholesale of alcoholic beverages, or if your business broadcasts information by radio, television, wire, satellite or cable, to name but a few.
In these and any other applicable cases, an application would need to be made to the appropriate federal agency, such as the US Department of Transportation, the Alcohol and Tobacco Tax and Trade Bureau or the Local Alcohol Beverage Control Board, and the Federal Communications Commission. The requirements and fees will depend on your business activity and the agency issuing the licence or permit.
The licences and permits you’ll need from the state, county or city will depend on your business activities and business location. States tend to regulate a much broader range of business activities than the federal government, for example, business activities that are commonly regulated locally include construction, farming, plumbing, restaurants and retail, although industry requirements often vary by state.
When planning your US business, arguably one of the most important items on your to-do list will be to secure the necessary permission to travel to the US and to remain there lawfully to drive forward your enterprise and undertake your work. This means obtaining the right visa for your needs. As specialist US immigration attorneys, we provide expert visa support and advice to entrepreneurs, investors and business owners looking to expand into the US market. For specialist advice, contact us.
How to set up a company in the US FAQs
Can a non citizen start a business in the US?
It’s possible for a non citizen to start a business in the US, provided they have the right visa to do so, and meet all of the requirements for registering and running their business under both federal and state laws.
How can I start my own business in USA?
You can start your own business in the US, but to be able to oversee this business in person you will need a visa, such as an E-2 or EB-5 visa, for which there are strict eligibility requirements.
How much money do you need to start a business in USA?
The amount of money needed to start a business in the US will not only depend upon the nature of the business, but the relevant visa needed, for example, you will need at least $500,000 for an EB-5 visa.
This article does not constitute direct legal advice and is for informational purposes only.