Moving & Setting Up a Business in the USA from the UK
The US continues to offer strong economic prospects for businesses. And in light of the highly attractive financial incentives brought in by the Inflation Reduction Act, overseas businesses are looking at how to establish US operations so as to take advantage of the US government subsidies and tax breaks for eligible companies.
If you’re planning to relocate your business to the USA, or to set up new operations in the US, you’ll need to research what’s involved in moving or setting up a business in the USA – everything from the US visa requirements to the potential tax implications.
In this guide, we look at the key areas you’ll need to consider to relocate or set up in the States.
Visa requirements when moving your business to the USA
To set up and also run a business in the USA, you will first need permission to work in the United States within this capacity. There are various different options here, including the L-1 visa for intracompany transferees, the E-1 visa for treaty traders, and either the E-2 and EB-5 visas for treaty investors. Below we look at who can apply for each of these different visa options and what each visa-type will allow you to do once you are in the US.
The E-2 visa
The E-2 visa is for nationals of treaty countries investing a substantial amount of capital in a US business. To be eligible, the applicant must be coming to the States to develop and direct the operations of either an existing or new business in which they have already invested, or are currently investing, a substantial amount of capital. There are no fixed capital thresholds, although the investment must be sufficient to ensure both the successful development and operation of the applicant’s business, measured in a proportional sense.
The applicant must also be able to show at least 50% ownership of the US enterprise, or possession of operational control of that business, such as through a managerial position.
If an application for an E-2 visa is successful, the treaty investor can come to the USA to oversee the running of their business for a period of 2 years. As a temporary nonimmigrant visa, they cannot obtain a green card under this route, but permission can be renewed on an indefinite basis, provided the investment continues to meet the relevant requirements.
The L-1 visa
The L-1 visa is either for employees transferring to a US branch of their overseas employer or for those being sent to set up a brand new branch. There are two types of L-1 visa, the L-1A visa for executives or managers, or the L-1B visa for employees who have specialised knowledge of a company’s products, services, techniques, policies or procedures. In either case, the L-1 visa will allow a multi-national employer to transfer key executives, managers or specialised knowledge employees from an overseas office, either to set up a new office in the US, or to work in a parent, affiliate, branch or subsidiary of the same company.
To be eligible for an L-1 visa, the applicant must have worked in an executive or managerial capacity for the same employer, or as a specialised knowledge employee, for a year out of the previous 3 years, and be seeking to undertake work in the US in a similar capacity.
If an application for an L-1 visa is successful, the employee will be allowed to come to the USA to undertake their job role for up to 3 years, or to open a new office for up to a year. However, subject to meeting the ongoing qualifying criteria, they will be able to extend their L-1 visa to remain in the US for up to 7 years within an executive or managerial role, or 5 years as a specialised knowledge employee. They may also be permitted to apply for permanent lawful residency whilst in the US under the EB-1C immigrant visa route.
The E-1 visa
The E-1 visa is for citizens of a treaty country to come to the USA to engage in international trade. To be eligible for this type of visa, the applicant must be a citizen of a country with whom the US maintains what is known as a treaty of commerce and navigation, or is otherwise deemed a qualifying country. The applicant must also be coming to the USA solely to carry on trade of a substantial nature, and which is international in scope, but principally between the United States and the treaty country in question. Principal trade between the USA and treaty country will exist when over 50% of this international trade takes place exclusively between the US and the treaty country of the trader’s nationality.
There are no minimum requirements when it comes to what constitutes ‘substantial trade’, either in the context of monetary value or the volume of each transaction. The amount of trade must simply be sufficient to create a continuous flow of international trade items as between the US and treaty country. Items of trade include, for example, goods, services, insurance, international banking, transportation, tourism and technology.
If an application for an E-1 visa is successful, the treaty trader will initially be allowed to come to the United States for 2 years. They can also extend their visa any number of times, in increments of 2 years, provided the visa-holder continues to meet all relevant requirements and maintain an intention to leave the USA when their lawful immigration status expires. However, this visa does not provide a direct path to settlement.
The EB-5 visa
As a green card, the EB-5 visa provides a more long-term solution to the E-2 visa, allowing foreign investors to obtain permanent residency in the United States. However, this will require a direct investment of at least $800,000 in an existing or new US enterprise, with the ability to create or preserve 10 permanent full-time jobs for qualified domestic workers.
If the application for an EB-5 visa is successful, the immigrant investor will be granted conditional permanent residence for an initial 2-year period. An application can then be made shortly prior to the second anniversary of being in the United States to have the conditions on permanent resident status removed, allowing the investor to settle in the US.
Company requirements when moving your business to the USA
Relocating a business involves a great deal of planning, as well as making key financial and strategic decisions, including which company structure will be best for your business.
The type of business model that you opt for will influence everything, from your daily operations to personal liability for any losses. As such, you must carefully select the model that will offer you the right balance of both legal protections and benefits. For example, by setting up a limited liability company (LLC), this will protect you from any personal liability if your LLC faces lawsuits or even bankruptcy. However, this type of business model is far more complex and regulated than, for example, either a partnership or sole proprietorship.
With a partnership, you can choose between either a limited partnership (LP) and a limited liability partnership (LLP), where a partnership provides the simplest way for two or more individuals to run a business together. However, if you will be running your US business on your own, sole proprietorship will often represent the easiest option, with the least number of regulatory requirements. You will also have sole control over how the business is run, although you will be personally liable for any debts and obligations of the business.
Registration requirements when moving your business to the USA
If you propose to do business under a name that is different to your own, you will need to register that business with the federal government and possibly also the state government. If you fail to register as a specific type of business, you will be treated as a sole proprietor.
If your business is either a partnership or LLC, you will probably need to register with any state where you plan to undertake business activities. You will usually be classed as undertaking business activities either where your business has a physical presence, you have regular meetings and/or a significant portion of your revenue comes from that state.
In some states, you will be able to register your business online, while others will require you to post the necessary paperwork or file this in person with either a business bureau or agency, or the Secretary of State’s Office. As a partnership or LLC, you will also need a state-registered agent to receive official papers and legal documents on your behalf.
Licensing requirements when moving your business to the USA
When relocating to the USA, your business may require a combination of licences and permits from both federal and state agencies. The different requirements and costs for these will vary depending on your proposed business activities and business location.
If your business activities will be regulated by a federal agency, you will need to secure a federal licence or permit. This could be where, for example, your business will be operating an oversize vehicle, or involve either the manufacture or wholesale of alcoholic beverages. If applicable, an application will need to be made to the appropriate federal agency, such as the US Department of Transportation, or the Alcohol and Tobacco Tax and Trade Bureau.
When it comes to state licences and permits, 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, restaurants and retail, as well as farming, although specific industry requirements can often vary by state in the context of licensing.
Funding requirements when moving your business to the USA
When it comes to funding, consideration must be given to all the costings involved of relocating your business to the USA. This is because, unless you already have the funds in place to support such a significant move, you will probably need to cost out the move to show to potential investors or lenders. As such, you will need to factor in all of the above considerations, including the cost of obtaining an appropriate visa, not least if you are seeking an investor visa for which a substantial capital investment must be made.
You should also factor in any additional costs associated with the type of business that you are proposing to run in the US, as well as any registration and/or licensing costs.
Importantly, deciding where to relocate your business can impact all these considerations, so careful thought must first be given to the most appropriate US location. For example, you may need to choose a targeted employment area in the USA, or what is known under the visa rules as a TEA, to qualify for the EB-5 visa lower investment threshold of $800,000. The location of your US business will also determine what taxes that your business will be subject to, and the cost of leasing or buying business premises, as well as things like business insurance rates, utilities, standard salaries and minimum wage laws.
Tax requirements when moving your business to the USA
When relocating to the US, there are various tax implications, where much will depend on the tax-related rules of the state, county and city where you choose to base your business. However, in all cases, you will need to factor in personal and corporate tax, not to mention sales and property tax. To ensure that your business is set up to pay the right tax, you will need to get both state and federal tax ID numbers. These work like a personal social security number, but for your business, so that you can pay state and federal taxes.
The taxation system in the USA, especially for LLCs, can present various challenges for new business-owners, not least if you are also new to the way in which tax laws work in the States. As such, seeking professional advice and assistance when moving your business to the USA is always advisable, allowing the experts to help you navigate the potential pitfalls.
NNU Immigration are specialist US immigration attorneys based in London. Our experts provide guidance and advice on US visa options to entrepreneurs, investors and business owners looking to start up, invest in or expand US-based enterprises.
For help meeting your US ambitions, contact us.
Moving & Setting Up a Business in the USA from the UK FAQs
Can a UK citizen start a business in USA?
It is possible for a UK citizen to start a business in the USA, provided they are granted a visa to do so, and meet the additional requirements for registering and running their business under both federal and state laws.
Can I get a US visa if I buy a business?
Buying a business in the United States does not, of itself, guarantee that you will be granted a visa to run that business yourself, where there are various strict visa requirements that must first be met under each relevant route.
How much money do you need to relocate to USA?
The cost of relocating to the USA will depend on several different factors, including the type of visa sought. For example, for an EB5 visa, you will need at least $800,000 to invest in a new or existing US company.
Can I open a business in US as a non-resident?
You can start a new business in the US as a non-resident, but to oversee this business in person you will need a suitable work visa, like an E2 or EB5 visa, for which various strict requirements must be met.
This article does not constitute direct legal advice and is for informational purposes only.