Guide to Relocating Your Small Business to the US
October 30, 2019 | Last Updated on: July 21, 2022
October 30, 2019 | Last Updated on: July 21, 2022
Starting any business is exciting, but can be especially challenging if it is coupled with immigrating to the US. In addition to all of the normal considerations an entrepreneur would contemplate, including whether the business will be financially viable and any regulatory barriers, any business owner hoping to bring their business to the US faces multiple choices and obstacles.
If you have decided that there is a business opportunity in the US that you want to set up, you have a few options. If you wish to relocate your small business to the US, you will need to determine your path to gaining a work visa and permission to reside in the US.
You have several options for moving your business to the US including but not limited to the L-1A visa, the E-2 visa, and the E-B5 visa.
The L-1A visa allows inter-company transfers so that individuals can come and work in the United States. Businesses often use it to establish a new office or branch in the United States.
With an E-2 visa, you can start a new company in the United States and gain permission to live in the United States along with your spouse and dependents. Generally, the state department requires at least a $150,000 personal investment. One downside, however, is that this visa does not lead to permanent residency or citizenship.
The E-2 visa allows an investor and their employees and families to live and receive work permits in the United States. E-2 visas do not have a quota. The investment required varies. Note that Indian and Chinese nationals can not apply for E-2 visas unless they are the spouse of an E-2 visa holder.
A very important note about the E-2 visa is that your funds must be â€śat-risk.â€ť What this means is that the funds have been committed irrevocably â€“ making it very hard for you to pull out. If you are looking to use a loan as part of your E-2, itâ€™s important to know that the loans canâ€™t be secured by the assets of the business â€“ they must be secured by your personal assets. In addition, it may be hard to use a loan for the up-front costs of an E-2 visa because the source of the funds will be subject to significant scrutiny. An E-2 is usually a better option if you have personal liquid funds to commit.
The EB-5 Visa is a type of investor visa that can lead to permanent residency and citizenship. It is costlier than the E-2, requiring a larger up-front investment, and a guarantee that it will create at least 10 jobs.
Similar to the E-2, if you get a loan for an EB-5, your personal assets must be at risk. The collateral for the loan canâ€™t be the assets of the business.
A very important consideration is that once you get a Green Card (permanent residency), you will be subject to US income tax on your worldwide income. For those with large sources of income outside the United States, this could be a strong deterrent against pursuing a permanent residency in the US.
Anyone can incorporate most types of companies in the US. The US does not restrict who can own most types of US-based companies, so if you are a non-resident alien or a resident of a foreign country, you can own parts of or entire companies in the US. The US has two types of taxation for companies (pass through â€“ as with a limited liability company (LLC) and double taxation â€“ as with C Corporations), so it is important to consider the tax implications of the type of company you are forming in the US. An S-Corp is one type of business that can cause issues for foreigners. Non-resident aliens canâ€™t own S-Corporations.
A foreign company can also be the owner of a US company. It is relatively fast and easy to incorporate a company in the US and many services can help you prepare the legal documents â€“ some can even do it in minutes. You may be required to appoint and pay for a â€śregistered agentâ€ť to receive official government mail for your business. Youâ€™ll be able to open a business bank account which will make it easy to transact with customers. If you meet certain requirements, you may be able to open a business credit card as well. Every state has different rules about companies incorporated and doing business in their states â€“ be sure to follow these local laws and seek out the help of experts who can help you remain in compliance with regulatory and tax return requirements.
Different US states make it easier to start a business than others. Things you should consider include business licenses and franchise taxes. Some municipalities in the US try to make it very easy to start a business, offering tax benefits or additional grants and subsidies for new businesses, particularly those that promise a certain number of jobs.
Itâ€™s also important to consider attributes of the area that are business-friendly â€“ are there sufficient customers? Is the city growing or shrinking? Does this new location have an adequate workforce with the talent that you need? How easy will it be to attract talent to relocate to work for your business? How is the cityâ€™s infrastructure â€“ will you have the resources you need nearby? Is the cost of living in this new location sustainable for your family and your business? What is the overall quality of life like in this location?
It is also important to consider the fixed costs of the transition which may include things like moving your equipment and talent. You may encounter upfront regulations and costs in the US, including licensing and inspection requirements. You will also want to consider any tax obligations you may incur as a resident of two countries, or any exit taxes you will need to pay if you are leaving your home country behind. Plenty of small business owners decide that the costs of bringing their new business to the US are too onerous and opt instead to just sell over the border.
Interested in learning more about the small business financing available to immigrants in the US? Check out this guide to business loans for immigrants in the US.
This article is not immigration or legal advice. Seek the help of a qualified immigration attorney for all of your immigration planning needs.