How to Start a Business in the U.S. as an Immigrant

For as long as we can remember, immigrants have shown the extraordinary ability to overcome obstacles and challenges to accomplish their goals. For many immigrants, one goal is to start and operate a business. While many entrepreneurs are U.S. citizens, there are plenty of permanent residents in the U.S. who are not. While there are of course non-residents, there are also green card holders who are permanent residents.

Regardless of status in the country, immigrant entrepreneurs dream of their own businesses taking off. Whether a small business or a large corporation, the type of business isn’t important. What is important is how immigrants are able to start their own businesses in the U.S. This requires plenty of paperwork, plenty of hustle, and plenty of dedication.

Anyone starting a new business already has a lot of challenges to face to get it to take off. Business owners have so much to keep in mind, from business plans to business structures and more. That’s without the added difficulty of trying to navigate not being native to the country.

It’s not all obstacles and challenges, however. The end result can be magnificent if you’re able to create a successful business.

Let’s take a look at how you can successfully start a business in the U.S. as an immigrant.

C-Corporation or Limited Liability Company?

The age old question for immigrant entrepreneurs is whether to start a C-corporation or an LLC. Both choices have their pros and cons (which we will of course break down for you), but this decision helps determine how your company is structured and where you can house your business. For both C-corporations and LLCs, you do not have to be a citizen of the U.S. to run the company as a U.S.-based company. This allows you to have the maximum freedom in running your company in the states.

When running a U.S. business and deciding between a C-corporation and an LLC, you’re going to want to weigh the pros and cons of each. For example, there are different tax benefits for each. That will matter when the IRS expects your taxes come tax season. As a U.S. company, there’s plenty to consider. Let’s break it down.

C-Corporation

A C-Corporation is great for legal and tax benefits. You cannot be sued or held liable for your company’s debts, and your company does not end if you pass away. This helps create continuity and a lasting brand. In fact, your corporation is considered its own entity in the eyes of the law.

When looking at a C-corporation, a major question is if you want your company to tie together with yourself, or if you want it to be its own entity.

However, there is the key downside of the possibility of double taxation. You’re required to pay taxes for being a shareholder of a company that turns a profit. On top of that, you must pay your income taxes.

So if you’re looking for a setup that requires minimal taxation, a C-corporation is not the setup for you.

LLC

Much like C-corporations, in a limited liability company, you are not held responsible for your company’s debts. Unlike C-corporations, you are able to pay your businesses taxes using your personal tax return. There’s more flexibility with you determining how the company’s profits are split, and less paperwork involved because you do not need to have shareholders.

LLCs don’t come with many negatives for immigrant business owners, so as you’re considering starting your business, LLCs should certainly be at the top of your list.

Determine where to start your business

There’s a lot to consider when determining where to start your business, especially if you’re a small business owner. Small businesses and startups have to consider where the competition is more than large businesses do, but every business should think about the competition when determining where to house their companies.

There are some states that are known for being the most lenient towards immigrant business owners, including Wyoming, Nevada, and New York, among others.

Here are some factors worth considering when deciding which state to start your business in.

• Competitive market: We mentioned before to consider where your competition lives, but you should also consider where your audience lives. Say you’re a company that sells oranges. Most of your customers will live in Florida. Rather than just looking at the rest of our suggestions and making a decision based on that, you’re best off considering where your customers are and determining where to house your company based on that. Thus, you’d keep your company in Florida.
• State taxes: Did you know that some states do not have state taxes? So there’s a major difference between New York and California for example, as New York has state taxes, but California does not. Something you’re going to want to think about when determining where to start your business is how much money you’re willing to see come out for taxes. If you’re sensitive to the amount that comes out, you’re best off picking a state tax-free state like California or Nevada. If you’re not as worried about that, New York is a very lenient state for immigrant businesses.

Determine how much you want to live in the United States

This is a larger consideration than you’d think! A lot of what we outlined so far works for both people who want to live in the United States full-time and people who do not want to live in the United States full-time, but that doesn’t mean the situations are exactly the same. There are plenty of considerations that change based on where you’re looking to live.

Some people prefer to start their businesses in the U.S. but only live in the U.S. part-time. Others want to use their businesses as a way to assimilate into U.S. culture. In either case, the decision is important, as it helps determine what type of documentation you need when you’re starting your business in the United States.

Where you choose to live will determine plenty about how your company runs in the United States.

That being said, you do need a green card or a Visa to run a company in the United States. The most popular example of a visa for immigrants trying to start their own companies in the United States is an E-2 visa. An E-2 visa allows you to stay in the United States as long as your business exists and is profitable. If your business should cease to exist and/or be profitable, your time in the United States would end as well.

While an E-2 Visa works great if your business is profitable, it does create a lot of pressure on your business to maintain a profit. If you’re anxious about your ability to turn a profit, an E-2 Visa may not be for you.

There’s also an L-1 visa if you already have had business success. You must be able to prove business success for an L-1 type of visa, however, so do not take that lightly. Ensuring you get the correct type of work visa is a major step.

Finally, there is a green card. Green cards are very difficult to get and require months to years of paperwork, but when you get a green card you have the most safety in living in the United States of all the options. Consider this option if you’re planning on running your business in the United States full-time and for the long haul.

Takeaways

In the beginning of this article, we outlined the challenges immigrants face when trying to start businesses in the U.S. However, as you read throughout the rest of the article, starting a business in the U.S. as an immigrant is something you can do.

There are many factors to consider when starting a business as an immigrant in the United States. You may have a lot of thinking to do and a lot of decisions to make, but when all is said and done, you should have the ability to start and maintain a successful business.

Make sure to keep this guide handy as you’re considering the different factors and make decisions that work the best for your company and (perhaps even more importantly!) your life! When you’re settled into your United States business, you’ll be glad you followed along.