How to Start a Small Business in the U.S. as a Non-Citizen

Table of Contents

• How to Start a Business as a Non-Resident
• Visas for Entrepreneurs
• E-2 Visa
• H-1B Visa
• Green Card for Investors
• Registering Your Business
• Unique Challenges for Non-Citizen Entrepreneurs

Small businesses are vitally important to the American economy. Consider the following statistics provided by the Chamber of Commerce: There are 30.2 million small businesses operating in the U.S. which collectively make up 99.9% of total U.S. businesses, employ 49.2% of the American workforce, and are responsible for 60-65% of net new jobs — amounting to around 2 million new jobs per year.

For non-residents that are looking to tap into the power of the U.S. economy, a small business can be a great option. The process may seem daunting and complex, especially as a non-citizen, but 80% of new businesses survive their first year. The United States economy not only welcomes small business, but is built from it.

How to Start a Business as a Non-Resident

The first steps to opening a business are making a few foundational decisions that will define what type of entity should be used to start the company. These questions include:

• How taxes will be paid.
• How much liability is needed, and the level of risk involved in the venture.
• The timeline of the business, and if ownership is to be bought, shared, or sold.

The two types of corporate entities that can be opened without citizenship in the U.S. are Limited Liability Company (LLC), and a Corporation (C-Corp).

Limited Liability Company

• LLC members are considered self-employed, and must pay self-employment taxes, including taxes to Medicare and Social Security. LLC members often pay a lower tax rate than a corporation.
• The LLC protects personal assets in case the LLC faces bankruptcy or lawsuit, and would be a good choice for those with significant personal assets, or those embarking on a medium to high-risk business venture.
• Not all state regulations are the same for LLCs, some have limited time spans, and some require agreements beforehand if there is to be any buying, selling, or transferring ownership.

Corporation

• A C-corp is a separate legal entity from its owners, it can make a profit, pay income taxes (sometimes twice: first when the company makes a profit, and then again when the dividends are paid to shareholders), and can also be held legally liable.
• A Corporation provides the strongest protection in terms of personal liability, which can be beneficial for higher-risk businesses, but is also more costly to form, and requires a more detailed record-keeping, operational processes, and reporting.
• As a Corporation is legally independent of its shareholders; shareholders may buy, or sell shares, "go public", or eventually be sold.

Visas for Entrepreneurs

Opening a business in the U.S. is possible without a visa or citizenship, though having a business inside the country does not provide a right to live in the U.S. A visa allows a non-citizen to both live in the U.S., and operate their business. Though no visa is offered specifically for entrepreneurs, there are a few options to choose from that are tailored to business entrepreneurs or the workforce. The most popular visa is the E-2 visa, but it all depends on the qualifications and needs of the applicant.

E-2 Visa

The E-2 visa is available to individuals who are citizens of a country in which the United States has a Treaty of Friendship, Commerce, and Navigation. The initial maximum stay for a qualified E-2 individual is 2 years, but may be extended without limit. An applicant must meet the following to qualify:

• The applicant must write and provide a business plan that details the start-up and management of a profitable business that benefits the local economy.
• The business must be opened as a Corporation, 50% of members and partners must be citizens from a treaty country, and the applicant must have a controlling share of at least 50% or more.
• There is no set amount, but the applicant must invest, or intend to invest a significant amount (usually around $100,000) to be considered.
• The amount invested must be irrevocably committed, which means that funding is an active part of the development and operation of the company.

Obtaining an E-2 visa qualifies eligibility for a spouse to follow or receive a work visa that can be renewed indefinitely, and may also allow for unmarried children under the age of 21 to follow as dependents. Family members (spouse and children) of the recipient of the E-2 do not need to be of the same nationality as the E-2 holder. Holding an E-2 does not necessarily qualify an individual for a Green Card.

H-1B Visa

The H-1B Visa is a part of the specialty occupations category, and applies to individuals with special skills or education for a specific occupation. This may include higher education, or services of exceptional merit and ability. The applicant's job must meet one of the following qualifications:

• A bachelor's or higher degree (usually the minimum requirement).
• The degree for the job must be a common standard in the industry, or the complexity of the job is unique and can only be performed by a qualified individual.

To qualify for a specialty occupation, an individual must meet one of the following:

• The applicant must have completed a U.S. bachelors or higher degree — or hold a foreign degree that is equivalent.
• Hold an unrestricted state license, registration, or certifications for the position, have education, training, or detailed experience, or recognition of expertise in the specialty that is equivalent to a degree.

Green Card for Investors

Foreign nationals (non-citizens) who are employment-based immigrants may apply to become lawful permanent residents by obtaining a green card for investors. A green card for an investor is also called the EB-5 Immigrant Investor, and is identified through the investment, or active investment of $500,000 to $1 million in a commercial enterprise that benefits the U.S. economy, and creates at least 10 full-time positions for qualifying employees. Eligibility includes but is not limited to: meeting the requirements of inspection and parole or admittance, physical presence in the U.S. at the time of application, and no bars to adjustment apply to the application.

Registering Your Business

The United States requires that businesses be registered with state agencies (including LLC, Corporations, Partnerships, and Nonprofit Corporations) where the business is primarily being conducted. Business activities include:

• The business is physically present in the state, and/or what state employees work.
• Clients and in-person meetings occur regularly in the state.
• A significant amount of revenue is generated from a particular state.

If the business is an online company or business is conducted throughout a range of states, a state to register in might be selected that has lower tax burdens such as Nevada and Delaware.

Unique Challenges for Non-Citizen Entrepreneurs

Opening a business is a challenging endeavor that begins with an original and good idea that takes shape as it is defined by organization type, getting registered, and proving to be a successful part of the American economy. For those who are non-citizens, the difficulty increases with challenges such as applying for visas, navigating a new culture with different laws and regulations, or perhaps finding the best rates to send earnings home for financially dependents and family. Companies from non-citizens may also utilize relationships that mutually benefit both economies — the U.S. as well as their home country — and may be in need of services to navigate the way that companies send and receive payments globally while traveling and conducting business with partners or clients.

With the right funding, planning, and management, small business opportunities are available in the U.S. for citizens and non-citizens alike, and provide the opportunity to create jobs, build residency, and grow economic development on a personal, local, or global scale. Entrepreneurship is a challenging road, but may ultimately become very rewarding.