Starting a business in the U.S. as an immigrant involves navigating both business formation and immigration regulations. The good news is that immigrants, regardless of their legal status, can form businesses in the U.S. However, if you plan to work in the business, you'll need to obtain the appropriate visa.

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Here's a breakdown of how to start a business, focusing on LLCs and Corporations, and key immigration considerations.

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What is LLC?

 

A Limited Liability Company (LLC) is a flexible business structure that combines the liability protection of a corporation with the tax efficiencies and operational flexibility of a partnership. It's particularly popular among small business owners due to its simplicity and protection features.

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An LLC (Limited Liability Company) is a favored business structure due to its many benefits. It offers personal asset protection, shielding owners from business-related debts and liabilities. 

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From a tax perspective, an LLC enjoys pass-through taxation, which means profits and losses are directly reported on the owners' personal tax returns, circumventing the double taxation typically associated with corporations. 

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This entity also stands out for its operational flexibility, requiring fewer formal procedures than traditional corporations. Furthermore, LLCs are accessible to a wide range of individuals, as there are no restrictions on ownership for immigrants or non-U.S. citizens, regardless of their legal status.

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What is Corporation (Inc.)?

 

A Corporation is a more complex legal entity that is separate from its owners (shareholders). It is suitable for businesses that plan to raise capital through stock issuance or intend to go public.

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Corporations (specifically C corporations) offer several key advantages, including limited liability for shareholders, protecting their personal assets. They excel at capital acquisition by issuing shares, making them attractive to investors like venture capitalists. Corporations also boast perpetual existence, continuing independently of ownership changes, and allow for an unlimited number of owners, including foreign individuals and entities, without citizenship restrictions for immigrant owners. 

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However, these benefits come with drawbacks, primarily double taxation where both the corporation and shareholders pay income tax on profits and dividends, respectively. Additionally, corporations face more formalities, such as electing a board and holding regular meetings, and entail complex tax filings compared to other business structures.

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Immigration Considerations for Immigrant Entrepreneurs 

 

While you can form a business in the U.S. regardless of your immigration status, if you intend to work within that business, you will need to obtain the appropriate visa. Here are some common visa options for entrepreneurs:

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• E-2 Treaty Investor Visa: If you are a national of a country that has an E-2 treaty with the U.S., and you make a substantial investment in a U.S. business, then you may be eligible for E-2 visa and can work legally under E-2 visa. Read more here. 

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• L-1 Intracompany Transferee Visa: This visa allows a foreign company to transfer qualified employees (executives, managers, or those with specialized knowledge) to a U.S. branch, affiliate, or subsidiary. Or even set up a new company in the U.S.  Read more here. 

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• H-1B Visa: While not specifically for entrepreneurs, if your business creates a job that meets the requirements for a specialty occupation, your company could potentially sponsor you for an H-1B visa. 

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• F1 OPT: Forming an LLC and working for it on your initial 12-month OPT is generally permissible if you strictly adhere to the rules about work being directly related to your major and active engagement. However, relying on self-employment for a STEM OPT extension is extremely difficult and generally not advised.

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• EB-5 Immigrant Investor Visa: This is an immigrant visa that leads to a green card. You must invest a minimum of $1,050,000 in a new commercial enterprise ($800,000 if in a Targeted Employment Area - TEA). Your investment must create at least 10 full-time jobs for U.S. workers within two years. You must also engage in the management of the business.

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• International Entrepreneur Rule (Parole): This is not a visa but a period of authorized stay granted by the Department of Homeland Security for entrepreneurs who can demonstrate their stay would provide a significant public benefit through rapid business growth and job creation. This is a limited and less common option.

 

Are you an immigrant ready to start a business in the U.S.? Ding Babb Law Group is here to help! We'll assist you in setting up your LLC or Corporation, create important documents like your Operating Agreement or Bylaws, and explain how to keep your visa valid while you work. Let us handle the legal details so you can launch your dream business.