Starting a Business in the U.S. is Easier Than You Think

Starting a business requires strategic planning. Starting a business in the U.S. as a foreign national adds another layer of complexity. If you are not already in the U.S., where do you begin? How can you start a U.S. company before you have a visa? We're here to dispel common misconceptions and share feedback on questions and concerns we've received from international entrepreneurs.

Question 1: Do I need a visa before I can start a business in the U.S.?

Answer: No. A visa is not required to form a U.S. business as a foreign national. It seems counterintuitive, but in order to qualify for certain employment-based visas, you need to show that you have taken substantial steps to make your business operational. Foreign nationals can set up and operate businesses in the U.S., even if they are living in another country.

Question 2: What do I need to form a business in the U.S?

Answer: You will need to form and register a corporate entity in the state of your choosing. The process and requirements for registering a business vary by state. In general, this requires choosing a company name that is not registered in the U.S., identifying a business address, and submitting incorporation forms to the Secretary of State. After your business is incorporated, you will need to obtain an employer identification number (EIN). This can take some time and requires the company's owner to first obtain a Taxpayer Identification number or apply for an EIN by mail. Once a company is registered and has an EIN, it becomes easier to open a U.S. bank account for your business.

Question 3: What professional services will I need?

Answer: You may wish to consult business and tax attorneys to determine the best corporate structure and registration state for your company's needs. Typically, there are two main entity options available to non-citizens and non-residents: A Limited Liability Company (LLC) and a Corporation (C Corp). As its name implies, an LLC can be an attractive option because its members are not personally liable for the company's debts or lawsuits. C Corps tend to be favored by large companies, companies with high growth potential, and companies seeking to raise capital through public stock offerings. C Corps also offer limited liability protection and are appealing to investors, but are subject to higher taxes.

Choosing the right business structure is critical to your tax obligations, recordkeeping requirements, growth ability, and personal asset protection. By working with business and tax advisors at the outset of your entity formation journey, you will be better positioned to achieve your long-term business objectives.

Question 4:  Can I start a business while in the U.S. on ESTA or on a B-1 visa?

Answer: Yes. You can form a business after entering the U.S. with ESTA or a B-1 visa. While company registration procedures vary by state, proof of U.S. citizenship or permanent residence are not required to file formation documents (such as articles of incorporation or organization).

Question 5:  Can I work while I'm in the U.S. setting up my business with a B-1 visa or ESTA?

Answer: No. Working in the U.S. is prohibited under the B visa classification and ESTA. You cannot engage in productive work while in the U.S., including remote work for foreign companies. While there is no "bright line" test for what counts as "productive work," the following passive activities are allowed:

• Participating in business meetings and conferences

• Conferring with U.S. colleagues and business associates (e.g., sharing information, taking meeting minutes or notes)

• Engaging in commercial transactions that do not involve productive work (e.g., taking orders for goods manufactured abroad, receiving information)

• Negotiating contracts

• Registering a business entity

• Obtaining a U.S. bank account

• Securing a lease

  
  

The consequences of working without authorization can be severe. You may be denied entry to the U.S., and your ability to travel using ESTA could be revoked. If you are found to be working without authorization in the U.S., removal (deportation) proceedings could be instituted. You could face a 10-year ban on future U.S. visas and also be ineligible to apply for permanent residence.

Contrary to popular belief, you do not need a specific visa to form a business in the U.S. However, understanding your immigration options is critical to determining your corporate structure. Engaging immigration counsel early on in your discussions with business advisors and investors can ensure both your personal and professional goals are aligned and set you up for a successful launch.