For years, you’ve dreamt about building a business.
You’ve envisioned your products, your customers, and the longevity of your company.
The blueprint for your business is firmly in your mind.
Now, it’s time to make it real.
Use this quick guide to follow the necessary legal procedures and help get your business off the ground!
The State of Immigrant Businesses in the U.S.
Immigrant business owners are the backbone of America’s economy.
In fact, immigrants are far more entrepreneurial than native-born U.S. citizens.
According to recent studies, immigrant entrepreneurs comprise nearly 22% of all business owners, despite making up just 13% of the total population.
According to Forbes, there are well over 3.2 million immigrant business owners in America, and that number is expected to skyrocket. In fact, by 2050, Latino-owned businesses will make up nearly 30% of the entire U.S. population.
All of these statistics confirm the successful history of immigrant business owners while simultaneously predicting an even brighter future.
1. Get Federal Government Approval
You don’t need to be a U.S. citizen (or even a green card holder) to open a business in America.
However, if you don’t yet have citizenship, you’ll need to gain federal approval before establishing your business.
There are several classifications you can pursue, including:
Intended for “priority workers,” the EB-1 is available to foreign nationals according to the following categories:
- Those who demonstrate “extraordinary ability,” whether in the sciences, arts, education, business, or athletics. Click here to view the full list of criteria for demonstrating extraordinary ability. If you meet at least three of the ten criteria (or provide evidence of a notable one-time achievement), you will qualify for an EB-1 visa.
- Those who demonstrate evidence as an “outstanding professor and researcher,” and have at least three years of experience in their particular academic area. If you meet at least two of the six criteria listed here (and provide an offer of employment from a U.S. employer), you will be eligible for an EB-1 visa.
- Those who qualify as “multinational managers and executives” and are petitioned by a U.S. employer to join their company. This firm must have a “qualifying relationship” with the business the applicant worked for outside the U.S. (i.e. as a parent, affiliate, or subsidiary), and it must employ them in a managerial or executive capacity.
This classification is available for immigrants seeking to invest in an existing business or to establish their own.
With an E-2 visa, you’ll be granted an initial stay of two years (with access to unlimited two-year extensions).
According to the U.S. Department of Citizenship and Immigration Services, qualifications for the E-2 visa include:
- Be a national of a country with which the United States maintains a treaty of commerce and navigation;
- Be actively in the process of investing (or have already invested) a substantial amount of capital in a bona fide U.S. company; and
- Be in (or seeking to be in) the United States for the sole purpose of developing and directing the investment enterprise. (Must show 50 percent ownership of the company or have operational control through a managerial position or other corporate device.)
Unlike the E-2 visa, the EB-5 has specific financial prerequisites.
For example, foreign entrepreneurs must invest at least $1 million in a particular business — or $500,000 if that same business is in a “Targeted Employment Area” (TEA) — i.e. rural regions or areas with above-average unemployment.
Secondly, foreign entrepreneurs must also create at least ten new, full-time jobs to obtain an EB-5 Visa.
While the qualifications are demanding, the EB-5 classification can lead to permanent U.S. residency (and eventually, to citizenship).
If you are interested in the EB-5 Visa, click here to learn more.
Note: the qualifications for the EB-5 Visa are under government scrutiny right now, as some parties intend to increase the minimum investment to $1.8 million (or $900,000 in a TEA). Be sure to keep an eye on these developments.
2. Select Your Company Structure
Immigrant business owners have two company structures to choose from: a limited liability company (LLC) or a C-Corporation.
Both have significant merits worth considering.
The Benefits of a C-Corporation
Under a C-Corporation, you are viewed as a “shareholder,” and your business is recognized as a separate legal and tax entity.
This is very important, because it ensures your personal assets are protected by any debts your company may incur. Additionally, thanks to “perpetual existence” laws, your corporation will continue to operate even in the event of bankruptcy (or worse, death).
However, there is one potential downside to a C-Corporation: double taxation. In other words, while the business will have to pay taxes on its profits, individual shareholders (like yourself) will have to do the same.
The Benefits of an LLC
As the business owner of a limited liability company (LLC), all profits flow directly to you — not to shareholders.
Plus, you can choose to pay your business taxes on your annual personal tax return instead of separate returns for yourself and your business, a convenient and potentially cost-effective feature. You can also elect to be taxed as a C-Corporation, depending on your financial situation.
In this way, LLCs are viewed as a hybrid company structure.
Unlike C-Corporations, however, LLCs don’t require shareholder meetings or a board of directors. Such simplicity helps lessen administrative hassle while promoting your personal oversight of the firm.
3. Register Your Business
After selecting your business structure, you’ll need to register your company in a particular state.
Though there are many factors to consider, these two elements are typically top of mind for immigrant business owners:
- State Taxes: In addition to federal taxes, your business will be subject to a variety of taxes including the state sales tax, state corporate income tax, personal property tax, value-added tax (VATs), and many more.
Click here to view a complete list of the most business-friendly states in America.
- LLC Taxes: While some states require an annual franchise tax based on your total earned income, other states offer a low, fixed rate. These taxes vary widely from state-to-state and are listed in detail here.
After identifying the right state for your business, you can then officially register your company.
As you select your trade name (or your “doing business as” (DBA) name), make sure the title doesn’t interfere with the trademarks of other existing companies or products.
Next, if you don’t already have a Social Security number (SSN), you’ll need to obtain your individual taxpayer identification number (ITIN) — which the IRS requires for all U.S.-based businesses.
To apply for your ITIN, click here.
With your ITIN, you’ll then be able to apply for your employer identification number (EIN), which empowers you to pay federal taxes, to hire employees, and to apply for business licenses and permits.
To apply for your EIN, click here.
With your ITIN and EIN, you’ll then be able to open a corporate bank account and apply for loans.
From there, you’ll truly be open for business.
You’re embarking on the realization of a dream.
Whenever you’re faced with setbacks and challenges, remember the vision that first inspired your business. Cling to that founding passion, and the results will follow.
At uLink, we admire your ambition and are excited to see what you create.
While you build your business, we’re here to help you support your loved ones back home. With great exchange rates and fees starting as low as $0, you can send more money home than ever before.
Miles from home — just moments away with uLink.