How Foreign Nationals Can Start a U.S. Business

How Foreign Nationals Can Start a U.S. Business

Foreign nationals who wish to start a U.S. business do not need to have U.S. citizenship or residency to do so. However, there is a visa requirement as well as some statutory restrictions that foreign nationals who wish to operate as entrepreneurs in the U.S. need to be aware of, including:

Visas for Foreign Nationals Starting a U.S. Business

The E-2 visa is one of the preferred visas for foreign nationals who wish to start a business in the U.S. To qualify, you must:

• Be a national of a U.S. treaty country;
• Have already invested or are actively pursing a substantial capital investment in the U.S.;
• Are entering the U.S. only to develop and direct your investment in a business.

The EB-5 visa is also available for foreign nationals who are investing in a new commercial enterprise, or an existing enterprise where the investment will provide at least a 40 percent increase in net worth or number of employees.

To get a U.S. investor EB-5 visa, you will need to invest capital worth at least US$1 million ($500,000 if in a high unemployment area) and “establish a new commercial enterprise” in one of the following ways:

• Start a new business;
• Purchase and restructure or reorganize an existing business; or
• Purchase and expand an existing business so that the result is a 40% increase in the business’ net worth or a 40% increase in employees.

Unless you invest in an EB-5 troubled business, your investment must result in the creation of 10 jobs that require at least a 35-hour workweek over a two-year period.

Business Entity Selection And Taxation

Foreign nationals cannot own shares in an S-corporation, so most elect to operate a U.S. business as a C-corporation. Your business will be taxed the same as a U.S. corporation on income associated with your U.S. business. If you also operate foreign branches, your corporation is taxed on its worldwide income. There are other complexities that should be discussed with your legal advisor.

Federal and State Laws

You will be required to comply with all state and federal laws in the U.S. jurisdictions where you do business. You will need to be sure your intellectual property is protected in each jurisdiction and that you comply with state and federal employment laws. If you intend to issue any unregistered shares in your business, you will want to exempt those shares under the Securities Act of 1933. The most commonly used exemption is Rule 506 of Regulation D, which allows you to raise an unlimited amount of capital from accredited investors.

These are just a few things you need to consider if you are a foreign national wishing to start a U.S. business. Be sure you consult with an experienced business attorney before you proceed.

Business owners seeking to protect their business interests should seek a qualified, competent advisor for assistance. Contact one of the experienced Florida business attorneys at Jurado & Farshchian, P.L., at (305) 921-0440, or email us at info@jflawfirm.com. We offer free consultations to business owners seeking to find the right attorney to meet their business’ legal needs.

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