A report by the Small Business Administration estimates that “immigrant owners consist of roughly 18 percent of business owners with employees and almost 23 percent of business owners without employees.”
Though, despite the prominence of immigrant-owned businesses, starting a business as an immigrant in the U.S. can be a convoluted and confusing affair.
This article will cover everything you need to know to start this process—from business structures and funding options to legal immigration paths and other essential considerations.
1. Choose the business structure
Selecting the appropriate business structure is an important first decision that impacts your legal obligations, taxes, and personal liability as a business owner.
For immigrant-run businesses, the two most common types of registration are “limited liability company” (LLC), and C corporation. Both of these allow you to run the business from outside of the U.S. and they do not even require residency or citizenship.
Benefits of an LLC
An LLC is a hybrid business structure between a corporation and a sole proprietorship that protects its owners from personal liability.
It tends to involve less paperwork since you do not need to have a board of directors or shareholder meetings, and it is generally a good fit for small businesses that want flexibility over formality. You have more flexibility in how you are taxed, for instance, which can help to minimize your tax burden depending on your circumstances.
Benefits of a C Corporation
A C corporation has its own rights and responsibilities under the law, and it will live on even after its owner(s) pass away.
This structure is preferred by many investors and is a good idea for companies that wish to issue shares to employees and eventually go public. Unlike an LLC, it is more commonly recognized internationally in case you are interested in raising foreign investment or setting up global partnerships.
Also read: C-corp vs. LLC: How to choose (but ultimately consult with legal and tax professionals to determine the best fit for your business)
2) Register your business
Once you've decided on a company structure, next you must register your business. Each state has its own requirements and procedures for business registration, so research thoroughly.
When choosing which state to register in, make sure to consider which states have low taxes (i.e. personal property tax, corporate income tax, sales tax) and high standards for protecting personal information of business owners.
Delaware and Nevada are both tax-incentivized states for business owners, making them a popular choice for many new businesses in the U.S., immigrant-owned and otherwise.
Once you’ve chosen your state, you can often complete the process through the state's Secretary of State office or an online portal. Consider using services like Doola, LegalPad, or Incfile to simplify the registration process and ensure you meet all legal obligations efficiently.
Whether you’re using a third-party service or registering your business yourself, make sure you also do the following to be prepared for tax season as a business-owner:
Apply for your Employer Identification Number online – this is your business taxpayer ID number
Apply for an Individual Taxpayer Identification Number (ITIN) or Social Security Number (SSN) after you have arrived in the U.S. — this is your unique personal taxpayer ID number
2. Find legal immigration avenues
If you wish to operate your business while living in the U.S., here are some of the most common immigration paths to do so.
E-2 Treaty Investor Visa: This visa is designed for individuals from countries with a treaty of commerce with the U.S., such as Mexico, Canada, the U.K, and several more countries. It allows you to invest a substantial amount in a U.S. business and manage it, and also grants your spouse and children the same immigration benefits, including work authorization.
L-1 Intracompany Transferee Visa: If you already own a business in your home country, the L-1 visa may enable you to transfer to a new U.S. branch or subsidiary. You must have worked for the foreign company full-time for at least 1 year and as a manager, executive, or special knowledge worker.
EB-2 visa: If you are pursuing an entrepreneurial endeavor in “the national interest”, you may be able to apply for an EB-2 visa using the National Interest Waiver (NIW). The definition of “national interest” is fairly broad, so make sure to work with an immigration attorney to ensure that you have a compelling narrative on how you fulfill the NIW requirements -- and have documents to back it up.
EB-5 Immigrant Investor Program: If you're looking to invest a significant amount of capital (i.e. >$500,000) in a new commercial enterprise, the EB-5 program may be a good pathway to entrepreneurship. This is similar to the E-2 visa but it is an immigrant visa, so it leads to permanent residency.
International Entrepreneur Rule: Finally, the International Entrepreneur Rule is not technically a visa, but is rather a period of authorized stay where foreign entrepreneurs can live and work for their enterprise for up to 30 months, with the potential to renew for an additional 30 months.
This is reserved for entrepreneurs with substantial ownership of a startup company. To be eligible, the beneficiary must have a central role in the company and show that their stay in the U.S. will provide significant public benefit through the potential for rapid business growth and job creation.
3. Secure funding
As you look for capital to start or grow your businesses, consider the following options:
Small Business Administration (SBA) Loans: The SBA is a government entity that offers loans tailored to small businesses, including those owned by immigrants. SBA programs like 7(a) loans provide financial assistance with favorable terms, though often require that you are a permanent resident and have been operating your business for at least 12 months.
While they tend to have low interest rates, they have strict eligibility requirements for collateral and often lengthy waiting time for approval.
Also read: How Non-US Citizens Can Qualify for SBA Loans
Digital Lenders: Some online lenders have become a popular choice for small business funding. Companies like BlueVine, OnDeck, and Kabbage offer digital lending solutions with fast approval processes, though these often require a strong U.S. credit history or personal liability if you default.
Term Loans: Traditional lenders and banks often provide term loans for businesses, meaning that they allow you to borrow a specific amount of money and repay it (with interest) over a set period.
These might offer larger sums of money than SBA or digital loans, but they come with more paperwork and stringent requirements.
Other loans: There are several other types of financing options to look into to cover different types of business expenses, such as equipment financing, invoice financing, and business lines of credit. Websites like NerdWallet and Bankrate are helpful to compare options here, filtering by loan type, credit requirements, and more.
Also read: Small-business Loans: Compare and Apply
4. Other Considerations
As you prepare to start your business, here are a few other important considerations to keep in mind to ensure that you, your employees, and your business will thrive:
Taxation and Compliance: Familiarize yourself with U.S. tax laws and requirements, which differ by state and between small business and individuals. Consult with a tax professional to ensure tax compliance and to take advantage of available deductions.
Also read: Tax and Business Forms You’ll Need to Start a Small Business
Business Plan: Crafting a comprehensive business plan is essential for attracting investors, securing loans, and guiding your business growth.
Also read: How to Create a Business Plan (With Template)
Hiring Employees: As your business grows, you might need to hire employees. Make sure to do diligent research on employment laws, local wages, and common recruitment platforms like LinkedIn and Indeed.
Also read: Employee Handbooks for Startups
Lastly, make sure to browse the Immigration Learning Center for extensive resources for and about immigrant entrepreneurs.
The takeaway
If you follow the steps in this guide, you will be well on your way to moving to the U.S. and starting a new business as an immigrant.
Alongside starting your business, you may also want to apply for your first credit card to begin building a U.S. credit history. Over time, this credit history will unlock options for business loans and other credit products for your personal life.
Fortunately, Nova Credit lets you use your foreign credit history from select countries to apply for U.S. credit cards from the moment you arrive, so you can kickstart this credit-building process.
Currently, Nova Credit serves individuals coming from Australia, Brazil, Canada, Dominican Republic, India, Kenya, Mexico, Nigeria, the Philippines, South Korea, Spain, Switzerland, and the U.K.
You can use your foreign credit history to apply for a U.S. credit card
Credit history used to stop at the border—until now. Your existing foreign credit history could help you get credit in the United States.
More from Nova Credit:
How to check your USCIS case status
How to build credit after moving to the US
How to get a social security card