Starting a Business in the USA and Working for that Business

As an immigration lawyer for investors and entrepreneurs, I work with foreign investors looking to start businesses in the USA. One of the questions I get asked all the time is: Can I start a business in the USA and work for that business?

The short answer is: Yes, you can start a business in the USA. But, if you want to work for that business, you will need to have work authorization.

In this guide, I will discuss work authorization and I’ll go over 4 ways to start and operate a business in the US. The first two ways involve setting-up a business without working for the business, and can be done without work authorization. The second two ways involve using visa categories that allow you to run a business in the US.

Overview:

1. Introduction to work authorization:

• What is considered work?

• What are the consequences of unauthorized employment?

• How to get work authorization

2. Two Ways to Own a Business in the USA Without Work Authorization

• Start a business and partner with someone authorized to work in the US

• Start a business and delegate all operations to a manager

3. Two Ways to Operate a Business in the USA With Work Authorization

• E2 investor visa

• EB-5 investor visa

4. Conclusion

1. Introduction to Work Authorization

US immigration law requires foreign nationals to have work authorization in order to “work” in the United States.

Unfortunately, the US immigration regulations do not clearly define what activities are considered “work.”

What is Considered Work?

According to the Immigration and Naturalization Service (INS): employment is considered “any service or labor performed in the United States by an individual, other than an independent contractor, for wages or other remuneration.”

Employment is also defined as the act of being employed for one’s self.

Also, all types of employment taken without proper authority are considered unauthorized employment.

Although the immigration regulations are not as specific as we would like them to be, two things are clear:

1. You can set-up a company in the USA without work authorization. This means you can:

• Set-up the business: form the corporation, LLC, etc.

• Open the bank account for the business

• Etc.

2. You need work authorization to run your business. Running your business includes:

• Actively managing your business

• Being employed by your business

• Providing services for your business

• Working for your business

• Etc…

What are the Consequences of Unauthorized Employment?

There are many serious consequences of working in the USA without the appropriate work authorization. These consequences include:

• You can be found to be in violation of your visa status

• Your visa can be voided

• You can be subject to removal proceedings (deportation)

• You can be barred from re-entry to the US depending on the situation

For these reasons, if you are planning to work in the US, it is  very important to make sure that you are doing so with work authorization.

How to Get Work Authorization

There are three different ways to get work authorization to the USA. We will discuss these ways below.

To enter the United States as a foreign national, you typically need a visa. Depending on the visa that you enter the United States with, you will be classified under a particular “status:”

Here are some examples of different types of status:

• Visitor for business/pleasure (B1/B2)

• Individual with extraordinary ability (O1)

• Non-immigrant investor (E2)

Of these many types of status, about 60 qualify for work authorization.

• In order to get work authorization, you will have to fall within one of these classifications.

• Here’s the actual section from the Code of Federal Regulations that goes through all the classes of people authorized to work in the US.

• Keep in mind: Visitors are generally not permitted to work in the United States.

The classifications of work authorization can be broken down into 3 basic categories:

• Authorization to work incident to immigration status

• Authorization to work for a specific employer incident to immigration status

• Must apply for work authorization

Authorization to work incident to immigration status

If you are in this group:

• You do not have to apply for work authorization

• You are automatically authorized to work based on your status

• Lawful permanent residents (green card holders) fall under this category

Authorization to work for a specific employer incident to immigration status

If you are in this group:

• You do not have to apply for work authorization

• You are automatically authorized to work based on your status

• You are limited to working for a particular employer

• E2 investors fall under this category

Must apply for work authorization

If you are in this group:

• You do have to apply for work authorization

• You are not automatically authorized to work based on your status

• To get work authorization, you will have to apply for an Employment Authorization Document (EAD) by filing a Form I-765

• Spouses of E2 non-immigrants and spouses of L1 non-immigrants fall under this category

If you have any questions about whether your status qualifies for work authorization, please contact me directly at contact@ashoorilaw.com. I’d be happy to discuss your particular situation with you in more detail.

Now that we’ve covered the basic concepts of work authorization, lets discuss two ways to own a business in the US without work authorization.

2. Two Ways to Own a Business in the USA Without Work Authorization

i. Start a business and partner with someone authorized to work in the US

As I mentioned earlier, you are permitted to set-up a company in the US without work authorization.

Keep in mind, that setting up a business is very limited to certain tasks such as:

• Setting up the company (corporation, LLC, etc.)

• Opening a business bank account

Without work authorization, you are not permitted to actively engage in running the business.

So, one way to own a business in the USA without work authorization it to partner with someone authorized to work in the United States.

Examples of people authorized to work in the US:

• United States Citizens

• Lawful Permanent Residents

• Non-immigrants authorized to work in the USA

Here’s how it works:

• By partnering with someone authorized to work in the USA, you can delegate all of the managerial and operational duties to your partner.

• Your role in the business would be very limited and would resemble that of a passive investor.

• You can receive profits from the business but you cannot receive a salary.

• A salary would indicate that you are receiving compensation based on providing services, which is not permitted.

ii. Start a business and delegate all operations to a manager

If you do not wish to partner with someone, another option to consider is to hire a manager (who is authorized to work in the USA), and delegate all operational responsibilities to the manager.

• In this scenario, your role in the business would be very limited as well and would resemble that of a passive investor.

• After setting-up the business and hiring a manager, you should have no involvement in the operations or the management of the business.

• Your manager should interview and hire staff as needed, and perform all other operations and managerial functions.

• You can receive profits from the business but you cannot receive a salary.

After going through the above two options, you may be thinking to yourself that these restrictions would be too limiting. In the next section we will discuss 2 visa categories that would actually allow you to start a business in the US and work for that business.

3. Two Ways to Operate a Business in the USA With Work Authorization

Now that we’ve discussed how to own a business in the USA without work authorization, lets go over two ways to start a business in the USA and actually operate your business.

i. E2 Investor Visa

The E2 visa is a non-immigrant visa that allows investors and entrepreneur to live in the US and operate a US business.

Benefits of the E2 visa:

• Allows you, your spouse, and your unmarried children under 21 years old to live in the US.

• With an E2 visa, you have work authorization to work for your business.

• The E2 visa can be renewed over and over as long as your US business continues to meet the E2 visa requirements.

• Your spouse can apply for work authorization to work in the US.

There are 8 main requirements to get an E2 visa:

1. You must be from a country with an E2 treaty with the US.

• Here’s a list of countries that have E2 treaties with the US

2. You must have the intent to leave the United States once your E2 status ends.

3. You must invest a “substantial” amount in a US business.

4. Your US business must be a “bona-fide” enterprise.

5. Your business cannot be a “marginal enterprise.”

6. You must be coming to the United States to “direct and develop” your US business.

7. Your investment funds must have been obtained lawfully.

8. Your investment must be “at-risk” and irrevocably committed to the US E2 business.

ii. EB-5 Investor Visa

Other than the E2 visa, another option to consider is the EB-5 visa. The EB-5 visa is an immigrant visa for investors and entrepreneurs. With an EB-5 visa, you can live in the USA and work for your business in the USA.

Benefits of the EB-5 visa:

• Qualifies you, your spouse, and unmarried children under 21 years old for a green card.

• Gives you, your spouse, and children work authorization.

• You can operate your business in the US.

There are 6 main requirements to get an EB-5 visa:

1. Invest in a New Commercial Enterprise. You can:

• Start a new business

• Invest in an existing business

• Purchase an existing business

• Or invest in a regional center

2. Invest a minimum of $1 million (or $500,000 in some cases).

3. Create 10 full-time jobs for US workers.

4. You investment funds must have been obtained lawfully.

5. Your investment funds must be “at-risk.”

6. You must engage in the management of the US business.

4. Conclusion

As a foreign national, you must have work authorization in order to work in the USA.

If you want to start a business in the US, there are two things you should be aware of:

1. You can set-up a company without work authorization. This means you can:

• Form the business: (Set-up the corporation, LLC, etc.)

• Open the bank account for the business

• Etc.

2. You need work authorization to run your business. This includes:

• Actively managing your business

• Being employed by your business

• Providing services for your business

• Working for your business

Working in the US without work authorization can have very serious consequences including deportation. So if you plan to work in the US, make sure to do so with the appropriate work authorization.

If you are interested in starting a business in the USA without working for the business, there are two options you may want to consider:

• Start a business and partner with someone authorized to work in the US

• Start a business and delegate all operations to a manager

If you want to start a business in the USA and work for the business, the following two visas are great options to consider:

• E2 visa

• EB-5 visa

In addition to what I’ve discussed in this article, there are many other options to consider. If you would like to discuss these options in more detail, feel free to email me directly at contact@ashoorilaw.com.

Ashoori Law is a full-service immigration law firm focused on helping investors and entrepreneurs get visas to the United States.

Got a question? EMAIL ME

Resources:

• USCIS 8 CFR Sec. 274a.12 Classes of aliens authorized to accept employment.

• EB-5 Visa Guide: Everything You Need to Know About the EB-5 Visa

• E2 Visa Guide: Everything You Need to Know About the E2 Visa

• USCIS E2 Treaty Investors