The E-2 treaty investor visa is one of the most useful and simultaneously complex categories of nonimmigrant visas. Here is a list of the most common questions we receive from clients. These answers are not legal advice but educational in nature and meant to aid those who are attempting to understand whether or not the E-2 visa is right for them. Please contact us for individual, tailored advice for your situation.
1. What is substantial investment?
Substantial investment is defined as an amount that is:
(1) Substantial in a proportional sense, ... i.e., substantial in relationship to the total cost of either purchasing an established enterprise, or creating the type of enterprise under consideration;
(2) Sufficient to ensure the treaty investor's financial commitment to the successful operation of the enterprise; and
(3) Of a magnitude to support the likelihood that the treaty investor will successfully develop and direct the enterprise. No set dollar figure constitutes a minimum amount of investment to be considered "substantial" for E-2 visa purposes. [9 FAM 402.9-6(D)]
But what does that mean? And how do you know if you have invested enough to pass the threshold?
Simply put, substantial investment is one of the trickiest points of applying for an E-2. The embassy or consulate will look at many factors in deciding what it means including the type of business started, how many people it plans to support, and where it is located. It will compare this amount with how much of the overall costs the investor has invested. The lower the overall start-up costs needed based on the business, the higher the percentage of funds the investor should seek to commit.
A good US Immigration Lawyer can go through your investments and advise on how to best spend money. To best utilise his or her expertise, I would advise instructing a lawyer early in the process and creating a timeline and game plan for investment. In choosing whom to instruct, it is often worthwhile to hire an attorney with familiarity of the embassy or consulate where you will be applying.
For more on substantial investment, please read our blog post solely on the topic here.
2. What makes a business marginal?
One criterion of an E-2 application is that a business may not be considered marginal. This means that the business must do more than simply provide financially for the investor and his or her family.
To look at whether or not a business is marginal, the E-2 officer will mainly assess two factors - profits and employees. He or she will be looking for the following: whether the investment will expand job opportunities, generate other sources of income, and generate income substantially above what would be considered a living, and that the investor will not work simply as a skilled or unskilled labourer.
If the business is new (as many are), a detailed business plan with a five year projection of profits and employees hired must be included.
For more on marginality, please see our blog post on it here.
3. Does my business need to be up and running at the time I apply for an E-2 visa?
Yes. At the time of filing, the company must be real and operating. This means that the business must have all of the applicable local, state and federal licenses.
4. Can my spouse and children get visas as well?
Yes, on an E-2 visa the spouse and minor children (unmarried children under the age of 21) of an E-2 visa holder may also apply for derivative visas. Important for many families, the spouse may also apply for a work permit (EAD) once in the United States. The EAD card generally poses no restrictions on the type of employment.
If you and your spouse are both potential E-2 visa holders, it may serve you well to consider the individual earning potential of each of you before deciding who should apply for the visa.
5. What kind of business can I run with an E-2 visa?
The E-2 visa is quite flexible when deciding what type of business to run. Both service and sales companies are eligible for E-2 registration.
One limitation to businesses is that it must not be a passive investment, i.e. simply buying property or stocks. It is also worth noting that nonprofit associations are not commercial enterprises so will not qualify for E-2 status.
6. How long is the visa good for?
Upon approval, the visa will be initially granted for anywhere from 1-5 years. For small businesses, the London embassy generally grants an initial approval of 1-2 years. Extensions are for 5 years at a time. There are currently no limitations on extensions.
It may be that the E-2 visa isn't the right visa for you or your company. For instance, if your company already has substantial trade with the US, you may qualify for an E-1 Treaty Trader visa.
This week, the US embassy in London will start accepting E-1 treaty trader and E-2 treaty investor visa applications electronically. Previously, application binders were posted to the embassy, but now they must be submitted online via email.
To speak with an experienced US Immigration Lawyer about submitting an E-2 or E-1 application, please email email@example.com or call +44 (0)203 102 7966
Please welcome guest blogger John Gordon of USA Corporate Services Inc. who answered our clients' frequently asked questions about the corporate and logistical sides of setting up a business in the US.
What are the main considerations when choosing how to structure a business?
The primary consideration is knowing what you are setting out to do, and where you will be doing it. Will you be doing business in the US, or outside? If in the US, will you need to apply for visas for the owners and/or directors? Do you understand how the federal system works in the US, and when to worry about federal laws and/or state laws? Will you need to set up a bank account in the US? If so, can you get a visa to visit the US to open it? If you can’t get a visa, is there a bank outside the US that can help you set up a USD account?
How does a non-resident generally decide where to open their new business?
If the company will be owned and managed from outside the US, then setting up in Delaware as an LLC is the best option, for price, convenience and simplicity of compliance. If the company will be operating from a location within the US, then setting up a company in the state where the business is located is best, unless:
1.The company will be looking to obtain venture capital funding.
2.The company will be operating across several states.
3.The company is not confident that the first location will work out, or will likely moving to a different state.
In these situations, setting up a company in Delaware, then having it registered to do business in the state where it will start doing business is best.
What types of filings are needed in order to set up a new business?
In general, a company is set up by filing its Articles of Incorporation with the Secretary of State of the chosen state. After the company is formed, it will need to obtain a federal Employer Identification Number, or EIN, in order to open a bank account and conduct business. Each state makes up its own rules for setting up companies, so there are exceptions to these general rules, and the names of formation documents are often different.
Once the basics are taken care of, then there may be more documents to be filed. For example, companies that will be selling to consumers may have to obtain a sales tax certificate from states where they have a presence.
May a non-US resident open a corporate bank account without a Social Security Number (SSN)?
Yes, but most banks are reluctant to open such accounts. Non-resident owned companies are considered high-risk, and even if a bank is willing to open an account it may decide to close such an account without notice or reason if their Compliance Department feels that the company has handled its account in a “risky” way. Non-resident owned companies need to be extremely sensitive to how its transactions will be perceived by the bank, or by the US banking authorities.
What should one be looking for in selecting a bank?
A robust online-banking system is a must, but also a willingness to open and maintain accounts for non-resident owned companies. When seeking out a bank, the business owner needs to make absolutely sure that the banker is familiar with the bank’s protocols for such accounts. Since bank representatives are paid to sell their banks’s products, that is what they do: sell products. It is only later find out that they cannot answer key questions from their Compliance Department, and then the account gets closed without notice.
How long does it generally take to fully open a business in the US?
Since each state handles corporate filings differently, and many offer different filing speeds for different fees (naturally, faster filing costs more), there is no consistent answer across the US. In general, you can get a company filed in one day, if you pay the extra fee. Some states do not have expedited filing, or like California, charge a high fee for faster service, and can take several weeks before filing the incorporation documents.
After formation, it may take several weeks to obtain a tax number for a company whose owners do not have a Social Security Number.
What is the biggest potential issue that you see with non-resident clients who are starting new businesses in the US?
The single biggest-problem is probably under-financing. The US is an expensive country in which to do business, and many companies come here believing that because the US business environment is relatively open, it will be easy and fast to make money. The stumbling block is not realizing that the more open business environment means more competition and less room for error. With sufficient capitalization, the company can afford some mistakes while adapting to the new environment.
The next biggest problem is lack of understanding of the US federal system, with federal laws, state laws, and local laws. There are taxes of all kinds at different levels of government, including franchise taxes, sales taxes, income taxes… As a company grows it may also have to learn what to do when you trigger having to register to do business in different states.
Another issue that we have encountered from clients from very different countries is understanding the practical meaning of the US cultural belief in “individual responsibility.” In practice, this means that although you may hire an attorney to handle your legal matters, and an accountant to handle tax and financial matters, a company’s management is held responsible for its actions, and cannot say that “we didn’t know because that was being handled by our attorney/accountant/consultant.”
To speak to an experienced US Immigration Lawyer about starting a business in the US, please email firstname.lastname@example.org or call us on +44 (0)203 102 7966
Some of the best online resources we have found for information in starting a business in the United States.Read More
Today we have a guest blogger, Patrick Findaro, of Visa Franchise LLC answer our questions about the process of using a Broker to purchase a franchise in the United States.
1. As a Broker, how do you help people who want to move to the US?
There are over 5,000 franchise brands and 700,000+ locations throughout the United States. It can be a daunting task to select the best franchise opportunity without an advisor.
At Visa Franchise, we provide assistance navigating the investment immigration process every step of the way alongside the immigration attorney. Through our client on-boarding procedure, we match your skill set, desired location and investment size to secure the best franchise opportunity.
2. Can you list the steps for us in finding a business to buy?
Although we work with new and existing franchises, we prefer new franchises for our E-2, L-1 and EB-5 direct clients. The investor will skip the negotiation process with multiple sellers and lengthy due diligence process. For more information on the pros and cons of new or existing franchises click here.
Steps for Finding and Investing in a New Franchise
1. Franchise consultation with Visa Franchise
2. Contract Visa Franchise for franchise search ($1,000)
3. Personal skill analysis
4. Franchise Search (3-4 weeks)
5. Franchise Selection
a. Introduction to select franchisors
b. Discovery day with franchisor(s)
c. Conversations with existing franchisees
d. Business due diligence
6. E-2/ L-1/ EB-5 Visa Business Plan (~$2,000 for E-2)
7. Deal Finalization
The complete process varies but takes between 2-3 months. After the franchise is purchased and investor visa issued, the client works with the franchisor for site selection, training, etc.
3. Which factors can make a business more or less worthy of your attention?
First, we like to study the industry of the franchise and growth prospects. Industries in franchising that are expected to continue to experience rapid growth for the coming years are largely in the service-related fields such as:
* Healthcare/Senior Care
* Pet Care
* Cleaning Services
There are many opportunities across specific sub-segments of industries like quick service restaurants.
As we analyze the particular opportunity these are some of factors we consider:
* Who the franchisor is, what its track record has been, and the business experience of its officers and directors
* How other franchisees in the same system are doing
* How much it's going to cost to get into the franchise
* How much you're going to pay for the continuing right to operate the business
* If there are any products or services you must buy from the franchisor and how and by whom they are supplied
* The hours and personal commitment necessary to run the business
* The financial condition of the franchisor and its system
4. How may a Broker and an Immigration Lawyer work well as a team to improve the experience for clients?
We find the when the Broker and Immigration Lawyer have clearly defined roles on serving the clients, the clients are impressed and satisfied with the service. Visa Franchise role is to act as the business advisor and provide on the ground support with local accountants and other trusted advisors. We also handle the business plan with experience professionals and the franchisor.
The immigration attorney is responsible for everything related to the visa petition and working with the client from an immigration prospective.
We work hand in hand with the attorney on verifying business opportunities that qualify for the E-2, L-1 or EB-5 visa.
When both parties respond promptly to our mutual clients, provide top quality service, and adhere to their defined roles, clients feel secure with the process and recommend friends and colleagues following the visa issuance!
5. What do you see as the main challenges for clients in the process?
Often times, our clients are not currently residing in the U.S. and communication issues can arise if not everyone is organized. Technology like Whatsapp and Skype ease the strains to a certain degree.
Most of the client challenges we see are internal. We have clients where one of the spouses is not 100% convinced on moving to the U.S. In other instances, the family is not sure where in the United States they would like to move or how much involvement they would like in the business from a day-to-day standpoint.
It is encouraged for the immigrant investor to arrange a U.S. trip to visit the prospective business opportunities and meet with local advisors.
Many of our clients come to us in the beginning stages of moving their business to the US. Whether you are starting a new business, buying an existing one, or creating a new branch of an established one, there are many areas that require attention.Read More