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Starting a new life in a new country is an adventure in itself. Creating a new business in a new country? Major adventure. You’ll need to consider everything from choosing the right visa to finding funding. This guide will help you with everything you need to know when it comes to starting your own business as an immigrant to the United States.
Choosing the Right Visa
Different U.S. visas come with different allowances. You have multiple options depending on your status and intentions. Here are the ones to focus on:
EB-5 visa — This visa is available to foreign entrepreneurs who invest a minimum of $1.8 million-$900,000 if the business is in a targeted employment area and in a commercial enterprise. They must also create at least ten new full-time jobs.
E-2 visa — This route requires that your business is under 12 months old or has fewer than four employees. It’s also a choice for those who do not have a business outside the United States but plan to move here to start one.
L-1A visa — You qualify for this visa if you have an established business overseas that employs four or more people and is at least a year old.
O-1 visa — There are several versions of this kind of visa. It basically requires that you have shown “extraordinary ability” in a certain field:
O-1A visa — Education, business, science, athletics
O-1B visa — Arts, motion picture/television industry
O-3 visa — This visa is granted to people who are the spouse or children of O-1s and O-2s. It may be the right option for your family.
E-B2 — Specific to entrepreneurs, this allows small business owners to sponsor themselves under specific conditions. The business must have a board of directors or other external governing body. Additionally, you must have an advanced degree, such as a Ph.D., relevant to your business.
There have been recent fluctuations in the immigration process that may impact what you qualify for. Consult with an immigration attorney before applying.
Budgeting
Once you’ve got your visa settled, it’s time to create a budget. Budgeting will help you keep track of all required money including how much you have, how much should be spent, and how much you need to make to meet your business goals. Start by taking a hard look at the money in your bank account and figure out what you can spare to spend on your new business while still living a healthy lifestyle. You may have some money set aside, which is an excellent place to start.
So what exactly does a budget entail? Here are a few elements:
Total start-up costs
Funds needed for labor, supplies
Cost of operations
Payroll
Revenue needed to keep the business running
Start with estimates. Roughly calculate these numbers so you can refer to them as you continue the process of building your business. You’ll want them handy for errands like shopping around for a place to put your business. Once you’ve gotten all of your funding in order, you can finalize your budget.
Finding Funding
Unless you’re coming into the country with an abundance of money, Startups.com points out that you’ll need additional funding. Start by opening a U.S. bank account and transferring your funds. In order to qualify for a small business loan (via a bank or Small Business Agency-approved lending program), you’ll need to show stable credit history and personal finances. Some may require a guarantor (someone who agrees to pay your bill if you don’t) or provide collateral.
Opening a credit card is one way to establish a credit history if yours is poor or you have none. (You’ll still need a U.S. bank account.) Additionally, making this your business credit card can really help boost success. If you need to make an emergency repair, you can use the credit card to cover the expense until you can repay it. The sooner you repay and the less interest you accrue, the more your credit score will rise.
For those coming to America with fat pockets, self-funding may be a viable option. Essentially, it means taking the money you have and starting a smaller version of the business. If, for example, you want to open a jewelry store, you can start by selling your merchandise at local outdoor markets and events where you can rent a booth. As your revenue increases, you’ll be able to start accumulating the items you’ll need for a jewelry shop like glass display cases. The more you make, the more you can grow your business.
Registering Your Business
It’s time to register your business. First, you’ll need a tax ID number called an ITIN, or Individual Tax Identification Number; it replaces a Social Security number. In some cases, you may also need an EIN, or an Employer Identification Number. When it comes to the business structure, you have a few choices in how you identify:
Corporation — As defined, a corporation conducts business, pays taxes, realizes net income or loss, and distributes profits to shareholders. Immigrants are only able to form C corporations (regular corporations) versus S corporations (which come with certain tax advantages). You’ll need to file for an EIN with the IRS and form the corporation itself under the laws of your state, complete with a registered legal name and business name.
Sole Proprietorship — This kind of business entity is owned and run by a single person. There is no legal distinction between owner and business. Unless you’re hiring an employee, in which case you would need an EIN, you only need an ITIN to start a sole proprietorship. In this situation, you are classified as an independent contractor, thus you’re held liable for all business debts.
Partnership — As the name implies, this is a business in which two or more people have invested. Partnerships aren’t required to pay income tax, but they are required to file an annual information return to report income, deductions, losses, gains, and more from its operations. Unlike other business structures, in a partnership, you have the option of using the surnames of individual partners or using a fictitious business name.
Limited Liability Company (LLC) — Regardless of legal status, immigrants may form and own an LLC, but there may be additional information or licenses required. This structure provides personal liability protection, meaning someone can sue your business for business-related reasons, but can’t sue you as an individual. There are significant tax benefits depending on how you take money earned. You have several options: pay yourself a regular salary, take a distribution of the profits, or leave all (or some) of your profits in the company. Contingent on what route you choose, it will change the amount of income tax you pay. If you’re wondering how to start an LLC without a lawyer (thus saving you money), you can work with a formation service. Regulations around forming a New Jersey LLC differ from other states, so check the laws.
Investing in Accounting and Bookkeeping Software
In today's business world, accounting and bookkeeping software is an essential tool for managing finances. The right cloud-based bookkeeping software can help you keep track of income and expenses, prepare financial statements, and generate reports. It can also help you manage inventory, customers, and vendors. In short, accounting software can save you time and money by streamlining your financial operations. When choosing accounting software for your business, it is important to select a program that is compatible with your existing accounting system. You should also consider the features that are most important to your business.
Design Business Cards
Business cards are one of the simplest, but most effective ways to promote your business. They provide a tangible reminder of you and your company, enabling potential customers or clients to reach out easily. Business cards are lightweight and easily carried about, saving space in comparison to larger marketing materials and serving as a great way to get attention from prospective customers or partners. If you’re wondering how to make business cards affordably, you can utilize templates online. After choosing a template, customize it by adding your own colors, text, images, and fonts.
Potential Issues
Though there are a variety of benefits for immigrants starting a small business, there are plenty of obstacles, as well. Immigration attorney Lori Chesser notes that the U.S. has also been tightening visa approval rates.
Navigating the process of starting a business is confusing, particularly if you aren’t completely familiar with U.S. laws and regulations. Some states offer programs to help immigrants get started, but they aren’t a required department in government. You can hire a lawyer, assuming you have the funds, but even that can be a tricky process.
Further, many immigrants are inherently self-reliant, which can cause them to slow business growth. They can be hesitant to take help from state resources, mentors, and peer groups, often because they are used to taking care of themselves completely on their own. Some simply don’t think they need any extra help, which doesn’t just decrease revenue, it can cause major burnout.
Finally, language and cultural barriers are perhaps the most common issues for immigrants looking to start a business. If you don’t speak the language very well or at all, you’ll need a bilingual immigration lawyer to start. You’ll likely need further guidance throughout the process, as well as patience from those around you who may not be understanding. You’ll need to take advantage of every program that’s out there, even if it’s just a local club of immigrants from your homeland. Ideally, you’ll find a friend who can help you with these obstacles.
Starting a business as an immigrant in America is no small feat. This brave new endeavor may be the greatest you’ve ever been on, but you will need the right tools and resources, such as business cards and a formation service to start an LLC. Let this guide help you through the process and find success in your new business.