How to Relocate a Business to the US
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How Can a Startup Relocate to the US?
Businesses operating outside of the United States often seek to expand or relocate operations to the United States. The United States is a large market for potential customers or clients. This is particularly beneficial to startup businesses that need to scale and grow rapidly as part of its business model. Opening a business in the United States as a foreign entity, however, can be difficult depending on the type of business, resource available, and country of the business owners.
In this article, we discuss the various considerations for relocating a foreign business within the United States.
Forming a Business Entity
The first step for relocating a business to the United States is to form a business entity. Business entities exist under state law. As such, the organizing individual must choose a state of organization. You must also register the business entity in any state in which you will actively carry on business. Registering a business entity may be difficult for a foreign business. The state will require a representative agent for the business to receive correspondence. If none of the business founders are present in the US, you will need to designate a representative agent. The organizer will also need to identify the primary business location or office.
Office or Business Location
There are specific limits on foreign individuals owning property within the United States. As such, if the business plans to purchase property, it must purchase the property in the name of the business entity. This is less of a concern when the business intends to rent property. Still, a lease will be in the name of the business entity.
Once the business entity is formed and has a location for operations, it can apply for a local business license. It is important to check to make certain the chosen location is zoned for the type of business carried on by the startup. Also, the business must secure any industry-specific licenses required, such as securities license for companies selling investment products.
Some banks will not open a bank account for a foreign person or business without having someone personally present to open the account. As such, the business entity will need to authorize an employee present in the United States to open the account. This may be difficult if the company has no US employees at this point.
Perhaps the most difficult aspect of relocating a startup in the United States is arranging for the startup founders to be present in the country. One option is for the startup to hire employees to run the US business. For most startups, the founders will want or need to be present. As such, the startup founders will need to explore options for a Visa or Green Card.
There are two primary Visa options available to businesses. The L-1A and the L-1B. L-1A allow for transfer of managers and executives of the company. The L-1B allows multi-national companies to transfer company employees to a branch, subsidiary, office, or affiliate in the United States. There are numerous requirements for the size of the company and the presence of already established US operations. This will make the L-1A difficult for startup ventures.
The L-1B allows for transfer of employees with specialized knowledge necessary for the company operations. The employee’s specialized knowledge must make her indispensable to company operations within the US. The employee must also have been working for the company for 12 straight months during the three years prior to application for the visa. This Visa also requires that the company be in existence for a period of time before it can begin transferring employees. Further, there are numerous requirements, such as completing labor certifications for each company position.
The EB-5 visa program is perhaps the most widely-used method for company owners opening up operations in the United States. The EB-5 provides individuals a Visa to individuals investing either $500K or $1M in a US business. The $500K applies to targeted employment areas. The $1M rule applies to any location. The business must create at least 10 permanent jobs for US workers within 2 years of the visa issuing. This can be a valid option for startups founded by individuals with extensive personal resources or by startups having already received a large round of equity financing.