Starting businesses in the USA for immigrants is a dream that many Latinos harbor. Knowing how to start a business represents the opportunity to build a more stable and prosperous future for our families.
According to 2022 data from the American Federation of Small Business, immigrants are nearly 80% more likely to start a business than those born in the United States.
In turn, a study by the American Immigration Councilreveals that immigrant-founded businesses generate trillions of dollars in revenue and create millions of jobs for the U.S. economy.
However, this hope-filled path is also fraught with complex legal challenges that can seem overwhelming. Your immigration status, obtaining a work permit in the U.S., and the maze of federal, state, and local regulations can generate uncertainty.
If you or your family want to create businesses in the USA for immigrants, you can consult our experts, at Lorenzo Law Group/Immigration Lawyers, we can guide you with practical legal advice. Our firm can be that support you need to navigate this process with confidence.
What is an investor in the USA?
An investor is a person or entity that allocates capital, usually in the form of money, with the expectation of receiving a financial benefit in the future. In order for an investor to be considered before U.S. immigration authorities, they must meet certain specific criteria:
- Assumption of risk: the capital must be truly “at risk”, that is, there is a possibility of losing the investment if the business is not successful. It cannot be a debt or a secured loan;
- Lawful source of funds: you must be able to prove that the money comes from legal sources;
- Active engagement: In most cases, the investor is expected to be involved in the management or direction of the business, although not necessarily in the day-to-day operations.
What do you need to set up businesses in the USA for immigrants?
The first and most critical requirement is to have an immigration status that allows you to operate a business legally.
It’s not enough to have a brilliant idea and the capital to start a business; if you plan to reside and actively work in opening companies in the United States, you must have a visa or permit that specifically authorizes you to do so.
Operating a business without proper immigration authorization carries serious risks, including substantial fines, deportation, and even the forced closure of your business. Some of the most common visas for entrepreneurs and investors include:
- E-2 Visa (Treaty Investor): designed for citizens of countries that have a trade treaty with the U.S. It requires a “substantial” investment in a U.S. business and allows the investor to direct and develop the company.
- EB-5 Visa (Immigrant Investor): It calls for significant investment in a new commercial business that creates at least 10 full jobs for American workers. It leads to permanent residency.
- Other options: Depending on your situation, you could explore combinations with visas such as the L-1 (Intra-company transfer) or adjust your status through a family petition if you already reside in the country. To know how to obtain an investor visa in the USA, an immigration lawyer can give you the necessary guidance
Who can access the work permit in the USA for immigrants?
Not all visas allow you to work freely. A work permit in the USA, known as an Employment Authorization Document (EAD), is a document that is obtained by being a beneficiary of certain immigration categories.
For an entrepreneur, it is essential that your visa (such as E-2 or asylum status) includes authorization to work in the company you have invested in or founded. Without this permission, even if the business is legal, your active participation in its day-to-day operations could be considered a violation of your status.
How to structure your investment and capital in the U.S.
Once the immigration status is clarified, the second requirement is the capital and legal structure of your business. For visas like the EB-5, the law is very strict, you must prove that the capital comes from legal sources, that the investment is “at risk” (not debt in disguise), and that there is no guarantee of early repayment.
For smaller businesses, such as a microbusiness or a local, even if there is no federal minimum amount, you will need enough capital to cover operating costs such as:
- Initial inventory.
- Rental of a commercial premises.
- Permits and licenses.
- Marketing expenses and initial payroll.
Choosing the right legal entity is vital to protect your personal assets and optimize your tax obligations. The most common options are:
- LLC (Limited Liability Company): Popular for its flexibility and because it protects personal assets from business debts.
- C-Corporation and S-Corporation: These are more complex structures, ideal for businesses that plan to seek outside investors or go public.
- Limited Partnership (Partnership): for businesses with several partners.
The registration process usually includes:
- Register the entity with the corresponding Secretary of State;
- Obtain an Employer Identification Number;
- Register a Business Name »Doing business as”.
What permits and licenses do you need to operate your business?
The third requirement is work permits and regulatory compliance. This is a point where many entrepreneurs encounter unexpected obstacles, as regulations vary not only by state, but by county and municipality.
Depending on your line of business, you may need:
- General Business License: issued by the city or county;
- Zoning Permits: to ensure that your premises are designated for the type of business you plan to operate;
- Health permits: if you handle food (restaurants, food trucks);
- Special licenses: for the sale of alcohol, construction services, transportation, beauty salons, etc;
- Commercial insurance, compliance with safety regulations and environmental permits.
Tax and accounting obligations of the investor
The fourth pillar to the success of your business in the USA for immigrants is tax compliance. The U.S. tax system is multifaceted and requires meticulous attention from day one.
Key obligations include:
- Registration with the Internal Revenue Service (IRS): Your Employer Identification Number (EIN) is your tax ID for filing annual returns.
- Federal Income Tax: depends on the structure (LLC, Corporation), income is reported differently;
- Sales Tax: If you sell goods or certain services, you must collect and remit this tax to the state;
- Payroll taxes: if you have employees, you must withhold taxes and pay employer contributions;
- State and Local Returns: Many states and cities have their own income and business taxes.
Maintaining proper and up-to-date accounting is not only a good practice, it is a legal necessity to avoid severe penalties, interest and a possible forced closure by the tax authorities.
Impact of employment on your investor visa
For certain immigration categories, the fifth requirement is to demonstrate the positive impact of your business on the U.S. economy, specifically through job creation. How to be a responsible investor is not a minor issue, but a fundamental pillar to maintain your legal status.
Risks, good practices and the role of the lawyer
Failure to meet the requirements, whether by failing to properly document funds, create promised jobs, or maintain the business in good standing, can lead to visa revocation, loss of immigration status, and the inability to renew or adjust your situation in the future.
Best practices for mitigating these risks include:
- Conduct due diligence or thorough research before investing in any project;
- Have clear contracts and partner agreements, drafted by a professional;
- Conduct regular legal and financial audits of your business;
- And, most importantly, to have specialized legal support from day one.
It doesn’t matter how complicated your initial situation may seem. With the right guidance, every legal hurdle can be overcome.
If you are considering taking the big step of opening businesses in the USA for immigrants or need clarity on how to obtain an investor visa in the USA, at Lorenzo Law Group/Immigration Lawyers we offer you to review your case and help you draw up the strategy that best suits you. Contact us and receive the advice you deserve.
