Getting Started in the US as a Foreign Entrepreneur

There is an estimated number of 40 million immigrants in America. In 2010, immigrant entrepreneurs generated about $775 billion in sales and paid $126 billion in wages to its employees. More than 50% of businesses founded in Silicon Valley from 1995 to 2005 were started by immigrants and around 21% of Inc. 500 CEOs were born outside of the US. Believing in the genius of foreign entrepreneurs, Chinese business magnate and Alibaba founder Jack Ma launched a $10 million African Young Entrepreneurs Fund to support African online businesses.

Yet the future does not look bright for immigrant professionals and entrepreneurs in the US under Trump’s administration. After rescinding the International Entrepreneurial rule, foreign startup founders have already decried the US government’s move that stifles a valuable contributor to America’s economy. Despite the limited options for alien-born entrepreneurs, the interest in starting a business in the US remains strong for many South African businessmen and women.

The foremost step in getting started in the US as a foreign entrepreneur is securing a work visa. The suitability of each type depends on one’s nature of business, the duration to which he or she intends to operate in the US, and even the capital investment of the company. Because South Africa does not have a treaty of friendship and navigation with the United States, South African entrepreneurs are ineligible for applying an E-2 visa which allows citizens of certain countries to start a business in the US. This leaves them with fewer options for work permits.

An EB-5 visa is less strict with the nationality of the applicant, granted that the capital investment reaches an amount of $500,000 to 1 million and brings employment to more than 10 US residents within 2 years. An E-1 or Treaty Trader Visa is suited for entrepreneurs whose US business involved trading and engagement with the visa holder’s country of origin. Entrepreneurs with an existing business in another country can open a new office in the USA under the L-1 Intracompany Transferee Visa. For temporary visits, a foreign entrepreneur can apply for a B1 or B2 visa. This would grant a foreign national up to a 6-month stay in the US to explore their opportunities, and negotiate and meet potential business partners, look for an office space, or plan their business strategy as long as they refrain from signing any contracts while in the US.

Once a US visa has been granted, the steps to opening a new business become more or less similar to that of a resident. Determining one’s business structure as well as which state to operate in will have significant effects on the tax consequences as well as legal obligations and corporate law that a business will have to follow. Once these has been sorted out, registering the business becomes the final hurdle to getting started in the USA.

A common question for budding entrepreneurs, both for local citizens and foreigners, is whether you can start a business in the US with a criminal record. “A criminal record will have little to no effect in anyone’s ability to start a business,” says Alexander H. Fuqua, a criminal defense attorney. “In fact, the US government’s aim to avoid recidivism plays into the favor of ex-offenders and encourages them to become active and productive members of society.”

With the help of a qualified attorney, it’s easy to navigate around the law and regulations governing visas for business owners and startups, as well as the applicable state and federal filings in obtaining tax identification numbers. Starting a business in the USA as a foreign entrepreneur definitely has its difficulties, but is far from being an impossible feat.