Forming a U.S. company for E-2 Visa purposes

Jan 31, 2021

This article details everything you need to know about forming a company in the United States for E-2 Visa purposes. Forming a company under the United States law is the very first step towards your successful E-2 Visa application.

Benefits of forming a U.S. business entity

If you decide to bring your business to the United States, and eventually apply for E-2 Visa, it is highly advisable that you conduct your business operations as a business entity rather than as an individual or sole proprietor.

Three main reasons to this: (a) your business credibility and reputability will increase, (b) you will be able to raise capital granting access to investors, and, more importantly, (c) a U.S. business entity such as a corporation or a limited liability company provides full protection to your personal assets from action and claims of the creditors of your company in case your business won’t be as successful as expected.

Steps to forming a U.S. company for E-2 Visa purposes

  1. Choose the appropriate type of business entity
  2. Choose the U.S. State where the company should be formed
  3. File the Articles of Incorporation or Organization
  4. Choose the name for your U.S. company
  5. Get an Employer Identification Number
  6. Open a bank account
  7. Maintain your U.S. business entity

1. Choose the type of business entity: LLC or Corporation

Typically, the most popular business entity types in the United States are the corporation and the limited liability company. Both provide their owners with full protection and separation of assets as described above, but they are subject to different tax treatments.

If you want to open a company in the U.S. and run it from home (meaning, with no intention to move to the United States to work for your company), you should probably consider forming a corporation. Although corporations are subject to two different levels of taxation (corporate income and dividends distributed to shareholders), many international treaties between U.S. and foreign countries suggest this to be the best solution from a tax standpoint.

If instead you are planning on moving to the U.S. and work for your own company, you should consider forming a limited liability company. Tax-wise, the LLC is a pass through entity, meaning that it is subject to just one level of taxation. This makes the LLC the most popular entity for American citizens and anybody else that receives the same tax treatment as a U.S. citizen, such as the E-2 visa holders.

2. Choose which state to form your corporation or LLC

In the United States, you can form a Corporation or LLC in any of the 50 States. Choosing in which state you should open your company depends on many different factors.

Typically, your choice should fall on the state where you physically conduct your business. If you intend to open an office, or a restaurant or a warehouse in Arizona, there is no reason why you should form your entity in, say, Florida. The company should be definitely formed in AZ.

However, if you don’t plan to conduct your business from a physical location (e-commerce companies, for instance), you may want to consider tax-friendly states such as Delaware, Wyoming, Nevada, New Mexico.

Moreover, if you plan to attract investors and venture capitalists, and eventually go public, your definitive choice should be to incorporate in Delaware. Delaware is the most corporate and tax-friendly state. Most venture capitalists feel more secure to invest in a Delaware company, and will not even consider investing in your business if your entity is formed elsewhere.

3. File the Articles of Incorporation or Organization

Once you know the state that best suits your needs, you will have to file the articles of incorporation (in case of corporation) or articles of organization (in case of LLC) with the Secretary of State. These articles are a set of documents that legally document the creation of a business entity. This type of legal document contains general information about the company, such as name, location and purpose, among others.

4. Choose the name for your Company

Each state has specific statutory restrictions when it comes to the company name. Not all names are available. Here, just remember that the name of your corporation should always end in “corp”. or “corporation”, or “inc.”, whereas your limited liability company’s name should always end in LLC.

 5. Obtain a Federal Employer Identification Number

The Employer Identification Number, also known as an “EIN” or simply “Tax ID Number” allows the United States Internal Revenue Service (IRS) to identify your company for tax purposes. The EIN will be required for most of the Company’s activities, including opening a US bank account, file tax returns, enter commercial agreement and get insurance coverage.

6. Open a company bank account

Opening a U.S. bank account is crucial to your business operations and also to your E-2 visa application. The first step of your E-2 Visa application is to show that an investment has been made into a bona fide U.S. enterprise.

To this end, the E-2 Visa investor is required to show that sufficient funds have been transferred to a U.S. corporate bank account. Therefore, opening a bank account is absolutely essential to the E-2 Visa application.  For more information regarding the investment requirements for E-2 Visa purposes, read our articles: E-2 Visa Investment Requirements.

7. Maintain your entity

Annual maintenance for your entity includes:

  • Filing the Annual report with your state of incorporation
  • Filing tax return and pay taxes
  • Hold annual meetings and keep record of them (for corporations only)

Do you need a company office for E-2 Visa purposes?

The short answer to this question is yes. USCIS requires you to show that sufficient physical premises have been secured in order to conduct your business. However, mostly in this specific historical moment, it may be argued that working from home is preferable. A room in your place, then, might be used as office space for your company. If you have employees, they should also be able to work from home. This should not impact your E-2 Visa application.

If obtaining a E-2 Visa is not your main goal, and you don’t need an office space, you may want to consider forming your Company in Delaware, Nevada or Wyoming. Major international banks that operate in these states are far more experienced with international clients and may accept your registered agent address for opening the bank account.

Contact E-2VisaWorld Today!

E-2VisaWorkd can assist you with everything that revolves around an E-2 Visa application, including forming a U.S. Company, getting a Tax Id Number and opening a company bank account. For these and many other services in connection with your E-2 Visa application, fill out the contact form at the bottom of this page, take our quick E-2 Visa Eligibility Survey, or call us today!

 

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