When we speak to clients who are interested in the E-2 visa, they often ask what the first step will be in the process. If the E-2 investor plans to start a new company (as opposed to purchasing an existing company), the first step is to incorporate the business entity in the United States. Below we discuss tips and important information to be aware of to ensure this process can go as smoothly as possible.
- Incorporate your E-2 business in the State where you will primarily operate to minimize duplicate compliance obligations and fees.
- Choose the right business structure (Corporation vs LLC) and review State-specific requirements such as publication rules or additional compliance.
- After formation, obtain an EIN, draft ownership documents, open and fund a U.S. business bank account, and begin making qualifying E-2 expenditures.
Essential Tips for Your E-2 Visa Entity Setup
Selecting a State for Your E-2 Visa Entity Setup
Decide where you want to incorporate your business. The first step in the entity set up process is to decide where to incorporate your business. While many investors assume that Delaware is the best option, this is not always the case. If your primary office will be located in another State and you incorporate in Delaware, then you will need to register to do business in the State where your business will operate. This means your company will be subject to compliance requirements in two jurisdictions, Delaware and the State where you will actually operate. Unless there is a specific reason you want to incorporate your business in Delaware, we generally recommend incorporating in the State where you plan to operate to avoid excessive compliance requirements and fees as you launch your business.
Determining the Business Structure (Corp vs. LLC)
Consider whether to set up a Corporation or Limited Liability Company. The next step in the process is to decide which type of business entity to set up. Our firm has created a useful resource in the chart found at this link to help clients determine which entity works best for an E-2 visa. You should also research State-specific information for each type of entity as some States have additional compliance requirements for certain types of entities. For example, New York requires that all LLCs meet a publication requirement.
Verifying Business Name Availability
Confirm that your company’s chosen name is available. Before filing your paperwork, ensure that you have read the instructions on the State website carefully and confirmed that the name you have chosen is available. Many States have a business entity search function on their website that allows you to check whether a name is available before you file.
Securing Office Space and a Registered Agent
Obtain office space and hire a registered agent. All States require that you have a registered agent listed on your incorporation documents. The registered agent can be an individual or a company with a local street address who is authorized to receive legal documents on behalf of the company. While you can use your own address or that of a friend or family member if they live in the State of incorporation and are willing to act as registered agent, this means the information is publicly available. Given this, many of our clients prefer to hire a company to act as registered agent. There are many companies in the U.S. that offer this service. It may also be necessary to obtain a local office address. This can be a virtual office as long as the company can receive mail. Some States require a local address be provided on the incorporation documents while others allow addresses from outside the State or even outside the U.S. The office address can always be changed later once you have obtained your long-term commercial office space.
Finalizing the Incorporation Paperwork
File your incorporation paperwork. Once you have completed the steps above, you can move forward with preparing the Articles of Organization or Incorporation and filing with the State. Most States have online filing options and some have options for expedited filings. It is important to read the incorporation instructions carefully to ensure your filing is not rejected. Once it is approved you will receive the filed Articles, usually by email. Retain a copy in a safe place, as you will need to provide this as part of your E-2 application.
Next Steps After Your Entity Setup is Complete
Congratulations, your E2 entity is set up! What should happen next to meet the E-2 business plan requirements?
Once the entity is set up, the next step is to apply for the Employer Identification Number (EIN), also called a Tax ID. If you have a U.S. Social Security Number, you can apply for the EIN online. If not, you will need to file Form SS-4 with the IRS. If you need to file Form SS-4, it can take a few weeks before your EIN is assigned.
You should also prepare your corporate ownership documents, which will vary depending on the entity you picked. For an LLC, you will have an Operating Agreement and/or membership unit certificate and for a Corporation you will generally have Bylaws, Stock certificates and a Stock ledger.
After the EIN is issued and the corporate ownership documents are drafted, the next step is to set up the U.S. business bank account, fund the account with the lawfully sourced investment funds and start to make the E-2 expenditures to get your company up and running.
At Scott Legal we have experience guiding our clients through every step of the E-2 process. We also offer the service of incorporating your E-2 entity. If you are interested in learning more about the E-2 visa we invite you to download our free immigration guides or join one of our webinars to learn more. To discuss your case and receive personalized advice, you can also schedule a consultation with our team.
