Today I hit my third anniversary in the United States. I moved over here for a startup and learnt a valuable amount of things in my two years there (which was always intended as a job to bring me to America and give me a start); and this last year I’ve had the privilege to be mentored by one of the most successful venture capitalists in the world (George Zachary) has invested $150m over 17 years and returned $1b, mostly recently Yammer selling to Microsoft and Millennial Media listing publicly) working for one of the oldest venture firms in America (CRV or Charles River Ventures).
This month however marks a new beginning: I’m now a full time entrepreneur in the US. And I take great pride in that, because I’ve spent many countless months — years even — trying to work out how to play by the immigration system to enable that. I’ve worked with lawyers, Googled the hell out of the Internet, and collected dozens of anecdotes from other entrepreneurs who have all experienced the same misery that only another expat can appreciate.
Visa’s generally favour a limited supply of talent that tends to bias the multinational company. There is no such thing as an ‘entrepreneur visa’. Silicon Valley screams out about the need of a “startup visa“, which to be honest, I have serious reservations about as it limits the potential of an entrepreneur (ie, you are required to raise funding from a major investor like a VC firm — that’s like saying you are required to get a bank loan to be able to start your business).
But after spending years pulling out my hair out trying to work out how to get around the rules legally, I’ve developed the following solution with my intent in sharing it so as to prevent the wasted opportunity that entrepreneurs after me may experience. Even some small sentences in this post I’ve spent many hours trying to validate. I hope you waste that time on marketing for your product or enjoying life, as time wasted on visas for entrepreneurs is the least productive thing society has ever invented.
As a disclaimer, I am not a lawyer. I’ve just leveraged my background in the English language to understand the rules myself, which has successfully resulted in three separate visa’s for myself and 1.75 for employees of mine.
Step one: read Geoff’s post
My friend Geoff wrote in detail the process from his own experience. This is the best summary I’ve seen to date and highly recommend you read it. My advice below is a bit bigger picture (as opposed to procedural) and tackles some of the conceptual issues (and ones that I actually disagree with Geoff on).
Step two: Get to the US.
It’s simple, but the more time you spend in the US, the easier it becomes — even if it’s for three months at a time on a visa waiver as a “visitor”. For example, you build a network of people who can support and advise you; you can build up your credit history which takes on year minimum (tip: get a secured credit card); you can setup a bank account which is near impossible to do remotely. If you move over with a job, you get a social security number issued immediately (well, that’s a separate story — it takes over a month on arrival and your life is on hold until you get one), a huge benefit given how key it is to all things regarding your identity. Ultimately, you learn how things work.
Step three: Setup a company
The US operates in a very decentralised manner, as seen by how its company law operates. As a consequence you get a lot of innovative forms of entities being invented by states like “B Corps” and “L3C’s”. Ignore them — most companies are either C-corps or LLC’s.
An LLC will do, as it’s the lightest-weight incorporation you can get, and in some cases, might be the only option. (Certain corporations like S-Corps require you to be a tax resident of the United States…something hard to do if you’re not present in the country for less than 183 days). It doesn’t matter where you register it: “Deleware” simply markets the brand of their state, due to the legal system having experience and other factors. Truth be told, a company is a company. Have some fun and register your company in Nevada so you can do your annual shareholder meetings in Vegas — heck it’s not a crazy idea as Nevada not only has zero income tax (a thing levied by some states and the Federal government) but it also is one of the most difficult states in which to “pierce the corporate veil.”
Step four: elect a board
Don’t forget, that your E3 or H1B visa is an employee visa — so you need to make sure you an employee. Advice I heard from the top tier lawyers suggested you needed at least three board members (assuming you are one of them), so that you could be “over-ruled” and theoretically fired by a majority vote of the other board members. This was recently clarified by the US government:
USCIS indicates that while a corporation may be a separate legal entity from its stockholders or sole owner, it may be difficult for that corporation to establish the requisite employer-employee relationship for purposes of an H-1B petition. However, if the facts show that the petitioner has the right to control the beneficiary’s employment, then a valid employer-employee relationship may be established. For example, if the petitioner provides evidence that there is a separate Board of Directors which has the ability to hire, fire, pay, supervise or otherwise control the beneficiary’s employment, the petitioner may be able to establish an employer-employee relationship with the beneficiary.
Step five: In your job offer to yourself, pay yourself above the prevailing wage. For real.
US Immigration is partly designed so that American’s are protected from foreigners stealing their job. Hence the need to satisfy the ‘prevailing wage’ case which requires you be paid above average from what an American would be paid, as defined by official statistics done by occupation and region. You can use this online tool to determine which job you need to match yourself to: http://www.flcdatacenter.com/
You can be creative here, but don’t be too creative: hiring yourself as a “secretary” at $29k a year (2012-2013 period) when you are clearly the CEO is not something I’d risk. A General Manager though is much more like a founder CEO, which is $73k — much better than the CEO pay rate of $212k.
But just because you get your visa application approved and a visa, doesn’t mean you can fake this rule. I know of an entrepreneur that “deferred” payment of his salary — which is completely legal but were he to apply for his next visa (or reenter to the US) and have no evidence of pay checks, there would be complication. (Athough if it took you more than two years to raise funding — the length of the visa — maybe you have bigger problems.)
I’ve actually been asked at US borders to show proof that I have been paid a wage in past — as in, actual pay stubs or bank statements. Eventually, you are going to need to prove you were paid not just above the prevailing wage…but actually paid.
- You should appreciate how the visa system works: the visa itself is simply a travel document; whenever you re-enter the United States, you are reissued form I-94 which is the actual work permit. Technically, you could enter the US a month before your visa expires and the I-94 that you are issued allows you to legally work in the US for a full two years (only one nerdy customs official ever did this to me, most border officials don’t even realise this rule themselves). The only catch with this of course, is that it’s a one way ticket when leaving the US and you don’t have a valid visa for re-entry: out of practicality, labour movements at check points are how governments seem to be able to enforce their immigration policies.
- Australian’s have a God-send in the form of the E3 visa which is plentiful in allocation, has less hoops to jump through, and even allows a spouse to get a visa as well. The default option for all other foreigns in the H1B which has its own complications. Other options include the B visa (business travel) but that’s a temporary solution — the O visa (for extraordinary achievers) is an option for people who have a public profile, but expect to spend a lot of time with the lawyers preparing this submission.
- If you don’t have a degree, things are a lot harder for you. Your only option would be the O Visa (which means you need a lot of press) or the ability to prove you have ‘equivalency’ in work experience. One university year of study is equivalent to three years work experience ie, you need 12 years based on a four year standard US degree).
- At least for the E3 visa, the first time you ever apply for it you need to do it from your home country. Subsequent visas you can do it in other jurisdictions.
- ADDED April 11 2014: Something I forgot to mention here is the L1 visa which not only is a great visa but the best solution if you don’t have a degree and if you want ‘dual intent’ which means you want to eventually apply for a greencard. The only catch with the L1: you need to have been ’employed’ by the company for one year before initiating the ‘transfer’
All in all, all expats in the US have war stories to share about how they managed to secure their living in the country. The above solution, as simple as it sounds, is also not that simple as it requires real capital or revenues to be able to pay yourself — but with that said knowing three years later this is a legitimate solution is something I would have paid good money for. It’s still not easy, but then again maybe it shouldn’t: little did I appreciate, getting to this point has me now appreciate what a true entrepreneur is. Seeing this as an obstacle that can be overcome will be what Phil Libin, the CEO of Evernote, is looking to hear from real entrepreneurs.
Good luck. Now, you can focus on what really matters: finding your market.
Many thanks for all the information, and to all the commenters who are providing additional notes. It’s much appreciated.
My g/f has been on an E-3 Visa in the US for several years and recently decided she wanted to set off on her own for a bit. Since I’m from the US we thought it would be a great idea to form a company (LLC) and sponsor her for a new E-3 Visa. As I’ve been researching how to do this, I came across a few questions.
1. If you were forming a company as a foreigner, how can you get an FEIN without having a SSN or EIN already? It seems you have to have a US identified person in order to apply for the FEIN online or using the SS-4 print out form?
2. If we in fact setup an LLC and I pay her a salary, but she is also 50% owner, what about when we make profit distributions and receive K-1s? Is this allowed, how does the US view or even see this? Will they only be concerned with a W2 when she renews under the same company in 2 years?
3. When she goes for her interview, does the US Consultate ask to see proof of the companies financials? In a company I work at we have sponsored J1 and H1B visa’s for Italians and I have had to supply the company financials to the host organization, which eventually went to the state dept. My worry is that we are essentially a start up, and have a bit of income to show in a bank account, but certainly not an entire year’s salary worth for her.
4. Lastly, if she decides to create another US based company (LLC) with another friend, would this be ok? I feel like the answer is yes, because if she has a SSN and only receives K1’s from the LLC’s distributions, there shouldn’t be a problem?
Some great hard to find information – especially the 3 members on the board of directors. This is our missing piece of the puzzle! Our US company is 1 year old and we've yet to move. Here's my top tips for others looking to relocate in order of execution;
1) Get a US Skype forwarding number
2) Set up your company early and get an ITIN (like a SSN for non-resident aliens).
3) Get a mail forwarding services that has a street address (as there are so many limitations on PO boxes – this has been a lifesaver!) 3) Use your ITIN to open a company bank account (TD Bank in Delaware were AWESOME! I've set up all our accounts remotely, all by email)
4) Apply for a secured credit card asap! We've only just applied for ours so won't have 12 months credit history before our move in 6 months,
Now to actually apply for the visa….
BTW – In Jan 2015 I confirmed that the first issuing of an E3 visa can be done at embassies outside of Australia, but this may be on a case by case basis. We live in Cambodia and the US embassy in Phnom Penh confirmed they could issue an E3 to Australians.
Hi Gen,could you please advice whether the Board of Directors can be Australian citizens? or should they be American Citizens?
Thanks for the info! Just wanting to clarify that I can set up an LLC under my own name and then offer myself a job from the company or should the LLC be in an American representative's name? Also is there official paperwork I must complete to establish a board?
The paper work for your role, ideally, is signed with another persons name to not raise questions if foul-play but it could also be you if you are on the board (what I did). The letter needs to come from a representative of the board of directors. You don't need American representatives and yes you need paperwork to back the board's eletion in accordance with the bylaws and the decision they make in meeting minutes.
Thank you Elias. Appreciate your help through this article 🙂
Hey Thanks for the great post 🙂
Does the board of directors have to be American Citizens as well? or Australian Citizens is good enough?
Any nationality. But it also depends on the company — S-Corps have different rules.
Thank you for the great blog with detailed information on E3 Visa.
Am in the process of creating the LLC online in Texas but i dont know any American Citizens. Does the board of directors have to be American Citizen?
Thanks Elias. Much Appreciated.
One more Q, should there be any specific wording required
in the Job Offer Letter apart from Joining date, rolle & duties & salary. As you know in Aus we have super mentioned as part of the package, anything similar has to be mentioned?Any reference would greatly helpful
Also how does a consulate officer know if am member of the LLC ? Would it be mentioned in LCA?