L-1 Visa For Entrepreneurs:

Introduction

The L-1 visa can be a viable option for entrepreneurs who have managerial or executive experience with an existing company outside the United States and wish to establish a related business within the U.S.

Contrary to popular belief, the L-1 visa is not exclusively for executives from large multinational corporations. It is equally beneficial for small and medium-sized businesses whose owners, executives, and managers seek to establish a presence in the United States.

Key Features of The L-1 Visa:

• No Minimum Investment Requirement: Unlike other visa categories, the L-1 visa does not mandate a minimum investment or specific capital requirements.
• No Set Number of U.S. Employees: There is no predetermined number of U.S. employees that must be hired, making it accessible for various business sizes.
• Initial One-Year Period: USCIS grants a one-year period for foreign nationals to establish an office and commence operations in the U.S. During this period, the entrepreneur must demonstrate that the U.S. business is operational and progressing according to its business strategy.
• Executive or Managerial Role: While employing U.S. workers is advantageous, it is not an absolute requirement for the L-1 visa. The key requirement is that the L-1 visa holder performs in an executive or managerial role. This role may include overseeing direct employees, managing independent contractors, coordinating with individuals in executive, managerial, or professional positions at other companies, or managing an essential function.

1. Case Study: Establishing A U.S. Subsidiary Through The L-1 Visa

Amelia is a talented entrepreneur and the Chief Executive Officer (CEO) of AITech LLC (AITech), a Canada-based start-up specializing in the development of specialized software for the legal industry. Following a rigorous due diligence process, AITech has successfully secured over $2 million in funding from a top-tier international venture capital firm. This funding will be partially utilized to establish a wholly owned and controlled sales and marketing subsidiary in Seattle, Washington.

International Growth Plan And Responsibilities: As part of AITech’s international growth strategy, the company’s investors and board of directors have tasked Amelia with the responsibility to establish, direct, and oversee all aspects of the new U.S. subsidiary. This Delaware-based subsidiary, incorporated over a year ago, has yet to initiate any business operations.

Objectives And Business Plan: According to AITech’s business plan, Amelia’s responsibilities will include:

• Securing Office Space: Identifying and securing appropriate office premises for the subsidiary’s operations.
• Recruitment And Hiring: Building a competent team by recruiting and hiring personnel for sales, marketing, and customer support roles.
• Successful Pilot Launch: Ensuring the successful pilot launch of AITech’s software platform with its first major U.S. customer, a leading commercial law firm.

Conclusion: Amelia’s leadership is pivotal to the success of AITech’s U.S. market expansion. Her expertise will drive the establishment and smooth operation of the new subsidiary, ensuring the strategic business plan is effectively implemented. With the guidance of her business team and immigration attorney, AITech proceeds to file an L-1A “New Office” petition on Amelia’s behalf. Upon approval, Amelia is poised to lead AITech’s U.S. expansion, turning the company’s objectives and business plans into reality.

2. Establishing A Non-U.S. Company And Transitioning With L-1A Visa

Here’s a tailored outline for entrepreneurs outside the U.S. who currently own a non-U.S. company and are considering the L-1 Visa.

• Consider The L-1A Route:
  • Entrepreneurs situated outside the U.S. must evaluate if the L-1A visa aligns with their business expansion and immigration objectives.
• Understand L-1A Requirements:
  • Entrepreneurs must meet the L-1A criteria, demonstrating their executive or managerial position in the non-U.S. entity.
• Launch And Growing The Non-U.S. Entity:
  • This phase involves initiating operations, building a solid foundation, expanding the customer base, and refining the business model.
• Transition To The U.S. with L-1A:
  • After a year of successful operations abroad, entrepreneurs can leverage the L-1A visa to transfer to a related U.S. company. They must show that the position in the U.S. will be in an executive or managerial capacity.
• Navigate L-1A Process:
  • Entrepreneurs need to ensure that both the non-U.S. and U.S. entities maintain a qualifying relationship, such as parent-company, subsidiary, branch, or affiliate.
• Eligibility For the EB-1C Green Card:
  • After one year of U.S. operations, the company becomes eligible to sponsor the entrepreneur for an EB-1C green card, designed for multinational managers and executives.
• Meeting Managerial or Executive Criteria:
  • Entrepreneurs should ensure that their role in the U.S. entity aligns with the requirements of a manager or executive in order to be eligible for the L-1A visa. This involves overseeing a significant portion of the company’s operations, making high-level decisions, and/or managing subordinate employees.

3. Equity Investment

An equity investment is made by giving money or other resources in exchange for shares of ownership in a company. Through equity financing, entrepreneurs essentially give away part of their ownership in a business in exchange for money to develop the business.

Equity financing can have both positive and negative implications on entrepreneurs in the immigration context. Equity financing may jeopardize a startup company’s L-1 eligibility. For example, let’s say you 100% own a company in Italy of which you are the CEO. You later establish a company in the U.S. of which you are also 100% owner. Because the 2 companies are both majority-owned by you, they are considered affiliates for L-1 purposes. You are transferred to the U.S. with an L-1A visa in order to take the reins of the U.S. company as its CEO. You and your new US company raise $50 Million from a U.S. Venture Firm which results in them having a 55% controlling interest in your startup. As CEO, you no longer qualify for L-1 status because you no longer own controlling or majority ownership of the U.S. company. Therefore, the Italian company and U.S. company are no longer affiliates and your immigration attorney informs you that you have to leave the country immediately.

After securing the deal of a lifetime, you learn from your immigration attorney that you might need to leave the country immediately after the deal is finalized. Fortunately, there are two potential strategies to quickly preserve your L-1 status:

1. Maintain Affiliate Relationship Through Ownership: The U.S. venture firm could agree to also acquire a controlling interest in your Italian company. This arrangement would ensure that both the Italian and U.S. companies remain affiliates through common ownership, thereby allowing you to retain your L-1 status.
2. Managerial Control Despite Majority Ownership: Considering your exceptional business acumen and the success of your two companies, the U.S. venture firm might agree, in writing, to allow you to maintain managerial control over the U.S. enterprise, even though they hold the majority share. This agreement could help you preserve your L-1 status.

If these strategies to maintain your L-1 status are not feasible, you may need to explore alternative options to remain in the U.S., such as transitioning to an H-1B visa or considering the International Entrepreneur Parole program.

4. Considerations For International Students In The U.S.

The L-1 visa category has gained traction among foreign students with entrepreneurial aspirations. This visa allows for intra-company transferees, enabling them to work for a U.S. subsidiary, branch, or affiliate of their foreign employer.

With the annual H-1B lottery oversubscribed in recent years, foreign students have been looking to other visa categories. For those interested in starting their own multinational business (and with access to the funding needed to do so), the L-1 offers a potential path.

For example, you can start your own company outside the U.S. and move back to the U.S. a year later. After your company has successfully operated in the U.S. for a year, it can sponsor you for an EB-1C green card.

Here’s a tailored outline for entrepreneurs starting a company outside the U.S. and transitioning with L-1A and EB-1C.

• Initiate Operations Outside The U.S.:
  • Starting the business abroad allows entrepreneurs to focus on building a strong foundation, establishing a customer base, and fine-tuning their business model.
• Transition To The U.S.:
  • After a year of successful employment and operations abroad, the entrepreneur can leverage the L-1A visa to transfer to the U.S. branch or subsidiary.
• EB-1C Green Card Eligibility:
  • With a year of U.S. operations under their belt, the company becomes eligible to sponsor the entrepreneur for an EB-1C green card. This category is reserved for multinational managers and executives.
• Meeting Managerial or Executive Criteria:
  • Entrepreneurs should ensure that their roles in both the foreign and U.S. entities align with the responsibilities of a manager or executive. This alignment not only enhances operational effectiveness but also establishes a clear pathway toward securing a green card. This involves overseeing a significant portion of the company’s operations, making high-level decisions, and/or managing subordinate employees.

Transitioning to the U.S. with an L-1A visa after establishing a successful business abroad offers entrepreneurs a strategic route to expand their operations and potentially secure permanent residency through the EB-1C green card program.

Additionally, if you already own a business overseas and are coming to the U.S. for an MBA or to participate in an Incubator or Accelerator program as an international student, you may be able to transition to an L-1A visa upon completing your program.

It’s vital to approach these transitions with thorough planning, adherence to visa requirements, and a strong understanding of the process. Seeking guidance from immigration experts can greatly increase your chances of a successful transition and long-term success in the U.S. market.

5. Important Note For Foreign Branch Office Petitioners

The L-1 visa regulations specifically permit a branch office of a foreign company to file an L-1A petition. It’s important to note that United States Citizenship and Immigration Services (USCIS) views such foreign branches which are simply offices of the foreign company that are physically located in the U.S. and where there is no incorporation of a separate U.S. business entity in the U.S., as lacking the long-term ties to the United States necessary to offer permanent employment. Consequently, these types of branches are considered ineligible to file EB-1C petitions for permanent residence.

Key Considerations For Petitioners:

• Company Structure: When establishing U.S. operations, it is crucial for petitioners to avoid setting up as an unincorporated branch of the foreign employer. While this structure may be sufficient for L-1 visa purposes, it could hinder the beneficiary’s ability to obtain permanent residence under the EB-1C classification.
• Long-Term Planning: To ensure eligibility for both L-1A and EB-1C petitions, consider establishing the U.S. operations as a subsidiary or an incorporated entity with long-term ties to the U.S.

By carefully planning the initial company structure, petitioners can facilitate both temporary and permanent immigration benefits for their executive or managerial employees.

Conclusion

Expanding your business to the U.S. as an L-1 visa holder is an exciting and strategic move. Whether you’re looking to establish a new office, transfer key employees, or eventually secure a green card through the EB-1C category, the journey is full of potential—but also complexities. Our experienced team is here to help you navigate every step of the L-1 visa process, from establishing your U.S. operations to ensuring your role meets the managerial or executive criteria necessary for success.

We understand the unique challenges and opportunities that come with expanding your business into the U.S., and we’re here to ensure your immigration strategy is solid and compliant. Our goal is to empower your business dreams, guiding you from the initial stages of incorporation to the long-term goal of securing permanent residency.

The success stories of L-1 entrepreneurs inspire us. Let’s make your U.S. expansion a success. Take the first step. Schedule A FREE Assessment with our best Immigration Lawyers today, and let’s build your U.S. business presence together!