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Opening a New Office in the U.S. Using an L1 Visa
VisaPro.com
Jul 17th
U.S. has long been considered a country of opportunities – a place that encourages entrepreneurship with a highly dynamic economy and a large wealthy consumer base. For these reasons, many successful companies consider starting operations in the United States after their success in the home country. For companies looking to expand to the U.S., one viable option is the use of a New Office L-1 visa to start their operations and move key personnel to the U.S. regulations define New Office as an organization which has been doing business in the United States through a parent, branch, affiliate, or subsidiary for less than one year. Since the new office needs to be “doing business” the “mere presence of an agent or office” is not enough to satisfy even the new office requirement for an L-1. In order to qualify for an L-1 where a new office is involved the petitioner must submit evidence that:
- Sufficient physical premises for the office have been secured;
- Beneficiary meets the one-year continuous employment requirements; and
- Intended U.S. operation within one year will support an executive or managerial position.
This article will explain some of the logistics that are involved in starting a new office in the U.S. using the L-1 visa.
Obtaining an Office Lease
When first looking to expand to the U.S. many companies are confronted with uncertainty and are not sure whether the move will prove to be financially successful. As such many companies try to control their overhead expenses and one place where they look to cut costs is office expenses. The 21st century has brought us the capacity to work fully from home or to utilize innovative office solutions such as virtual offices and other types of temporary office space. As these types of office solutions become a norm for certain business sectors, USCIS has not embraced the concept and continues to require a brick and mortar physical office space.
The office space should be large enough to support the company and its planned growth in the first year. We typically advise our clients to obtain an office with a minimum of 100 square feet, but the requirements vary depending on the company’s industry and planned growth. The lease should be signed for a minimum of 6 months and the newly formed U.S. company should be listed as the tenant on the lease. Often this involves a two-step process, because to register the company in the U.S. it is helpful to have a local address and so we typically wait to register the company until the lease has been signed and then make changes to the lease after the U.S. company has registered.
Writing a Business Plan
Although not as complex and thorough as one that you would submit to investors, a business plan is required for any New Office L-1 petition. The business plans typically range in the area of 8-12 pages and are more what you would consider executive summaries than fully featured business plans. When drafting the business plan it is important to include a personnel plan for the new office in the U.S. detailing how many employees the newly formed U.S. company plans to hire in the first year and over the next five years. Another important aspect is financial projections. It is important to include forward-looking projections of the company’s financials (i.e. revenues, costs, and others), setting out the company’s short-term and long-term goals. To determine whether to grant an extension after the first year, USCIS considers aspects such as the number of employees, growth in revenues, attainment of significant clientele, and other similar elements indicating that the entity has been actively engaged in business activities.
Hiring Personnel
This is another case where typical business practices and USCIS policies and immigration law come into conflict. Many companies looking to expand try to minimize the costs of expansion until they obtain new contracts or the business looks promising. USCIS however requires that within the first few months the U.S. office show a growth in personnel. In order to maximize your chances of getting the first year extension petition approved, we always recommend our clients to hire some U.S. citizens or Green Card holders to fill the required positions. Although many companies want to send specialized knowledge workers to their new U.S. office, the reason why we recommend hiring some local talent is so the company can get a healthy balance of local U.S. workers and foreign workers on the U.S. company payroll and organization chart. Taking this more conservative approach in the beginning will inevitably prove to be a wise decision when the New Office L-1 is submitted for extension and later on when the company needs to send more key personnel to the U.S.
The question that many companies ask when they are told about the hiring requirement is: how many people do we have to hire? The answer is not straight forward, because the regulations do not set out concrete numbers, instead the company should hire as many individuals as is needed to operate the venture in the U.S. successfully and meet its financial goals. Because a New Office L-1 will initially be approved for one year, the company will need to hire some staff before they can file for their one year extension. The reason for this is two-fold: 1) to show that the company has been growing during the first year becoming a viable business and 2) show that the office requires a manager or an executive. The second reason is relevant for those companies that send managers or executives to the U.S. to open the new office as an L-1A.
Organizational Chart
Often underestimated parts of the New Office L-1 petition package, the organizational charts are important pieces of the New Office L-1 puzzle. Every company should submit two organization charts, one for the home country office and the other for the company in the U.S. They are especially important when the company seeks to send an executive or a manager to the U.S. on an L-1A visa. When transferring persons from higher company ranks, the role of the organization chart is to show that the concerned person is an executive or a manager and to present a clear view to USCIS about the company’s personnel expansion plans in the new U.S. office.
When it comes to organization charts, creativity is highly discouraged and the best organization charts are those that provide a clear hierarchical view of the company’s leadership from top to bottom. One common problem in making organization charts is that companies often insist on including department or divisions on the chart. This should be avoided, because it only provides a confusing picture to USCIS. The various departments or divisions should be represented by its personnel on the chart and not as separate entities by the name of the division. The idea behind the organization chart as used in the immigration context is to show the personnel reporting structure in your home company and the U.S. entity.
Company Registration
One of the most important steps in setting up a new office in the U.S. is to form a business entity. The formation process in most of the states is straight forward and generally requires the filing of articles of incorporation with the Secretary of State in the state where you wish to register your company. The decision on where you should register your new business enterprise and what type of an entity you should choose depends on your company’s long-term and short-term goals. You should keep in mind that the choice of a business entity could have an impact on your tax liability and otherwise and is best made with the consultation of a trained professional such as a business attorney or at least a certified public accountant. Most of the times it makes the best business sense to incorporate in the state where you plan to conduct majority of your business, or where your company is located. Some of the popular business forms are Limited Liability Company and Corporation.
Conclusion
Starting a venture in the U.S. under the L-1 category is a method commonly used for those coming to the U.S. from countries that do not have a treaty providing for E visas such as China and India, among many others. For healthy enterprises that are looking to expand to the U.S., it offers a way to start operations and gives its senior managers and executives a path to U.S. green card under the EB-1C category. It is a visa category that offers many perks, but is also rather complex to navigate effectively and without incurring liability. Smaller to mid-size companies need to prepare extremely well for obtaining a New Office L-1 and will likely face adversity from USCIS, if there are any ambiguities in the submitted documentation as to the company’s or beneficiary’s qualifications. This article was intended as an introduction to some of the aspects associated with applying for a New Office L-1, but it is not fully exhaustive. The issues are many and complexity of this visa is often underestimated by those that do not have extensive experience in this area of immigration law. VisaPro highly suggests hiring a professional to plan your company’s expansion to the U.S. market. This will ensure a smooth transition and a successful undertaking for your company.
VisaPro offers multiple services across multiple locations and is able to work with you regardless of your physical location. VisaPro gives the right tools to companies expanding their operations into the United States. Our ability to deliver fast, easy and economical service has helped VisaPro build a well-earned reputation of trust and efficiency within the business immigration community.
In case you are deliberating over setting up a new business venture in the U.S. or wish to enter the U.S. to invest in, manage or work for an existing business enterprise, please contact us.
Source: http://www.visapro.com/Immigration-Articles/?a=824&z=48
