THE E2 VISA FOR AN ONLINE BUSINESS: GOOD IDEA OR BAD IDEA?

The E2 Visa for an online business: Is it a good idea? 

This is a question that E2 Visa lawyers are increasingly asked.

The truth is that technology has made it easy for most of us to operate a purely online business. These businesses do not have to be located in any particular location. For this reason, we have seen a rise in digital nomadism and tech enabled businesses that do not pay for office space. 

This trend is being amplified in the post covid world where traditional businesses have learned that they can survive without paying a king’s ransom for a traditional office.

As this trend continues, foreign nationals are asking if they can move to the US to run an online business. 

The answer is yes.

However, there are certain E2 visa requirements that can create challenges for online businesses.

Below, I highlight a few issues/requirements to understand before deciding to pursue an E2 visa for an online business.

Problematic Requirement #1: Marginal Businesses Are Prohibited

A marginal business is one that only supports yourself and your family. So, if your goal is to build an online lifestyle business that does not require any support, it is time to rethink your plan. 

The good news is that you do not need to have employees in place at the time that you apply. However, after you launch, you should plan to hire US employees and contractors to help advance your business. If you do not, you will likely be denied when you request an extension/renewal.

Problematic Requirement #2: “Substantial” Investment in a “Real” Business

The E2 Visa regulations require you to make a substantial investment in a “real and operating commercial enterprise.” “Substantial” is not explicitly defined and there is no minimum investment. But—generally speaking—the larger the investment, the more likely it is that the US government will consider your business legitimate.

This creates a unique challenge for online businesses that tend to have lower startup costs.

For example, an online consulting or marketing business can be started for under $5,000. However, a business with a $5,000 initial investment will not be seen as legitimate in the eyes of the US government.

If you want to start a low cost online business, you should think of ways to spend more money—even if your business doesn’t require it—to signal that you have a legitimate business. You can count equipment(ie. computers , phones, etc.), software and professional services in your investment tally. So, buy the items that you need and use services to bulk up your investment. Even though you can avoid spending on many of these things, it does not mean that you should. This is especially true for those who are applying for an E2 visa for an online business.

Problematic Requirement #3: Applicant is in a position to “develop and direct” the enterprise

In addition to the low costs, another perk of an online business is that they usually do not require professional credentials. 

For example, I could start a marketing agency tomorrow with no experience. It wouldn’t be very good. But, that wouldn’t prevent me from being able to operate.

If you don’t have any expertise in the endeavor that you want to start in the US, your application could be denied. 

To reduce the risk of a denial, I recommend that you try to select an online business that is tied to your background. So…if you are an experienced social media manager in Canada, you would have a better chance of opening a social media agency in the US as opposed to starting an e-commerce business that sells pet clothing(even though your social media chops could be useful).

If your background does not enable you to successfully direct and develop the enterprise, you could invest in training or start a franchise that is operated online. 

Franchises are beneficial for inexperienced entrepreneurs because there is a proven formula for success. Additionally, they are beneficial from an E2 visa perspective since franchisees typically must complete training prior to opening. This will increase the odds that the adjudicator will find that you have the ability to direct and develop the business.

Conclusion: The E2 Visa for an Online Business: Good Idea OR Bad Idea?

For many entrepreneurs, applying for the E2 visa for an online business is a great idea.

However, keep these requirements in mind as you contemplate whether or not this type of business makes sense for you. 

If you have any questions or comments, please feel free to reach out to me at ben@frearlaw.com