Advice for Canadian Entrepreneurs

Canada is a country that participates in certain international agreements with the U.S. that must be considered before a Canadian national begins the process of opening a business or branch office in the U.S. In addition to immigration issues, the Canadian entrepreneur must also consider U.S. tax rules, estate planning, and state and local business regulations, among other regulations. This article will discuss selected non-immigration (i.e., temporary) work visas, and suggest strategies for the Canadian entrepreneur.

The Visitor’s and TN Visas

A Canadian visitor need not apply for a visitor’s visa from the U.S. Embassy before coming to the U.S. However, the visitor will be questioned about the reasons for his/her visit upon entry into the U.S. The TN work visa can be applied for at the border, giving the Canadian worker a three-year, renewable work visa.

A Canadian in visitor status is not authorized to work in the U.S. However, in many cases, it may be the only non-immigrant status with which a Canadian entrepreneur can gain access to the U.S. during the pre-incorporation phase of starting a business in the U.S. This is also true of the TN visa, which does not allow for self-employment. However, a TN visa holder or visitor from Canada may engage in commercial activities for his/her own enterprise that do not result in the performance of productive labor. Permissible activities include negotiating the purchase of a business or entering into contracts related to the new business, as well as other non-work related commercial activities. In other words, the Canadian visitor or entrepreneur on a TN visa should not be actively managing the running of a business nor be paid in the U.S. He or she may actually set up the business, but cannot run it while in visitor or TN status. For example, an entrepreneur from Canada who already owns a business in Canada can come to the U.S. in visitor or TN status, establish a subsidiary relationship with a U.S. company by acquiring at least 51% of the stock of the U.S. company, and, in this way, lay the foundation for a future L or E visa (discussed below). The visitor or TN holder must be careful to abide by all the restrictions and agreements inherent in the TN visa, as must the visitor who arrives visitor status.


The H-1B Visa

The H-1B is a three-year visa that is renewable to six years. It is very useful in many cases, but it is laden with certain burdens that make this type of visa unattractive to the foreign entrepreneur. The most oppressive of these is the requirement for a Labor Condition Application (“LCA”), which is filed with the U.S. Department of Labor. This, as well as other details regarding the H-1B, is the subject of another article.

The L-1 Visa

Like the H-1B, the L visa (also called the “Intracompany Transfer Work Visa”) usually has a maximum of about seven years. It has definite usefulness for the foreign entrepreneur, especially if the entrepreneur is married (as discussed below). Often, the L-1 visa holder is transferred to the U.S. as an executive or senior manager of a multinational company. The L visa is also available to entrepreneurs who are coming to the U.S. to open a branch, subsidiary, or affiliate of his/her own small, privately-held company. The company can be owned by just a few people or even wholly owned by the entrepreneur. If the entrepreneur has performed the early stages of corporate formation abroad, and has established a foreign entity that will continue to operate, he/she may seek to establish a new office in the U.S. with the L visa. As with the E-2 visa (discussed below) the Immigration Service is looking for viable business entities before it will grant a visa for a foreign entrepreneur.

The E-2 Visa

Canada is a “treaty country” for the purposes of the E-2 visa. Of all the non-immigrant work visas, the E-2 visa is probably the most useful for the foreign entrepreneur. The applicant must own at least 50% of the company and be either the manager or an executive, i.e., someone with the background or capacity to make the business viable. The E visa is also available for employees who have the same nationality as the E-2 visa holder and who will work as either executives or supervisors. The Immigration Service will grant E-2 visas in cases where the enterprise is “active”, i.e., has the present or future capacity to generate income that is not exclusively for the purpose of generating a token living for the entrepreneur or his/her family. Business plans, job creation, and other evidence of business growth must be demonstrated. The E-2 enterprise need not be fully established, but it needs to be established at least partially in order to be considered “active.” Establishing an “active” enterprise cannot be accomplished on non-immigrant visas because they do not allow for work outside of the visa restrictions. However, with the “spousal advantage” discussed below, an “active” enterprise can be achieved.

The Spousal Advantage

An advantage of both the E and L visas for small business entrepreneurs is that the spouses of E and L visa-holders have the right to apply for work authorization. Unlike their E and L spouses, whose work visas restrict them to specific employers and specific salaries, the spouses of E and L visa-holders can start up companies on their own, and then the companies can sponsor the E and L visa-holding spouses. Depending on the circumstances, the new company can then sponsor foreign workers such as the E and L visa-holding spouses for new L, E., or H work visas. This is the kind of flexibility that every foreign enterprise needs for its initial start-up. The Immigration Service prefers a business that is established and viable, and the spousal advantage is an ideal way to have the company up and running in time to sponsor the E or L visa holder before his/her visa runs out.

Before embarking on a new enterprise in the U.S., it is strongly advised that the entrepreneur seek the advice of an immigration attorney, a corporate/business attorney, and a certified public accountant.

Kathleen Lord-Black
Attorney at Law
50 California Street
Suite 1500
San Francisco, CA 94111
Tel: (415) 205-5601
Fax: (415) 276-3161
www.kathleenlord.com
www.immigration-etats-unis