The E2 Visa: What you need to know before applying
The E2 Visa: What you need to know before applying
If you’re serious about entering the US market, you’ll more than likely have heard of the E2 Visa.
Between paperwork, interviews, and investment data, it can look like quite an intimidating process. However, as with most things that seem scary and complicated, you can ease your burden by talking to experts and to people who have already gone through the process!
In a recent episode of the Scale Up Stateside podcast, we spoke with McKenzie Powell, Operations Manager at Strive, a recruitment business headquartered in Manchester. McKenzie has successfully set Strive up stateside by navigating the complexities associated with expanding to the US, including leading the E2 visa application process for their employees.
What is the E2 Visa?
The E2 visa is an investor visa designed that enables a national of a treaty country to be admitted to the US. It is a non-immigrant visa which means that it is issued to foreign nationals seeking to enter the US on a temporary basis.
The E2 is one of the most common types of visas we witness among our international clients when they are looking to expand their business to the US.
How long can you stay in the US with an E2 visa?
For UK citizens, the E2 visa can be granted for up to 5 years and allows recipients to re-enter the US multiple times. Extension requests can be granted in increments of up to two years each, with no maximum limit. E2 visa holders can bring their spouse and children to the US.
E2 visa vs H1B visa
E2 Visa vs H1B Visa – What's the difference?
An E2 is an employer-sponsored visa that is often used to relocate employees under a company that is going to reside and operate in states. Whereas a H1B visa enables US employers to employ workers on a temporary basis.
Both visas are issued to foreign nationals; H1B to those who have been offered a job in the US, and E2 to those who are making a significant investment in a US business.
The E2 Visa process
How to apply for the E2 Visa
McKenzie breaks down her experience of navigating the visa application process and outlined some of the requirements for gaining an E2 visa.
1) Speak to US experts
Immigration lawyers
“We had a conversation with PGC and spoke to as many people as possible prior to starting the project itself. One of the first stages is to select an immigration lawyer. We spoke to three different immigration lawyers that were recommended to us and we were able to get a feel to who would be best to partner with.”
Tax accountants
Why you should engage a tax accountant for your E2 visa
“We selected our US accountant prior to starting the E2 visa application. He was just so knowledgeable and informative. We ensured that we were taking the right necessary steps for the IRS as US legal compliance can be a bit of a minefield for UK companies.”
McKenzie found that the US accountants offered a strong support mechanism to ensure they remained compliant. By engaging an accountant who understands the tax treaties between the UK and US, recruitment companies in the UK can make the process of expanding to the US as tax efficient as possible.
2) Set up a US entity
“So the first step for ourselves was setting up an entity. We set up an entity in Delaware, and although we're not based in Delaware, when speaking to people, it's very commonly known Delaware is a very UK law friendly state.”
Strive set up in Delaware and then registered to do business further down the line in the state of their choice. Although this may sound like an odd choice, over 50% of publicly traded companies in the US choose to incorporate their business in Delaware. We previously covered why businesses choose to incorporate in Delaware.
3) Apply for an EIN
“The next stage for us was applying for an EIN which is an Employer Identification Number. That caused a bit of issue for us because the lead time on that is meant to be six weeks, it ended up taking 13 weeks to come through from the IRS”.
An EIN is also referred to as a Federal Tax ID Number. This unique number, which is issued by the federal government, is used by the IRS in order to quickly and easily identify each business for tax purposes.
4) Opening a US bank account from the UK
“A lot of the big banks aren't interested in UK businesses. You usually need a presence in the US, some form of trading history, but we used a recommendation from our accountant and so we were able to set up one very shortly after we got the EIN.”
The processes of the financial sector in the US may come as a surprise to UK businesses, with many perceiving it as not as up to date as financial systems in the UK. For example, McKenzie states that she had to use fax communication with the IRS, in addition to many banks requiring a signature on paper when opening an account. This is further reflected with many US clients opting to pay businesses using cheques.
5) Create a business plan
McKenzie states that Strive were able to engage with a third party to help them detail their business plan as part of the E2 visa application.
“Alongside all of that, you've got all the documentation you need to have your accounts ready from the UK, company organisation charts, what it looks like in the UK, what it looks like in the US. How the US company is owned.”
6) Track your investment
Advice on tracking your E2 Visa investment
As part of the E2 visa process, companies must demonstrate sizeable investment into their US business. Although there is no mandatory minimum requirement or target total for businesses to reach to guarantee a successful application, it is not uncommon for businesses to invest anything from $50,000 to $100,000 as part of their application. As a result, it is crucial that you track your investment throughout.
“You need to prove every single payment that you've made as a contribution to the investment. I couldn't speak more highly of our finance director. Every invoice was tracked against the bank statement. And then by the time that we came to submit everything aligned. If you leave it to the last minute going through 9 to 12 months of invoices and trying to match them wouldn't be a fun job!”
At PGC, we recommend to recruitment founders at the very beginning stages of accessing the US market to track any revenue raised on a state-by-state basis. Since any spend generated as part of the US business will count towards that investment required for the E2 visa.
How long does it take to get an E2 visa?
How long does it take to get an E2 visa?
The initial research stage
“We first started having the conversations to look at where we should be looking and who we should be speaking to in November 2021. And we started this project a little bit differently to the majority of people that I speak to. We ended up doing a three-month research project to where we should locate, which was just fundamental in choosing the state we set up in.”
E2 visa processing time
“So we officially started the E2 process itself and set up the entity in Delaware at the beginning of April 2022 and then visas were approved at the beginning of February 2023. So it was probably a 10-11 month process.”
Beware of delays
“We thought we had quite a lot of leeway with a January launch date, but the EIN took 13 weeks. By the time our application went through, it was November time. With Thanksgiving and Christmas, this meant that it took a little longer to carry out interviews. So there were a few delays that were out of our control.”
Submitting the E2 visa application to the embassy
“It was about 4-5 weeks from submission to finding out that we had to pick an interview. And then it was about 2-3 weeks after that, so probably about 6-8 weeks in total.”
Choosing a US location to set up in
What to consider when choosing a US location to set up in
“There are lots of states to choose from when doing business in the US, and our initial long list was based upon tax incentives. We narrowed it down to three states: Florida, North Carolina, and Texas.”
As a senior leadership team, Strive created criteria of what was important to them as a business. This included:
Availability of local talent pools of local
Cost of living for UK expats
Lifestyle
Business taxes
Travel time from the UK
Time zones
Client base
Researching US locations
“I spent three months, which I don't necessarily recommend. I was fortunate to have this amount of time, so I could research all these elements that were really important to us as a business. I was able to learn so much along the way and speak to so many people that I felt like I was so much more knowledgeable than when I first started the project.”
“After completing the research, three cities stood out: Tampa, Charlotte, and Austin. You want the team that you send over to the US to be happy, and thrive from both a career perspective and a life perspective. If they're not happy, ultimately it's going to reflect and performance for the business as well.”
Strive made the choice of opening up an office in Tampa, Florida. We are witnessing Tampa emerging as a real business hotspot and becoming one of the top US tech cities. We previously discussed why we believe Tampa is one of the best places to start in a business in Florida.
Key learnings of the E2 visa process
“Build a US team”
“We have three UK nationals over there now. But what's super important to us, and this is advice I would give to anyone else considering this project, it is really, really important to also hire locally, you need to build a US local team.”
This is advice we at PGC share with our clients entering the US market for the first time. It is important to take the culture and identify of your UK company and use that to build your American business, then bring in American talent.
“The foundation of building a US business is research”
One key learning McKenzie shared if she could do it all over again is to carry out more research on the location after it has been chosen.
“Definitely research into every single element, especially where you going to base yourself and where you're going to be asking people to come into the office on a daily basis or a few days a week.”
“We were quite restricted with options to pay up front for a future start date for an office lease so when we were given the opportunity, we grabbed it. But when we started interviewing people, we soon found out that the area that we'd selected to base ourselves wasn’t the most reputable, which made it a bit more difficult to attract talent.”
Network
“One of the key learnings is network and speak to people. Speak to recruitment companies who have done it before - I could not recommend it more!”
Ready to Enter the US Market?
PGC has over 22+ years of experience helping international companies, specifically recruitment agencies, make their mark in the US market
If you are interested in seeing what opportunities exist in the US for you, find out how we can help get you started.
Disclaimer: All information written here is for general informational purposes only and is not intended to be a substitute for professional and/or legal services.