Is my E-2 business marginal?
NOTE TO READERS: Remember that until you are approved for the E-2 visa, you likely have no authorization to work in the United States. Please speak with an attorney who is familiar with your case in order to determine the best way to proceed in your case.
A frequent question I get from many E-2 visa hopefuls is to explain the definition of a “marginal business.” As those of you who are doing a lot of E-2 visa research know, one of the main requirements is that an E-2 business must be “more than marginal.” The regulations go further to explain that the business must have the “present or future capacity to generate enough income to provide more than a minimal living for the treaty investor and his or her family.” (9 FAM 402.9-6(E))
So, what does that mean?
When I advise clients, I usually tell them that the business should show the following:
- Within five years of the date of E-2 visa issuance, the business should be generating enough revenue in order to pay yourself a salary and employ at least a few U.S. employees.
- There is no “magic number” as far as revenues go. But, it must be profitable within five years.
- There is no “magic number” when it comes to your salary, either. But, please keep in mind that everything with your business and your E-2 visa application needs to make sense. When determining your salary, ask yourself “Does it make sense that a CEO of a profitable business makes $35,000 a year?” If the answer is “no,” consider paying yourself more.
- Finally, there is no minimum number of employees you must have, but I’ve never heard of the government upset that there were too many employees. That said, use the common-sense method when determining how many employees you should have within five years. Does it make sense to have three employees for a business that generates $4 million USD a year? Does it make sense to be in business for 15 years and have 1 employee? If the answer to these questions is “no,” you may want to reconsider.
How do I show that my business is not marginal?
Usually, this is done through a business plan. Most new businesses or people who are applying for a new E-2 (even if the business has been purchased and is currently operating) should include a business plan with five-year projections for revenues and employees. I recommend that this business plan is written by a company that has experience writing business plans for U.S. immigration adjudicators. If you aren’t sure, you should definitely ask.
In addition to a business plan, having U.S. employees on payroll at the time of E-2 visa application helps to prove this requirement. You are showing that the business already has the capacity to pay U.S. employees, which is much better than showing you will eventually have the capacity to pay U.S. employees. To show that you employ people, you may want to include a W-2 or a W-4 or a payroll record. A quarterly record (Federal tax form 940) may help, as well.
Do I have to pay myself immediately in order to prove marginality?
You don’t have to pay yourself right away, but showing that you plan to pay yourself soon (within the first 12 months) is incredibly helpful.
How will I show that my business is generating revenues?
Usually, I have clients submit either tax documents or financial documents (balance sheet or profit and loss statement) to show revenues, assets, etc.
What if I have a brand new business that has no revenues?
This is where the business plan will come in handy. Using legitimate information and backing up your information with data and statistics, you will need to show that the business will make revenues soon.
However, the best thing to do is to show that the business already has some revenues before applying for the E-2 visa – even a little bit of revenue goes a long way.
Have more questions about the E-2 visa marginality requirement? Contact us today to ask your questions. We’re here to help!