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One of the biggest challenges we see with L-1A cases has very little to do with whether someone has built a good business.
The problem is that the way entrepreneurs actually run small businesses and the way USCIS expects an L-1A company to operate do not always match.
If you have ever built a company from scratch, you probably know exactly what I mean. In the early stages, nobody is thinking about creating the perfect organizational chart. The owner may negotiate a major contract in the morning, approve payroll after lunch, and help solve a customer problem before going home. Employees wear several hats. Hiring decisions are based on what the company can afford today, not what would look best on paper.
All of that can make perfect business sense.
Then you decide to pursue an L-1A, and suddenly you have to look at your company through a completely different lens.
USCIS is evaluating whether the person coming to the United States will actually function in a managerial or executive capacity. That means the structure underneath that person, the employees, their responsibilities, the company’s finances, and its ability to support the proposed organization all become important.
This is where business reality and immigration expectations can collide.
Challenge #1: Your Organizational Structure
In a small business, job titles often don’t mean very much.
Your operations manager may also handle customer issues. Your marketing person may help with sales. The owner may be involved in hiring, banking, vendor negotiations, and anything else that needs attention that day.
Ask a small business owner for detailed written job descriptions for every employee, and you may get a blank stare. They know perfectly well what everyone does. They just haven’t documented it.
USCIS looks at the organization differently.
In an L-1A case, it is important to establish that the beneficiary will primarily manage the organization, a department or an essential function, or serve in an executive capacity, rather than spend most of the day performing the company’s routine operational work.
That requires understanding who does what under the beneficiary.
An organizational chart by itself doesn’t answer that question. The job titles, job duties, reporting relationships, and staffing structure all need to make sense together.
That is why one of the first things we review when preparing an L-1A business plan is the proposed organizational structure. We don’t just ask, “Who are you hiring?” We want to understand what those people will actually do and how their roles will allow the beneficiary to function at the appropriate managerial or executive level.
Sometimes that conversation reveals a problem early enough to address it.
Challenge #2: Staying Lean Can Work Against You
Most entrepreneurs are taught to keep overhead low, especially when launching a new business.
Don’t rent an expensive corporate office if you don’t need one. Don’t hire five full-time employees when two employees and a few contractors can get the work done. Don’t add payroll until the revenue justifies it.
From a business perspective, that can be very smart.
From an L-1A perspective, however, an extremely lean operation can raise questions.
USCIS wants to understand who will perform the day-to-day work of the business if the L-1A beneficiary is supposed to be managing or directing it.
This doesn’t mean there is a magic number of employees that guarantees an L-1A approval. There isn’t.
I sometimes joke that if you ask 100 immigration attorneys how many employees an L-1A company should have, you may get 100 different answers.
Still, staffing matters.
For a new office L-1A, the U.S. operation generally needs to develop within the first year to a point where it can support the beneficiary in a managerial or executive position. In our experience, planning for a meaningful layer of full-time subordinate support is usually much easier to defend than trying to explain how an executive will manage a company with little or no staff.
Four full-time subordinates by the end of the first 12 months can be a useful planning benchmark in many cases, but it should never be treated as a USCIS rule. The appropriate structure depends on the business, the positions involved, the duties being performed and the overall facts of the case.
This is exactly why simply inserting employees into an organizational chart to make a business plan look stronger is a bad idea.
The company actually has to be able to support that structure.
Which brings us to money.
Challenge #3: What You Pay Yourself and Your Employees
Entrepreneurs do things that employees would never agree to do.
One of them is working without getting paid.
It is completely normal for a founder to leave money in the company rather than take a salary, particularly during the early stages. The owner may be perfectly capable of paying himself or herself but decide that the money is better spent on marketing, inventory, equipment or another employee.
Small businesses may also start employees at relatively modest salaries and increase compensation as the company grows.
Again, perfectly understandable from a business perspective.
But compensation can become part of the bigger picture USCIS is evaluating.
If the business plan describes someone as a senior manager or highly skilled professional but the projected salary seems inconsistent with the position, an officer may question whether the role is really what the company says it is.
The same issue can arise with the beneficiary’s compensation.
This doesn’t mean every L-1A executive has to earn an enormous salary. Compensation is only one part of the case. But the salaries, positions, financial projections, and organizational structure should tell a consistent story.
When we prepare projections, we look at those relationships carefully.
If something doesn’t make sense to us, we assume there is a possibility it won’t make sense to the immigration officer either.
Challenge #4: The Business May Be Too Lean Financially
This is probably one of the most interesting conflicts between entrepreneurship and immigration.
There are plenty of successful companies that were started with very little money.
Entrepreneurs are proud of that, and they should be. Starting a company with $20,000 and turning it into a profitable business can be a great business story.
But an L-1A case presents a different question.
Can this U.S. company realistically support the operation being described?
Imagine a business plan that says the company will hire four or five employees, pay the beneficiary an executive salary, rent commercial space, spend money on marketing, and grow significantly during the next 12 months.
Then imagine that the company’s bank account has barely enough money to cover a few months of those expenses.
The individual pieces of the plan may sound reasonable. Together, they may create an obvious question: how is the company going to pay for all of this?
That’s something we pay close attention to.
The financial projections cannot exist separately from the staffing plan. The staffing plan cannot exist separately from the organizational structure. And none of them can ignore how much capital the company actually has available.
There is no universal amount of money that every L-1A company needs to keep in the bank. But the company should be financially positioned to support the operation it is proposing.
This Is Where We Often Have the Most Important Conversations
When we prepare an L-1A business plan, some of the most valuable work happens before we start writing.
We may look at a proposed structure and realize that the beneficiary appears too involved in daily operations.
We may notice that several positions are part-time when the organizational structure seems to require more substantial support.
We may see salaries that don’t seem consistent with the positions being described.
Or we may run the financial projections and realize that the company doesn’t appear to have enough capital to comfortably support its proposed hiring plan.
Those are not things we want to hide inside a 50-page business plan and hope nobody notices.
We talk about them.
If an attorney is handling the case, we communicate our concerns and explain what we are seeing from the business and financial side. Sometimes the solution involves changing the hiring timeline. Sometimes duties need to be clarified. Sometimes the projections need to be reconsidered. In other situations, the attorney may have additional facts or evidence that completely change our analysis.
That collaboration matters.
We are not immigration attorneys, so we don’t decide whether someone legally qualifies for an L-1A. Our role is to make sure the business story makes sense and that the organizational structure, staffing plan and financial projections support the immigration strategy the attorney is presenting.
After working on thousands of immigration business plans, we have learned that the questions you ask before writing the plan are often just as important as what eventually goes into it.
A Good Business and a Good Immigration Case Are Not Always the Same Thing
This is probably the most important point for entrepreneurs to understand.
Something can make excellent business sense and still create a problem from an immigration perspective.
Keeping payroll low can be smart. Staying lean can be smart. Having employees perform multiple functions can be smart. Reinvesting your own salary into the company can be smart.
None of those decisions automatically means there is something wrong with the business.
But when you are pursuing an L-1A, you have another set of expectations to consider.
The solution isn’t to build an artificial company designed only to satisfy immigration. It’s to understand where the realities of your business may conflict with what USCIS needs to see and address those issues before the case is filed.
That is why we spend so much time asking questions at the beginning of an L-1A project.
The time to find these problems is before the case is filed, not when USCIS points them out for you. By then, you may be defending a weakness that could have been addressed from the beginning.
We would rather have the difficult conversations upfront, work through the issues with the attorney and present a case that anticipates the questions instead of reacting to them later.
Contact us today to get started
The information provided in this blog is intended solely for informational purposes. While we strive to offer accurate and up-to-date content, it should not be considered legal advice. Immigration laws and regulations are subject to change, and individual circumstances can vary widely. For personalized guidance and legal advice regarding your specific immigration situation, we strongly recommend consulting with a qualified immigration attorney who can provide you with tailored assistance and ensure compliance with current laws and regulations.
Visa Business Plans is led by Marco Scanu, a certified coach from the University of Miami with a globally-based practice coaching Fortune 1000 company executives, entrepreneurs, as well as professionals in four different continents. Mr. Scanu advises clients on turnaround strategies and crisis management.
Mr. Scanu received a bachelor’s degree in Business Administration (Cum Laude) from the University of Florida and an MBA in Management from Bocconi University in Milan, Italy. Mr. Scanu was also a Visiting Scholar at Michigan State University under the prestigious H. Humphrey Fellowship (Fulbright program) with a focus on Entrepreneurship, Venture Capital, and high-growth enterprises.
At present, Mr. Scanu is the managing partner and CEO at Visa Business Plans, a Miami-based boutique consulting firm providing attorneys and investors with business planning services in the areas of U.S. and Canadian immigration, SBA loans, and others.
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