4 Essential Steps for Starting a Business On an H1B Visa

Foreign nationals who work for a US employer on an H1B visa often want to start their own business or become self-employed using their acquired skills and experience.  While this may seem like a natural step for any professional, if you are in the US on a non-immigrant visa, you have to remain in compliance with visa regulations.  If you think you can quit your job and start a business, then you need to reconsider that plan and understand the rules.

It is possible to start a business while on an H1B visa if you follow these four steps:

Step One:  Remain Employed With Your H1B Sponsor

The H1B visa allows you to live in the work in the US as long as you remain employed by the original sponsoring employer, or a new sponsor if you transfer.  If you want to start your own business you must remain employed and working for your H1B sponsor.  This ensures your visa status remains unchanged and intact.

Step Two:  Start Your Business as an Investor/ Passive Shareholder

There is nothing to prevent you from starting a business in any area as an investor, even if you are the sole shareholder.  This is similar to buying stock in any US company where you would not be involved in operational elements, and restricted to normal shareholder participation such as meetings and voting.  

Step Three:  Hire Someone to Run the Business

In general, you can’t work in an active role in your business.  Since you are prevented from working within your own business, you will need to hire someone to handle the operational and administrative functions.  If you are still working with your H1B visa sponsor, this is necessary anyway since you would not have the time to do both effectively.

Step Four:  Oversee the Business as an Owner/ Shareholder Without Working

Since you are an investor/owner, you can oversee the business without participating directly.  Of course, you are entitled to ownership rights of business proceeds, dividends or gains in business value.

What About Using Your Own Company to Sponsor Your H1B Visa?

This is a tempting option, but one full of pitfalls.  Since to qualify for an H1B visa you have to demonstrate that an ‘employer-employee’ relationship exists with elements of direction and control, this may be a difficult task.  The US government is aware of this strategy and has decided that self-employment as a sole proprietor will not meet this requirement.  If you start a corporation with others involved, you may have one avenue open to you.

If you are one of several owners or shareholders and want to take on a management role it is conceivable that you could demonstrate that you are under the direction of other investors, but there is no assurance this will qualify for the H1B.  You would have to show documentation of the investor and management relationships, as well as the other H1B visa requirements.  

A future article will discuss in depth the type of documentation that you need and how to structure your company to sponsor an H1B visa for you, as well as the steps to transfer from your current sponsor to your own company’s sponsorship.

• April 8th, 2016
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