Can you start your own business while on H-1B?

Owing to the versatility and dual intent of H-1B visa, USCIS has to place strict scrutiny rules and regulations keeping in mind the authenticity of the applicant’s application.

For H-1B visa application the basic procedure starts with the job offer from the US employer but the focus of this is Can you start your own business while on H-1B? The answer is yes but the process is difficult and can welcome more scrutiny to your stay in the US.

Can you start your own business while on H-1B?
Can you start your own business while on H-1B?

Let’s understand what is H-1B visa first?

H-1B visa is an employment-based visa for skilled workers which allow an applicant to work and stay for a specific period in the US. Before filling for the H-1B visa an applicant must have an offer letter for the US employer. Then the US employer will file a petition to the USCIS for the approval of the visa.

What Does USCIS have to Say?

From this, it is unclear whether or not an H-1B holder could really start a business since there was no direction for or against this action.

Before 2010, there were no mandates by the USCIS which either prevented or allowed H1B holders to start a business. Those who wished to actually just needed to make sure that none of the terms of their H1B status were being violated.

As there is nowhere mentioned that H1B holders can’t work and it is mention that can work only under the petitioning employers, most entrepreneurs thought that they could start a business, but could not work for it.

However, as per the memorandum released by the USCIS in January of 2010 mentioning the regulations regarding entrepreneurship stating that an H1B holder can start a business and also work for it provided that:

  • Among the board of directors be it CEO, or similar entity has the power to hire, pay, and fire the beneficiary. Therefore, the nonimmigrant will be treated like an employee despite having complete ownership.
  • The H1B holder will not be the sole proprietor of the company.
  • The company is just not for the sake of getting H1b visa, it should be legalized.
  • The position still must require a relevant bachelor’s degree or higher.
  • Hiring qualified American workers should be included in the business plan of the company.

By which we can come to a conclusion, that 2010 memorandum was constructed focusing on more jobs to Americans.

An example of a situation that can’t be questioned by the USCIS-

Louis who owns a 55% stake in a ride-sharing company is a nonimmigrant. The company has been setup wherein there is a separate board of directors who have the power to fire him. So, if Louis at any point in time wants to move to the U.S., then with questions he can apply for an H-1B visa.

An example of a situation that would encounter difficulty:

Lisa is a graphics designer who has started her own trademarked business. She is the only employee and is the sole proprietor of the company. Because of this, Lisa would not be able to prove an employer-employee relationship and show that the company has control over her.

How to Start a Business on H-1B Status

With an exception of setting up an entity that has control over your duties and your salary, the process of starting a business as an H-1B nonimmigrant is very similar to the process for U.S. citizens.

The steps are as follows:

  • The first is creation or lay outing a perfect business plan which you think can succeed.
  • Different business structures such as a corporation, LLC, corporate partnership, or sole proprietorship should also be thoroughly researched.
  • Invent and register a new name for your business with both the county office and the state government.
  • File the Petition of the IRS for a TIN (Tax Identification Number) and an EIN (Employer Identification Number). TIN will serve as the social security number for your business as a separate legal entity.
  • A business location on a lease is must whether it be a shopping bay, warehouse, or office space.
  • Make sure to procure all of the licenses, permits, and certifications to perform your business legally & ethically.
  • As each state in the U.S has their different requirements regarding worker’s compensation, benefits, insurance, health codes, and state taxes, so it is very important to research every aspect of your business to prevent any future legal problems.

So to summarize this article, I would say – yes, one can start own business on an H-1B, although a legal advice is must at every step as it is very heavily scrutinized by USCIS.