How an H-1B Holder Can Start a Business

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Starting a business can be a difficult endeavor, not to mention a leap of faith. Doing so as an alien, however, can present its own share of challenges. While there are several ways for a foreign national to become an entrepreneur in the U.S., one question that is often asked is: can an H-1B holder start his or her own business? The answer is yes, and here’s how it’s done.

Starting a Business as an Immigrant

According to a 2014 report, immigrants were responsible for the creation of over three million businesses during that year. Extrapolated over the years, it’s clear that immigrants play a vital role in the small business economy here in the U.S. They do this in a number of ways: the E-2 visa, the EB-2 National Interest Waiver, and the EB-5 are all great candidates for granting a foreign entrepreneur permission to start a business in the U.S. One visa program that few think about when considering business owners is the H-1B program .

How it Works for an H-1B Holder

While it is possible for an H-1B holder to start a business in the U.S., it isn’t as simple as it may be for the E-2 or EB-5 options. Primarily, the rules for the H-1B still apply. The applicant cannot self-petition and still needs a sponsoring employer to file the I-129. There must still be an employer-employee relationship between the sponsor and the applicant. This means that the sponsor must have the ability to hire, fire, and control the wages of the applicant. In other words, the employer must demonstrate the right to control the employee.

Before 2010, these seemed like insurmountable regulations for the prospective H-1B entrepreneur. Without any clear rules regarding entrepreneurship, it looked as though the only way to start a business in the U.S. would be if you didn’t work for it, which defeats the purpose of starting a business in the first place.

After 2010, however, the USCIS created a memorandum giving more clarification to these regulations. It allows an H-1B holder to start a business under the following conditions:

● That a separate entity that has the ability to control the hired status, wages, and work of the applicant files the petition. The applicant may be the owner, but he or she must be treated like an employee.

● That the applicant is not the sole proprietor of his or her business.

● That the business was not created so that the applicant could obtain an H-1B visa.

● That the applicant’s position as owner still requires at least a bachelor’s degree to perform.

● That the business has a plan that includes hiring U.S. workers.

Keep in mind that the USCIS carefully analyzes each one of these cases to avoid allowing anyone to take advantage of this system. One of the things that some foreign entrepreneurs do to abide by these conditions is to set up a board of directors within their company that has the power to hire, fire, as well as control the wages and work of the business owner. This could also be done by establishing a CEO position with the same power. Regardless, this entity must be responsible for filing your petition.

As with most employment-based visas, the purpose is to create more jobs for U.S. workers. Therefore, having a business plan for your H-1B business can be extremely beneficial in proving that you plan to hire local workers and positively impact the job market in your area. While having a business plan is not officially required, very few petitions are approved without one.

Here are the Steps

Take a look at this helpful checklist if you are interested in getting an H-1B visa and starting a business in the U.S.:

  1. Create a business plan that can succeed and includes hiring U.S. workers. This plan should also include how your employment is controlled by a separate entity.
  2. Indicate whether your business will be an LLC, corporation, or partnership.
  3. Contact the state and county government offices to register your business’ name. If you would like to see if your business name is original, you can take a look at the Patent and Trademark Office.
  4. Get a Tax Identification Number and Employer Identification Number from the IRS.
  5. Rent or buy the physical premises for your business such as a bay, warehouse, office, or standalone building.
  6. Obtain any licenses your business may need to operate legally in your city, county, and state.
  7. Be sure that you cover all relevant areas such as insurance, workman’s compensation, taxes, benefits, and any health codes. Also, be sure that the business has a separate bank account.

As far as immigration situations go, this is more delicate than most. Attempting to establish a business through a separate entity can be difficult in and of itself. Doing so in the field of immigration law can be even more difficult. This is why having an immigration attorney is all but essential to the approval of your petition.

Does it Have an Impact on Permanent Residency?

Fortunately, the H-1B visa is a dual intent visa that allows all holders to apply through either consular processing or adjustment of status, unlike the E-2 visa. Therefore, you are allowed to pursue green card status while working as an H-1B entrepreneur. However, because this situation is more delicate, it can be easier to violate the terms of your status and therefore jeopardize your green card eligibility.

Above all, the best way to stay in the clear is to adhere to all of the regulations and to have an immigration attorney go over your case with you to be sure that everything is set before petitioning.


About The Author

Shilpa Malik, Esq. Shilpa Malik, Esq. worked as a Senior Attorney at prominent New York City based law firms where she practiced Immigration Law exclusively prior to founding her own law firm. She has handled a myriad of Immigration cases and issues including Family-Based cases, Employment Based cases, Consular Processing, CSPA, Removal Representation and Defense. Attorney Malik has participated in several community outreach programs and was an Advocate with the Immigrants Rights Clinic at the New York University School of Law.


The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.