H1B visa holders can launch U.S. companies, own equity, and invest in businesses. But how do you navigate the limitations? And what alternative pathways exist for international entrepreneurs?
Review your H1B visa conditions
The H1B visa is primarily designed for temporary employment in the U.S. under a specific employer.
This means you cannot extend your job responsibilities beyond those outlined in your approved H1B visa petition, and you also can’t directly work for other U.S. employers. Doing so could lead to severe consequences, including deportation.
If you’re considering an entrepreneurial path, consulting with immigration attorneys is a smart first step. They can review your current H1B status, evaluate your business goals, and guide you toward the best visa strategy.
In the meantime, here are some guidelines to help you navigate the complexities of U.S. immigration law:
Maintain a passive role. H1B visa holders can start a business but cannot be actively involved in day-to-day operations or management activities that constitute “work” under immigration regulations. Many founders have successfully navigated these restrictions by remaining passive investors in their businesses and ensuring all operational work is done by others.
Find a business partner. Many have found success by forming LLCs or corporations, placing U.S. citizens or green card holders in operational roles, and retaining passive ownership.
If your spouse came to the U.S. on an H4 visa, they can take an active role in the business if you have an approved USCIS Form I-140 immigrant visa petition and obtain a work permit (EAD).
File for a concurrent H1B visa. One potential workaround is when your startup files a concurrent H1B work visa petition for you. This setup allows the visa holder to work concurrently for their original employer and the new company, assuming all legal requirements, such as prevailing wage, are met by both employers.
Decide on your company’s form of incorporation and familiarize yourself with U.S. tax laws.
H1B visa holders typically choose to register a sole proprietorship, partnership, limited liability company (LLC), or C corporation.
When choosing a structure, consider:
- Personal liability protection. Sole proprietorships and partnerships offer less protection than LLCs and corporations.
- Taxation. Sole proprietorships, partnerships, and LLCs offer pass-through taxation, while corporations face double taxation when the company’s profit is taxed first and then the owner’s income/pay is taxed.
- Control and flexibility. Consider how much control and flexibility you want in managing the business and how easily you can change ownership or structure.
- Cost and maintenance. Weigh the costs of formation, ongoing maintenance fees, and compliance requirements.
- Founding opportunities. If you plan to attract institutional investors or angels, register a C Corporation (LLCs cannot issue stocks, which limits fundraising strategies).
Register your business with the appropriate state authorities. This typically involves choosing a business name, filing necessary forms, paying registration fees, and obtaining an Employer Identification Number (EIN) from the IRS.
Develop a detailed business plan. Outlining your business idea, target market, financial projections, and operational strategies in your business plan is crucial for both raising funds and potentially getting your green card approved.
Plan your visa transition. Deciding when to change your H1B visa status depends on various factors, including your long-term plans, your business growth, and whether you can secure funding.
The right time to change your status from H1B is when you are ready to start work for your own company and pay yourself a salary. Here are some visa and green card options:
- O-1A Extraordinary Ability Work Visa. This visa is ideal for entrepreneurs with a record of outstanding professional achievement. It requires extensive documentation. Your U.S. company must file a petition for you as a beneficiary.
- EB-1A Extraordinary Ability Green Card. This is for those with outstanding professional achievements and talent seeking permanent residency. The evidence requirements are more rigorous than for the O-1 visa, but it offers the fastest route to a green card. You can self-petition for an EB1A green card.
- EB-2 National Interest Waiver (NIW). This program suits entrepreneurs who can demonstrate that their executive work on their business will be in the U.S. national interest and would benefit the economy. It allows self-petitioning without going through a lengthy and procedurally complicated labor certification process.
- E-2 Treaty Investor Visa. This visa requires citizenship from a treaty country (not all citizenships qualify for E-2) and involves personally investing a substantial amount in a U.S. business. It is an excellent option for those looking to start, manage, and develop their enterprise.
- EB-5 Immigrant Investor Program: Direct Investment. This requires a minimum investment of $1.8 million (or $900,000 in targeted employment areas) and the creation of at least ten full-time jobs. This leads to permanent residency if the requirements are met.
- International Entrepreneur Parole (IEP). To qualify, you must own at least 10% of the startup, play an active role in its operations, and secure significant U.S. investment. While this program doesn’t provide a direct path to permanent residency, it offers a temporary solution for entrepreneurs with high-growth potential startups who may not qualify for other visa options.
Are there many entrepreneurs in H-1B status in the U.S.? What kind of businesses do they start?
Since the H-1B visa is mainly designed for highly specialized professional workers employed by U.S. companies, the number of business owners on this visa is relatively small. However, some have successfully started businesses while on H-1B, navigating the challenges that come with it.
- Tech startups. Many entrepreneurs come to the U.S. on an H-1B visa to work in tech and later transition to founding their startups. They often stay compliant with H1B visa rules until they can change their status to O1A or E-2 visa or secure permanent residency by self-petitioning for an EB-1A or EB2 NIW immigrant visa.
- Fintech. Financial technology startups, including those focused on payment solutions and cryptocurrencies, are popular among tech-savvy H-1B holders due to their lower overhead and scalability.
- Consulting and services. Some H-1B holders launch businesses in IT consulting (like cybersecurity and data analytics) or specialized services (such as operations and marketing). These businesses often serve as a stepping stone toward obtaining an EB2 NIW green card.
- E-commerce and online businesses. Many H-1B visa holders start online stores selling niche products or providing digital marketing services. These businesses can be managed passively by hiring others to work for them while the visa holder remains employed with their H1B sponsor.
- Healthcare and wellness. Telemedicine platforms and businesses selling wellness products are also popular ventures for H-1B holders, allowing them to tap into the growing demand for health-related services.
- E-learning and edtech. Entrepreneurs in this field create platforms for online courses and training or develop tools to support remote learning, catering to the increasing need for education technology.
- Real estate and property management. Some H-1B holders invest in real estate and manage properties through third parties, staying within the bounds of their visa H1B visa restrictions.
- Retail and consumer goods. Some invest in franchise businesses or open stores that sell specialty goods. This allows them to manage the business indirectly through others who handle day-to-day operations.
- Food and beverage. Starting a restaurant or cafe is another route some H-1B holders take, typically involving family members or U.S. citizens in the management and operations.
- Non-profit organizations. Establishing non-profits focused on community services, education, or cultural activities is another path for H-1B visa holders who want to contribute while staying legally compliant with H1B regulations.
While starting a business on an H-1B visa can be challenging, careful planning makes it possible. With the right strategy, you can obtain a work permit, scale your business, and secure your future in the U.S.
About the author:
Katya Stelmakh, founder and managing director of Stelmakh & Associates LLC, brings over 16 years of experience in business immigration law. Her firm has successfully guided more than 1,000 foreign entrepreneurs and professionals through the process of securing work visas and green cards. Stelmakh & Associates offers personalized legal advice and crafts strategic plans to align with your business and immigration goals. For inquiries, reach out at: info@stelmakhlaw.com
