Starting a Company on H1B Visa

Last Updated at: Feb 09, 2021
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Starting a Company

A lot of foreigners who work for American employers through an H1B Visa wish of someday starting their own business in the US. However, is starting a company on an H1B Visa even allowed within the US? Individuals have to ensure they follow all visa regulations stringently when staying on a semi-permanent basis in a foreign nation. This is why it is so important that such individuals research the legality of founding businesses and startups on an H1B visa. Let us now take a look at whether people can start an online business on an H1B visa, and how the process of starting a company on an H1B visa works.

  1. Eligibility Criteria for Starting a Company on an H1B Visa

  2. How to found a startup on an H1B Visa

  3. Can you sponsor your H1B Visa using your own company?

  4. What to do before starting a company on an H1B Visa

Eligibility Criteria for Starting a Company on an H1B Visa

As per an amendment made by the USCIS in 2010, an H1B Visa holder may start a business if they meet the following conditions.

  1. A board of directors has the power to hire and fire the beneficiary.
  2. The applicant will be treated as an employee, and not an owner though they have ownership rights.
  3. Cannot be a sole proprietor 
  4. Post offered must be a bona fide role, and not one started to secure an H1B visa and must require a relevant educational qualification.
  5. Companies must have a solid business plan that involves hiring Americans. 

How to Find a Startup on an H1B Visa?

Foreigners who work in the US on an H1B visa need to make sure they comply with all the visa regulations to prevent legal troubles. Hence, there are a few things you need to consider before quitting your job and starting a company on your H1B visa. Individuals may start a business on an H1B visa in the US by following the steps mentioned below.

  1. First and foremost, individuals need to remain employed with their H1B employer to continue working and living in the country. To continue living in the US legally, you need to remain employed under your registered employer or sponsor. 
  2. Next, individuals must start a business by contributing to it as a passive investor during its initial stage. This process works similar to how people buy stock in an American company without being involved in its day-to-day operations. 
  3. Once you have gotten on-board as an investor, you will have to hire someone to run your business on paper. American law prohibits you from playing an active role in your business on an H1B visa. Hence, you will need to hire someone to handle all the administrative and operational functions. 

As you are a passive investor or owner, you can in this way run a business in the US on an H1B visa without taking a direct part in it. However, you will enjoy ownership rights on proceeds, gains and dividends, allowing you to enjoy all the benefits that come with owning your own business.

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Can you Sponsor your H1B Visa Using your Own Company?

Several individuals are confused about whether they can use their business to sponsor their H1B Visa. While this might look like a tempting option, it is a risky and dangerous one as it comes with several pitfalls. The first prerogative to qualify for an H1B visa is that you can demonstrate an employer-employee relationship with your sponsor. This will be difficult as the American government does not allow self-employed sole proprietorships to qualify under this category. 

However, if you own a business with other people, you can try to apply for an H1B visa by applying for a management role in the firm. The application will have to make it look like the role offering to you by the rest of the investors. However, there is no guarantee that the government will consider such an arrangement. The applicant will have to prove their working relationship with the other investors and meet all the other H1B visa requirements. Since the visa is in high demand, the government has placed stringent rules regarding its issuing and registration.

What to do Before Starting a Company on an H1B Visa?

While it might seem exciting to found a startup on an H1B visa, it requires careful research and planning. Here’s a quick look at the various things you need to consider before setting up an offline or online business on an H1B visa.

  1. Ensure you develop a sustainable and economically viable business plan that proves that your business can succeed in the US.
  2. Conduct in-depth research of the market you wish to enter to make sure you completely understand how it functions. 
  3. Meet with local lawyers before deciding what type of company you want to incorporate as since each type brings several advantages and limitations. 
  4. Come up with a creative, legal and memorable name for the business and register the same with both the county and state government offices.
  5. After hiring a management team, you will need to ensure that they apply for and obtain a Tax Identification Number and an Employer Identification Number through the IRS. 
  6. Once you have the documents ready, lease a suitable office for official purposes as per your requirements. 
  7. Next, before you start your business, ensure you have all the required permits, registrations, licenses and certifications. You will need to meet with a legal expert to ensure you have everything needed. As different states have different requirements in the US.
Starting a business in the US on an H1B visa requires a lot of careful thought and planning. Since it involves several legal steps, you should take the help of legal experts before beginning such a venture. The experts at VakilSearch will be able to help you set up your business in no time! So, what are you waiting for? Reach out to us at the earliest and kick-start your American dream with us by your side.