Opening a Business With an H-1B Visa in the Land of Opportunity
America has long been known as the land of opportunity for many reasons, and perhaps the biggest example of that in the present day is the H-1B visa, which has brought many talented citizens from foreign countries to the United States.
After living in the U.S. and working for a time, many people with these visas come up with ideas for products or services and decide that they would like to open their own businesses. However, they may not understand the laws about doing so or even know if they’re allowed to become entrepreneurs here.
Let’s take a quick look at an H-1B visa, how to get one, and whether it allows for starting a business.
What Is an H-1B Visa?
The H-1B is a special type of visa issued by the U.S. government. It is intended for highly skilled workers from other countries to come to this country to work. It is a non-immigrant visa, which means the recipient is not granted permanent residency status but instead remains a national of their country of origin.
To be eligible for an H-1B visa, the applicant must have a bachelor’s degree or the foreign equivalent plus relevant experience. Most importantly, a job offer must be extended before the application is submitted to the U.S. Department of State. The business must pay them a salary on par with those earned by their coworkers or, in some cases, the typical market rate for similar positions in other companies.
Can a Person With an H-1B Visa Start a Business Here?
The answer is complex, but the short version is that H-1B visa holders can start businesses in the United States. However, they won’t have a normal business experience, as there are various restrictions on the companies they create.
First, it cannot be a sole proprietorship. There must be a board of directors, CEO, or other authority figure who can fire the owner at any time. They are allowed to be a member of the board but cannot serve as chairman.
Second, the owner must not be involved in making day-to-day operational decisions. Those must be left to other executives appointed by the board itself. The business plan must also involve hiring American citizens as employees.
Third, the visa holder must continue to work in the position for which the visa was issued, as leaving that position would cause them to be deported. Additionally, the operational headquarters for the new company must be within “normal commuting distance” of the office they used for their previous position.
Finally, they cannot draw a salary for their work at the new company and may only receive active income from the company that originally hired them as part of the H-1B process. However, they can receive passive income as a shareholder in the new company.
What Responsibilities Can an H-1B Visa Holder Have?
Now that we’ve covered all the things the visa holder cannot do at their new company let’s take a look at some roles and responsibilities they are legally allowed to have at their company.
- Create a business plan that guides the company along the path to success, including the development of new products.
- Become a member of the board of directors and help make decisions about big-picture operations.
- Conduct market research to help ensure the right decisions are made by the CEO or board.
- Become a principal shareholder with voting rights
Can H-1B Visa Holders Open a Business in Their Home Country?
Yes, persons who have come to the United States under the H-1B program are still allowed to conduct business and earn income in their home country. There are a few restrictions, however, as that income cannot be deposited into a United States bank, credit union, or other financial entity and must instead be placed in an institution in the home country.
Additionally, the foreign-held company must not do business in the United States. Depending on the circumstances, it may be possible to secure a U.S. loan to start an overseas company, especially if the business involves exporting goods or services from the U.S. to a foreign nation, but that will depend greatly on the lender.
Alternatives
Although the above applies to all H-1B visa holders, there are a few solutions that can make the situation significantly less irritating for potential entrepreneurs. Additionally, these strategies can be used by those with a current H-1B who wish to leave the company that initially sponsored them and move to their new company full-time.
First, an H-1B visa holder who wants to or has already opened a business in the United States can apply for a new visa at the U.S. Consulate. If they’ve already started the company, that corporation can sponsor a new H-1B visa, allowing them to leave their old job. However, the employer-employee relationship would still stand: They would have to report to a CEO or board of directors who could fire them.
Another alternative, and perhaps a much simpler one, is applying for a different visa type. The E-2 visa, for example, is an excellent choice for current H-1B visa owners who wish to move to their new company full-time. The new company can sponsor them for this type of visa.
Citizens of Mexico and Canada may be eligible for TN visas, which were negotiated as part of NAFTA. If the new business is sufficiently technical in nature to the point that, by virtue of having started it, the owner has “extraordinary abilities,” an O-1 visa is another excellent choice.
Is It Still Worth It for H-1B Visa Holders to Open a Business?
Yes! Even though they won’t be in charge of the company’s daily operations, it’s definitely worth it for H-1B visa holders to open a business. First, most of these businesses focus on products or services designed to help people or make their lives easier. In the grand scheme of things, opening a business like this may be a bit of a hassle at times, but it’s definitely worth it.
Second, the holder can eventually leave the company that originally hired them and either be sponsored by their new company or apply for a different type of visa and potentially take on a more active role within the company. It’s a good idea to consult a lawyer who specializes in immigration law and visas, as they can make sure that the applications are filed properly and no laws are violated.
Practical Application
As some of this may be hard to follow, here is a hypothetical situation that illustrates the process or typical experience of an H-1B visa holder opening their own business.
Imagine a future entrepreneur from India named Victor who received a bachelor’s degree in computer programming from a university in his hometown of Bangalore. After receiving a job offer from a company called Emmerdale Tech in the U.S., he successfully applied for an H-1B visa and relocated to New York City.
In his spare time, he develops an AI-based software program that helps artists price their works based on market trends and previous sales of similar artwork. He then decides to build a tech startup based around this app, as he intends it to be the first part of a software application suite with further AI-based programs being developed by the company.
Victor tells his boss at Emmerdale Tech that he will continue his current job but will also start a new company called VicAI in his spare time. He seeks a $10,000 loan to cover his startup expenses, which he receives. He then files paperwork to have the company incorporated in New York and begins holding interviews for VicAI’s vacant CEO position.
He eventually chooses a U.S. citizen named Toby to fill the position. As CEO, Toby is in charge of every aspect of the business’s daily operations and only consults Victor on big-picture aspects like company direction or new markets to which VicAI should expand.
Victor spends his nights and weekends coding the rest of the software suite for VicAI. He doesn’t receive a salary, but since the company has been quite profitable due to the success of his software, he receives a handsome sum every quarter as a major shareholder.
After a year, Victor decides he wants to leave his day job at Emmerdale Tech and devote his time to working on new projects for VicAI. He goes to the U.S. Consulate and applies for an E-2 visa that allows him to invest more of his own money into the company and direct its day-to-day operations. The plan is approved, the E-2 is granted, and Victor is now able to take over as CEO. Toby is promoted to chairman of the board of directors with a substantial raise as a “thank you” for helping Victor get the business off the ground.
Final Thoughts
Although it is possible for an H-1B visa recipient to open a business in the United States, it can be a very complicated procedure. However, the best course of action may be to start the business, appoint a CEO or board of directors to report to, and then reapply for a new visa, either an HB1 sponsored by the new company or a different type, depending on the applicant’s nationality and technical abilities.
One last thing worth noting is that H-1B recipients are generally given a set rate of pay determined by either their coworkers’ salaries or the average market value for their position. It may be necessary to take out a loan before starting a new business endeavor. American Business Credit Loans has the perfect solution if that’s the case.
Our application takes only three minutes, and we can help get your new business immediately off the ground. Some loans can be issued in as few as seven days, which can help get your product or service onto the market much sooner than traditional lenders like banks or credit unions. Visit our website to check out your options today!
