Navigating the Path to Startup Success: Aspiring Entrepreneurs on H-1B Visas

The allure of entrepreneurship often captivates the minds of talented individuals, especially those with expertise in emerging fields. For foreign nationals holding H-1B visas, this aspiration may seem daunting due to the intricate web of immigration regulations. However, with careful planning and strategic execution, it is indeed possible to launch a successful startup while maintaining H-1B status.

Understanding the H-1B Visa Landscape

The H-1B visa is a nonimmigrant visa that allows foreign nationals to work in specialty occupations in the United States. Unlike other visa categories, the H-1B visa is employer-specific, meaning each H-1B is valid for only one specific company. This restriction raises the question of how H-1B visa holders can pursue entrepreneurial ventures in a traditional employee-employer relationship where the employer has hire/fire authority over the employee.

Navigating the Permissible Activities

As an H-1B visa holder, you cannot actively "work" for another U.S. company without authorization from that company. This means that you cannot receive payment, engage in hands-on product development, manage staff, or handle other aspects of day-to-day operations.

Despite these restrictions, there are still activities you can undertake to lay the groundwork for your startup, including:

• Incorporating a U.S. company, applying for an EIN, establishing a mailing address, and applying for a business license

• Acting as a passive shareholder or investor

• Conducting market research and customer discovery

• Discussing planned investments and purchases with prospective co-founders

• Attending and participating in business meetings

• Developing business relationships with investors and clients

• Negotiating contracts

Leveraging the Power of Co-founders and Employees

Given the limitations of H-1B visa status, it is crucial to assemble a team of co-founders or employees who are, ideally, U.S. citizens or green card holders. These individuals can handle the day-to-day operations of your startup while you focus on strategic planning and securing work authorization.

Preparing for your H-1B Transfer

While securing a work visa through a company you establish is feasible, self-employment is not permitted under U.S. Citizenship and Immigration Services (USCIS) regulations. To distinguish between self-employed individuals and eligible employees, USCIS scrutinizes the presence of an employer-employee relationship. As a founder, you can establish an employer-employee relationship by holding less than 50% ownership in the company or by forming a Board of Directors.

In addition, your proffered H-1B role at your startup must meet two additional requirements: (1) Speciality Occupation Role and (2) Prevailing Wage Requirement. Often times, early-stage startups don’t have the capital available to employ executive level specialty occupation roles as the prevailing wage requirement can be extraordinarily high for areas like San Francisco or New York City. Instead, startups consider alternative titles that correspond to lower prevailing wage requirements.

Its important to note that the “Co-Founder” designation is permissible under the H-1B regulations. However, be sure to include that the specialty occupation requires at least a Bachelor’s level degree, meets the prevailing wage requirement, and maintains less than 50% equity in the startup (or has a Board with more than three people).

Maintaining H-1B Status and Transitioning to Full-Time Work

To maintain your H-1B visa status, you must continue working for your sponsoring U.S. employer until you are ready to switch to full-time work at your startup. Once you are ready, your company can file an H-1B transfer petition for you.

The H-1B application process typically takes a few weeks to a few months to be approved, depending on if premium processing is elected. The H-1B regulations allow you to start working for your new company as soon as the visa application is filed. However, it is highly recommended that you refrain from starting employment with your startup until the petition is approved. This is especially the case for early-stage companies who are unable to demonstrate sufficient funds to pay their H-1B employee’s salary for the requested H-1B period.

Alternative Nonimmigrant Visa Options

The H-1B visa is not the only option for foreign nationals seeking to establish their own businesses in the U.S. Other nonimmigrant visa options to explore include:

• O-1 Visa: This visa is favored for its unlimited extensions and flexible criteria. Venture-backed founders often qualify for the O-1 visa without realizing it.

• E-2 Visa: If you are from a treaty country, you may be eligible for an E-2 visa by investing in your company.

• Green Card: While the green card process can take years, it ultimately grants you permanent residency, allowing you to work for any U.S. company. If you don't need immediate work authorization for your startup, consider initiating the green card process early.

Book a call with us today to understand your U.S. visa options and eligibility for an H-1B transfer with your startup. Even if you don’t think you qualify, let’s chat and figure out how to get you there.