From H1B Visa To Business Owner:

Introduction

Navigating the journey to an H-1B visa for entrepreneurs is intricate, given the unique rules and regulations governing this visa category. USCIS has provided potential solutions for entrepreneurs grappling with the employer-employee requirement. Specifically, the H-1B petition needs to articulate a clear distinction between the ownership of the petitioning company and its control over the beneficiary’s employment.

1. Conditions For Successful Approval of Entrepreneur H-1B Visa By USCIS

a.A Genuine Employer-Employee Relationship Must Exist Between The U.S. Employer Company Filing The Petition And The Foreign National Beneficiary Worker.

The specifics of the employer-employee relationship are explicitly outlined in the petitioner’s letter to USCIS, along with supporting documentation.

The employer-employee relationship encompasses the employer’s authority to hire, terminate, remunerate, supervise, or otherwise manage the terms and conditions of the H-1B worker’s employment.

In the letter to USCIS, the petitioner outlines who will provide direction and supervision to the H-1B employee.

How can I establish The Employer-Employee Relationship If I Am The Owner of The Company?

Here are two viable options:

• If you have co-founders, you can demonstrate that you hold less than 50% equity in the company, allowing others the authority to hire and fire you.
• If you are a solo founder or hold more than 50% equity, you can establish a board of directors with the authority to not only outvote you but also to terminate your employment within the company.

For business owners like yourself, showcasing an employer-employee relationship becomes feasible when the control over your work is exerted by external parties. This may involve having a board of directors, preferred shareholders, other investors, or elements indicating that your organization possesses the right to dictate the terms and conditions of your employment, encompassing the authority to hire, fire, pay, supervise, or otherwise control these terms. Evidence supporting the distinction between your ownership interest and the right to control your employment may include:

• Term sheet
• Capitalization table
• Stock purchase agreement
• Investor rights agreement
• Voting agreement
• Organization of documents and operating agreements

Clearly state in your cover-support letter that you are one of the founders or owners of the company and elucidate how the submitted evidence demonstrates that your company has the authority to dictate the terms and conditions of your employment.

NOTE:
Equity financing can significantly benefit entrepreneurs within the immigration situation. For H-1B purposes, it might be crucial to establish that a founder-beneficiary owns less than 50 percent of the company, demonstrating the necessary employer-employee relationship before filing an H-1B or another petition-based classification. The initiation of the company’s first equity financing round can facilitate this requirement for the founder.

Consider this scenario: An entrepreneur, a Wharton School graduate, establishes a startup as the sole shareholder. While developing his business during F-1 Optional Practical Training, he anticipates challenges in transitioning to H-1B status due to his sole ownership. Fortunately, a US Venture Firm is captivated by the entrepreneur’s concept of AI in neuroscience and invests $100 million in the startup, acquiring 52% stock ownership in return. This strategic investment empowers the entrepreneur to demonstrate the essential employer-employee relationship, as he no longer holds sole control over the business.

b. The H-1B Employee Is Required To Work In A Specialty Occupation Position.

To qualify as a specialty occupation, the position must meet one of the following criteria:

• A bachelor’s degree or higher degree, or its equivalent, is typically the minimum requirement for the specific position.
• The degree requirement is a standard in the industry for this position, or the role is so intricate or unique that it necessitates a minimum of a bachelor’s degree in a field related to the position.
• The employer consistently demands a degree or its equivalent for the position.
• The specific duties associated with the position are so specialized and complex that the knowledge required to perform them is usually linked to the attainment of a bachelor’s or higher degree.

You can substantiate that the position qualifies as a specialty occupation by providing:

• Information from the Occupational Outlook Handbook (OOH) confirming that a degree in a related field is typically the minimum requirement for the position.
• Copies of previous position announcements, if applicable, reflecting the minimum requirements for the position and indicating that your company typically mandates a degree for the role.
• A comprehensive description of your company’s business, products, services, and the specific duties of the position, highlighting its specialized or complex nature that necessitates a degree.
• Detailed written opinions from experts in the field affirming that the position is indeed specialized or complex, requiring at least a degree in a related field.
• Job listings, letters, and/or affidavits from other employers illustrating the minimum requirements for similar positions in the industry, emphasizing the commonality of degree requirements.
• Written opinions from field experts explaining the relevance of the degree to the role you will undertake.

NOTE:
Considering that an entrepreneur leading a startup may lack documentation of past hires in comparable roles necessitating a bachelor’s degree or equivalent and may also have an unclear delineation of her specific job duties, meeting the specialty occupation requirement can pose a challenge.

For numerous entrepreneurs, particularly in the initial years of business expansion, adhering to these prerequisites can incur substantial costs. Many entrepreneurs might opt to defer taking a salary while nurturing their business. Nevertheless, for those in H-1B status, compliance with a minimum compensation standard becomes mandatory.

c.The H-1B Position Must Pertain To A Specialty Occupation Aligned With Your Field of Study.

To substantiate that the position is connected to your degree, include the following documentation:

• A comprehensive description of the specific duties associated with the position, the product or service offered by your company, or the intricate nature of the role you will undertake, illustrating how your degree correlates with the responsibilities.
• Written opinions from experts in the field elucidating the connection between your degree and the role you are expected to fulfil.
• Extracts from online resources outlining the typical degree fields associated with the occupation.
• Proof that comparable companies in your industry mandate similar degrees for equivalent positions.

If you lack a bachelor’s degree related to your position, you may still qualify by:

Possessing education, specialized training, and/or progressively responsible experience equivalent to the completion of a U.S. bachelor’s or higher degree in the specialty occupation, coupled with recognized expertise in the field through progressively responsible positions directly associated with the specialty. Generally, 3 years of work experience or training in the field is deemed equivalent to 1 year of college.

d. The Employer Must Pay A Salary At Least Equivalent To The Prevailing Wage For Your Occupation.

The prevailing wage is established by considering factors such as the position you will hold and the geographic location of your employment. The U.S. Department of Labor (DOL) maintains a database containing current prevailing wage levels applicable to specific occupations and work locations.

The employer provides a certified, signed, and dated Labor Condition Application (LCA) as an affirmation of their commitment to remunerate you with a salary equal to or exceeding the prevailing wage.

e. Your Company’s Viability Is Crucial

Establishing the viability of your company involves crafting a comprehensive image of an organization capable of sponsoring visas and possessing ample “specialty occupation” tasks to offer. This is demonstrated through various elements such as funding, well-crafted business plans with revenue projections, visually appealing pitch decks, and a fully developed company website.

While illustrating the ability to pay a salary, there are diverse approaches – a common strategy involves showcasing sufficient funds in the company and investors bank accounts. Alternatively, you can present elements like anticipated future funding, especially applicable in the early stages without generated revenue.

f. H-1B Visa Numbers Are Available

The issuance of new H-1B visas is subject to an annual cap, with a limit of approximately 85,000 visas each year and, usually, a lottery.

In certain scenarios, entrepreneurs have secured a cap-exempt H-1B through a university or research organization. Following USCIS guidance, they have then obtained a concurrent H-1B to engage in entrepreneurial activities.

• Cap-Exempt Status
  • Certain H-1Bs fall under the “cap-exempt” category. Institutions of higher education, affiliated nonprofits, and research organizations are exempt from the annual quota.
• Eligibility Beyond Four Cap-Exempt Categories
  • Even if you are not employed by one of the specified entities above, you can still apply for a cap-exempt H-1B by demonstrating that the majority of your time will be dedicated to “performing job duties at a qualifying entity, and those job duties directly further the mission of the entity.”
• Entrepreneur-In-Residence
  • Entrepreneurs have the opportunity to pursue a cap-exempt petition by being directly employed and sponsored by the university in a part-time capacity.
• On-Campus H-1B Incubators
  • A pathway to provide cap-exempt H-1B visas for foreign-born entrepreneurs and startup employees, contributing to the growth of the American economy.
  • The university, in this case, doesn’t need to directly hire the foreign-born entrepreneur or bear additional overhead. Instead, the startup company can hire the founder and apply for a cap-exempt H-1B, leveraging the formal relationship with the university’s incubator. The university’s role is to provide physical space on its campus. This program not only benefits the university by offering mentorship to budding entrepreneurs but also aids in retaining some of its brightest international graduates.
• Concurrent H-1B
  • Once a part-time cap-exempt H-1B is secured, any company, including the startup, can leverage it to immediately obtain a full-time cap-exempt H-1B visa, bypassing the lottery.
  • Upon securing a part-time cap-exempt H-1B, individuals gain a unique opportunity. Holding cap-exempt status, they can explore full-time roles within any company, be it their startup venture or an existing one.
  • Importantly, the cap-exempt status eliminates the need to participate in the H-1B lottery when working for the startup.

2. What You Can Do Before The H-1B Work Visa

Before obtaining H-1B work authorization, there are several crucial tasks an entrepreneur can undertake to lay the groundwork for their business venture:

• Conduct Customer Interviews And Gather Feedback:
  • Engaging with potential customers is pivotal in refining your business idea. You can conduct interviews, surveys, or focus groups to understand their needs, pain points, and preferences. This feedback will be invaluable in shaping your product or service.
• Market Research And Business Planning:
  • Thorough market research allows you to identify your target audience, competition, and market trends. This information is crucial for creating a comprehensive business plan, which outlines your business goals, strategies, and financial projections.
• Incorporate And Establish Legal Foundations:
  • You can take steps to formally establish your business, such as incorporating it as a legal entity. This involves registering your business with the appropriate government authorities, obtaining necessary licenses, and setting up any required legal documents.
• Open A Business Bank Account:
  • Setting up a business bank account is essential for managing your finances. It allows you to separate personal and business transactions, which is crucial for financial reporting, taxes, and legal liability.
• Meet With And Seek Investments From Investors:
  • While you may not be able to execute the day-to-day operations, you can still engage with potential investors. You can have meetings, presentations, and discussions to pitch your business idea and seek funding. This includes preparing investor materials and financial projections.
• Acquire Inventory, Equipment, And Office Space:
  • You can make preparations for your operational launch by identifying and sourcing necessary inventory, equipment, and securing office space.

3. What You Can’t Do Without An H-1B Work Visa

When it comes to working in the U.S. under the H-1B visa, there are several key limitations that entrepreneurs should be aware of. These restrictions are in place to ensure compliance with U.S. labor laws and to maintain the integrity of the visa program. Here’s an in-depth look at what you can’t do without an H-1B.

• Product Development:
  • Limitation: Without H-1B work authorization, you are prohibited from actively engaging in the development of your product or service in the U.S.
  • Implication: This means you can’t be directly involved in tasks like coding, designing, testing, or any other activities related to product creation.
• Hiring And Firing:
  • Limitation: As an H-1B visa holder without work authorization, you’re unable to make employment decisions, including hiring or terminating employees.
  • Implication: You can’t officially bring individuals onto your team or release them from employment based on your authority.
• Daily Operations Management:
  • Limitation: You’re restricted from being actively involved in the day-to-day operations of your business.
  • Implication: This includes tasks such as overseeing daily routines, setting operational goals, making operational decisions, and managing workflow.
• Salary And Compensation:
  • Limitation: As an H-1B visa holder without proper work authorization, you can’t draw a salary or receive compensation through remuneration.
  • Implication: You’re unable to financially benefit from your venture until you obtain the necessary work authorization.
• Financial Transactions:
  • Limitation: Without work authorization, you may face limitations in handling certain financial transactions on behalf of your business.
  • Implication: This can include activities like managing financial investments, or entering into contracts that involve monetary transactions.
• Representation In Legal Matters:
  • Limitation: You may be restricted from representing your business in legal matters.
  • Implication: This means you might not be able to legally negotiate contracts, settle disputes, or make legal decisions on behalf of your business entity.
• Acting As A Spokesperson:
  • Limitation: Without the appropriate work authorization, you may not be able to officially represent your business in public forums, conferences, or media events.
  • Implication: This can impact your ability to establish the public image and brand presence of your venture.

NOTE:
If you’re seeking to engage in activities that fall outside the scope of your H-1B authorization, one option is to temporarily leave the U.S. and perform the active work from abroad. This might involve consulting, providing specialized services, or engaging in entrepreneurial ventures. After completing the active work abroad, you can return to the U.S. and continue to earn royalties or passive income from the work done during your overseas stint.

4. Considerations For International Students In The U.S.

The demand for H-1B visas has far outpaced the available annual quota, leading to the implementation of a lottery system. This shift has introduced a level of uncertainty for international students who aspire to work in the United States after completing their studies. The highly competitive nature of the H-1B visa process has made it increasingly difficult for foreign graduates to secure this visa, prompting many to explore alternative pathways to remain in the U.S.

With the annual H-1B lottery consistently oversubscribed, international students have begun to look beyond the traditional H-1B route, seeking other visa categories that might offer more stability or opportunities. Among these alternatives, entrepreneurial visas are becoming increasingly popular. For international students who have a strong interest in launching their own businesses and have access to the necessary funding, the H-1B visa under certain conditions offer potential pathways to stay and work in the U.S.

Conclusion

Embarking on the U.S. entrepreneurial journey as an H-1B visa holder is full of promise and potential. Whether you’re looking to transition from an H-1B employee to a successful entrepreneur, or you’re already laying the groundwork for your startup, we’re here to guide you every step of the way.

We specialize in helping H-1B visa holders navigate the complexities of starting a business in the U.S. From aligning your business role with specialty occupation requirements to exploring cap-exempt H-1B options, our dedicated team ensures your business is structured for success and compliance.

The success stories of H-1B entrepreneurs inspire us every day. Let’s turn your vision into reality. Take the first step towards building your entrepreneurial future.

Schedule A FREE Assessment with our top H1B Immigration Lawyers today, and let’s build something extraordinary together!