Ask HN:Can I start a company on an H1B visa?
32 comments
H1B -> Starting company -> Getting Funding -> Transferring Visa is not impossible but have lot of hurdles.
Irrespective of traction,you have to do following which is very frustrating & time consuming.
1. Your company need to demonstrate ability to pay us "prevailing wages" as per SF standards [76k per year per person ] or Santa Clara [82 k per year person], office space and other general needs.
2. You need to hire some one (contractor is okie ) US citizen/Green card holder to sign off on the H1 application. That person can be any non technical person .e.g. accounting or marketing to demonstrate employee employer relationship.
3. You need to hire yourself as software developer demonstrating right skills and acting temp CEO /CTO . C position usually have higher salary ranges and have USCIS complications.
4.Form a board of directors who will have right to hire and fire you
Get lawyer who knows and have experience in immigration.
Irrespective of traction,you have to do following which is very frustrating & time consuming.
1. Your company need to demonstrate ability to pay us "prevailing wages" as per SF standards [76k per year per person ] or Santa Clara [82 k per year person], office space and other general needs.
2. You need to hire some one (contractor is okie ) US citizen/Green card holder to sign off on the H1 application. That person can be any non technical person .e.g. accounting or marketing to demonstrate employee employer relationship.
3. You need to hire yourself as software developer demonstrating right skills and acting temp CEO /CTO . C position usually have higher salary ranges and have USCIS complications.
4.Form a board of directors who will have right to hire and fire you
Get lawyer who knows and have experience in immigration.
Background: I've hired many many people on H1B and helped friends on visas start businesses.
TL;DR - In practice, this is very difficult to pull off. There are some chicken and egg issues that make it very difficult and the government is a pain in the ass about it too.
The rule of thumbs are that you cannot control the business that is giving you a visa (you can be fired from the job), the company has to demonstrate significant financial resources to employ you, and you have to do the transfer in a way that doesn't raise red flags with the government. Let's break these down.
1 - you cannot have a controlling interest in the business. This means you need a cofounder or cofounders so that your share of the business is less than 50%. Finding cofounders is tough. Especially cofounders who want to run the risk of you being deported during the next 4 years. Yes, there are ways to do it so that you own 49% and your cofounder owns 51%, but then you better be really sure that you want to give up board control and company control to this other person. This also means that your cofounder has to be a citizen or green card holder. Lots of constraints...
2 - financial resources either means you're putting up a million dollars of your own money or you've gotten an investor to give you $500k. But why is an investor going to give you $500k without a product or cofounder ready to go, and with a chance that you may run into visa issues and not be able to run the business? And therein is the chicken-and-egg situation. You can't stay without a financially sound company. But no one will give you money if you can't stay. So most people wait till they have a green card or build something on the side until they can get some traction or get some clients so they can show enough traction to raise funding.
3 - we almost got screwed with one of our employees at Spool because the government thought we didn't exist. Pre-launch we didn't have a website, our address was a UPS box, and though we were funded and clearly real, the USCIS basically rejected the visa transfer for one of our employees because they thought we were a shell company setup just for this guy to stay in the US without working.
Ultimately, there are people in an office at USCIS that make these decisions. These people will reject applications if something smells fishy, will reject it if they think this is a shell corporation just so you can stay in the US, or if they don't understand that startups get started and hire employees in month 1 of existence. Keep in mind that this transfer has to happen quickly. Your previous employer has something like 30 days to report that you don't work there any more. And your new employer gets to keep you in the country as long as the visa transfer is in process, but if you get rejected you're out of the country. So the transfer needs to happen quickly...and often your company just got started, has no other employees, has no website or product in the marketplace yet, and various other red flags as far as USCIS is concerned. The sequencing of all of these events in practice is difficult.
===== The best option ===== There are lots of "clever" options. I don't endorse any of them and you try them at your own risk. The safest option is to try and start something on the side, get enough traction to be able to pull together a seed round, and then have that new company sponsor your h1b. Lots of investors will give you money if you demonstrate the beginnings of a real business. This is extremely difficult though...you will basically need to work two full time jobs until you can raise a seed round.
I really wish it weren't this way but unfortunately the US government's rules were built in a manufacturing era and make no sense in our modern information age.
Disclaimer: This is not legal advice. Go talk to an immigration lawyer for real legal advice.
TL;DR - In practice, this is very difficult to pull off. There are some chicken and egg issues that make it very difficult and the government is a pain in the ass about it too.
The rule of thumbs are that you cannot control the business that is giving you a visa (you can be fired from the job), the company has to demonstrate significant financial resources to employ you, and you have to do the transfer in a way that doesn't raise red flags with the government. Let's break these down.
1 - you cannot have a controlling interest in the business. This means you need a cofounder or cofounders so that your share of the business is less than 50%. Finding cofounders is tough. Especially cofounders who want to run the risk of you being deported during the next 4 years. Yes, there are ways to do it so that you own 49% and your cofounder owns 51%, but then you better be really sure that you want to give up board control and company control to this other person. This also means that your cofounder has to be a citizen or green card holder. Lots of constraints...
2 - financial resources either means you're putting up a million dollars of your own money or you've gotten an investor to give you $500k. But why is an investor going to give you $500k without a product or cofounder ready to go, and with a chance that you may run into visa issues and not be able to run the business? And therein is the chicken-and-egg situation. You can't stay without a financially sound company. But no one will give you money if you can't stay. So most people wait till they have a green card or build something on the side until they can get some traction or get some clients so they can show enough traction to raise funding.
3 - we almost got screwed with one of our employees at Spool because the government thought we didn't exist. Pre-launch we didn't have a website, our address was a UPS box, and though we were funded and clearly real, the USCIS basically rejected the visa transfer for one of our employees because they thought we were a shell company setup just for this guy to stay in the US without working.
Ultimately, there are people in an office at USCIS that make these decisions. These people will reject applications if something smells fishy, will reject it if they think this is a shell corporation just so you can stay in the US, or if they don't understand that startups get started and hire employees in month 1 of existence. Keep in mind that this transfer has to happen quickly. Your previous employer has something like 30 days to report that you don't work there any more. And your new employer gets to keep you in the country as long as the visa transfer is in process, but if you get rejected you're out of the country. So the transfer needs to happen quickly...and often your company just got started, has no other employees, has no website or product in the marketplace yet, and various other red flags as far as USCIS is concerned. The sequencing of all of these events in practice is difficult.
===== The best option ===== There are lots of "clever" options. I don't endorse any of them and you try them at your own risk. The safest option is to try and start something on the side, get enough traction to be able to pull together a seed round, and then have that new company sponsor your h1b. Lots of investors will give you money if you demonstrate the beginnings of a real business. This is extremely difficult though...you will basically need to work two full time jobs until you can raise a seed round.
I really wish it weren't this way but unfortunately the US government's rules were built in a manufacturing era and make no sense in our modern information age.
Disclaimer: This is not legal advice. Go talk to an immigration lawyer for real legal advice.
One correction.
USCIS has updated the rules and clarified that a controlling interest in the company is allowed (i.e. > 50%) as long as the employee-employer relationship is maintained and a board of members exist who can control the employment and terms of the beneficiary.
http://www.washingtonpost.com/national/on-immigration-a-step...
http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f...
Specifically (quote from the page on the second link):
Q: The memorandum provides an example of when a beneficiary, who is the sole owner of the petitioner, would not establish a valid employer-employee relationship. Are there any examples of when a beneficiary, who is the sole owner of the petitioner, may be able to establish a valid employer-employee relationship?
A. Yes. In footnotes 9 and 10 of the memorandum, USCIS indicates that while a corporation may be a separate legal entity from its stockholders or sole owner, it may be difficult for that corporation to establish the requisite employer-employee relationship for purposes of an H-1B petition. However, if the facts show that there is a right to control by the petitioner over the employment of the beneficiary, then a valid employer-employee relationship may be established. For example, if the petitioner provides evidence that there is a separate Board of Directors which has the ability to hire, fire, pay, supervise or otherwise control the beneficiary, the petitioner may be able to establish an employer-employee relationship with the beneficiary.
USCIS has updated the rules and clarified that a controlling interest in the company is allowed (i.e. > 50%) as long as the employee-employer relationship is maintained and a board of members exist who can control the employment and terms of the beneficiary.
http://www.washingtonpost.com/national/on-immigration-a-step...
http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f...
Specifically (quote from the page on the second link):
Q: The memorandum provides an example of when a beneficiary, who is the sole owner of the petitioner, would not establish a valid employer-employee relationship. Are there any examples of when a beneficiary, who is the sole owner of the petitioner, may be able to establish a valid employer-employee relationship?
A. Yes. In footnotes 9 and 10 of the memorandum, USCIS indicates that while a corporation may be a separate legal entity from its stockholders or sole owner, it may be difficult for that corporation to establish the requisite employer-employee relationship for purposes of an H-1B petition. However, if the facts show that there is a right to control by the petitioner over the employment of the beneficiary, then a valid employer-employee relationship may be established. For example, if the petitioner provides evidence that there is a separate Board of Directors which has the ability to hire, fire, pay, supervise or otherwise control the beneficiary, the petitioner may be able to establish an employer-employee relationship with the beneficiary.
That's very interesting. Nice find. Definitely a step in the right direction
The safest option is to try and start something on the side, get enough traction to be able to pull together a seed round, and then have that new company sponsor your h1b.
However, from what I heard - if you're on H1B you can only work for the company that sponsored your visa. So, the "best option" itself is pretty dicey.
However, from what I heard - if you're on H1B you can only work for the company that sponsored your visa. So, the "best option" itself is pretty dicey.
As far as I know, while on a H1B, you can definitely start something on the side, but you can't get a salary for this activity legally. So as long as you are just coding and developing an app, for example is perfectly fine. This can be your 'hobby' and if this 'hobby' gets good traction and you want to convert it to a company then you'll run into all the legal issues pointed here. However, by then if you can convince investors and raise money with a board of directors you are in good shape.
I'm not an immigration lawyer, so those guys will give you the best advice. Please consult one.
I'm not an immigration lawyer, so those guys will give you the best advice. Please consult one.
Transferring an H1B to a company that the government thinks is legitimate is very straightforward. I was just hoping to outline the steps to getting a company considered legitimate. So if you can get your company off the ground and considered legitimate (the hard part) then you can have your visa transferred to that company (the easy part).
There are certainly employment contract issues -- moonlighting clauses, non-solicitation, and non-compete agreements. But those all apply to anyone building something on the side while employed full-time.
There are certainly employment contract issues -- moonlighting clauses, non-solicitation, and non-compete agreements. But those all apply to anyone building something on the side while employed full-time.
I think the point @karterk was trying to make is that it might be illegal for you to do any paid work at all at your own startup (or any other company other than your original employer), regardless of whether your original employer allows moonlighting or not. I'm not sure how H1B works in the U.S., but a lot of countries have rules like that attached to work visas. So until your visa has been transferred to your startup, your startup can't pay you any salary.
"anyone building something on the side while employed full-time." -- but if your on a H1-B you will always be working full-time, atleast in my case.
if you are working full-time and building something that is not even remotely related to your current full-time job, do those contract issues still apply ?
if you are working full-time and building something that is not even remotely related to your current full-time job, do those contract issues still apply ?
An H1B holder can't simply move from their sponsoring company to another in the same way that a permanent resident or citizen can, but an H1B can be transferred to another company that also meets all the requirements. There's paperwork involved, but it's definitely possible and legal.
Avichal,
When you say start something on the side. Do you mean trying to get the web application up and running, possibly even, accepting payments from users , then look for a seed round ?
When you say start something on the side. Do you mean trying to get the web application up and running, possibly even, accepting payments from users , then look for a seed round ?
I have been in you shoes in the past (and left America due to frustration of the complexities of the process). Also, I am not a Lawyer - caveat emptor.
Short answer - get a US citizen to act as the Majority Partner in the business if at all possible. Do not accept even a cent from your new company if you go this route until it is set up and Generating Payroll. Once founded then transfer your H1 using your new company and then become employee/partner.
There are still ways around the stringent H1-B rules for employment that you can use to start a company in your name. However I must advise extreme caution in using any of them. The USCIS (citizenship and Immigration) might take a dim view of people who enter the US for a "Specialty Occupation" visa and then switch to founding companies.
I wish you the best of luck - it takes a lot of work to get a company going. Doing it while dealing with the complexities of the US Visa system is just adding to the mountain of difficulties you need to overcome.
If you do pull it off legally, maybe you can write a blog post that tackles this issue for other aspiring entrepreneurs who would love to tread in your path.
Short answer - get a US citizen to act as the Majority Partner in the business if at all possible. Do not accept even a cent from your new company if you go this route until it is set up and Generating Payroll. Once founded then transfer your H1 using your new company and then become employee/partner.
There are still ways around the stringent H1-B rules for employment that you can use to start a company in your name. However I must advise extreme caution in using any of them. The USCIS (citizenship and Immigration) might take a dim view of people who enter the US for a "Specialty Occupation" visa and then switch to founding companies.
I wish you the best of luck - it takes a lot of work to get a company going. Doing it while dealing with the complexities of the US Visa system is just adding to the mountain of difficulties you need to overcome.
If you do pull it off legally, maybe you can write a blog post that tackles this issue for other aspiring entrepreneurs who would love to tread in your path.
I am planning on starting a company with a partner who is a US citizen. I currently hold an H1B visa. Just wanted to know if people here have some pointers as to if this is even possible. I am going to be talking to an attorney but just wanted to get an idea before that. I have read about the startup visa act but it is still pending legislation.
It is possible. Even if you own majority shares, you can still articulate your application in such a way that initially you are not on the board but maybe after a event (funding etc.) you can be on the board
It is definitely possible - I've been in your shoes and done it. Transferred an H1 from an existing employer to a startup run by my biz partner (who also had a majority share). We hadn't raised any $$ when the transfer happened, though we closed an angel round a month after the transfer happened.
Things may have changed since 07 (funding requirements, etc). IANAL, though - you definitely want a good immigration lawyer who's familiar with this stuff.
Things may have changed since 07 (funding requirements, etc). IANAL, though - you definitely want a good immigration lawyer who's familiar with this stuff.
Totally possible. I've seen it done often. Even by double immigrant founders.
As a rule of thumb if your company has an independent board that can fire you then it can sponsor your H1B. In practice this tends to mean you need to have investors owning a sizable share of the company.
All wonderful advice and legally accurate. The best thing I can tell you is...start the business. If you have paying customers...everything else will fall into place automatically. Getting paying customers is the hardest part of starting any business. At worse, you will be able to run your company remotely from whatever country you are from. However, if your intent is to get the GC by way of starting a company, then there are lot of other easier options without suffering thru starting a company.
BTW, read this post...http://nodemaker.posterous.com/the-problem-with-ideas
Quick Answer: Yes, you can start the company. BUT, you can't work for the company that company. Mostly, work = getting a salary.
If you are trying to start a company, feel free to incorporate it and own all of it. I would suggest worrying about getting paid once you have revenues coming in.
Then hire a good lawyer to figure out your options.
If you see huge growth getting paid should be easier with investors (IANAL). Alternatively, you can have it run on the side with the company collecting the revenue that you can eventually retire on.
If you are trying to start a company, feel free to incorporate it and own all of it. I would suggest worrying about getting paid once you have revenues coming in.
Then hire a good lawyer to figure out your options.
If you see huge growth getting paid should be easier with investors (IANAL). Alternatively, you can have it run on the side with the company collecting the revenue that you can eventually retire on.
Thanks for all the comments. Really helpful.Just to give some more background, I am currently working on an H1B and looking for ways with another partner who is a US Citizen. He would own a majority stake between 60%-70% and thus has the controlling stake.
Yes (see @achival's post), but if you ever want to naturalize (get a green card), you'll have serious problems.
My father's in the process of working through the 'serious problems', please email me (in my profile) if you want more details.
My father's in the process of working through the 'serious problems', please email me (in my profile) if you want more details.
In my belief this could be tricky as I'm sure the H1B is actually tied to your current employer and would become invalid once you left that company.
I'm not sure however and I certainly wouldn't go off my word.
I'm not sure however and I certainly wouldn't go off my word.
Thank you for asking this question.
You can own a business but you cannot work for it or collect a salary from it without having a H1 from that particular company. It's just like owning stock which is allowed under H1 but not working for any employer just like that without USCIS authorization.
The rules for your company employing you is that you should be firable by some other person or the board i.e someone has to have a control over you. You should not taking decisions about yourself.
The rules for your company employing you is that you should be firable by some other person or the board i.e someone has to have a control over you. You should not taking decisions about yourself.
Does that work if I have the minority stake in the company and my partner owns the major chunk?
You can start one but can not work for one.
As others here have said, an H1B visa requires demonstrating that the company could fire you, which isn't usually true if you own it. In the case of Rapportive, we had 3 cofounders, all needing visas; 3 turns out to be the perfect number for H1B purposes, because any two of you own enough of the company to fire the third. That sounds a bit circular, but made enough sense to USCIS that we got our visas, even though none of us was a US citizen. (Not that it was easy, but our difficulties were more about convincing them we were a real company.)
Of course, this isn't legal advice, and you'll want a good immigration lawyer who can prepare the petition appropriately for this arrangement.