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Starting a company while on a H1 visa

Posted by attorney Anu Gupta

Owner sponsoring own H1B visa through company.

Question. I am the technical director of a Bay Area start up. I have over 10 years of experience in the IT industry. Currently I am on a H1B1 visa. I have been approached by numerous clients who are willing to give me their business if I were to start my own company. I am not sure whether I qualify to start my own company and what my visa status would be if I started my own company. Can you please help?

Answer. Yes you can “start" your own company. There are various forms under which a person can “do business" in the US. A sole proprietorship, a partnership, a corporation and a limited liability company are few of the types of entities that you can form. While each of these forms is used for different purposes, a corporation is the entity that may suit you to most.

A corporation is owned by the people who own stock in the corporation. These people are called “stockholders" or “shareholders". Current laws do not prohibit a person on an H-1 status from owning stock in a subchapter “C" corporation. Under most circumstances, there is no limit on how many stocks an individual stockholder (including one on a H-1B visa) is allowed to own. Upon incorporating the company and issuing stock, the stockholder will have “started" his own company.

The other, more difficult issue is your visa if you decide to work for the company you just formed. If you are on a H1B1 visa, and decide to work for the newly formed company, the new company will have to sponsor your H1B1 visa. The issue is whether the corporation that you have formed and own may sponsor your visa.

While it is clearly illegal to form a company solely for visa sponsoring purposes, there are other situations where you may be able to have the newly formed corporation sponsor your visa. On one hand, if the corporation does not have sufficient start-up capital, or the stockholder (you) is going to be the only employee of the company, or if you are the person making the decision to hire yourself through this corporation, CIS will clearly hold that the corporation was formed for the sole purpose of sponsoring you – which is illegal – and the visa will be denied. On the other hand, if the company has a solid client-base, has sufficient capital, has hired other employees, there are other directors and shareholders making corporate decisions (including whether to hire you), then the company should be able to hire a you, the shareholder as an H-1B employee as well.

In such a scenario, you would need to show several additional documentation to prove that the business is not incorporated only to sponsor your visa. You might want to show sufficient funding in the company by providing corporate bank account statements, providing contracts for the company’s services, providing a solid good business plan, or letters from investors. All of the above would increase the possibility of your being able to get an H-1 through your company. Similarly the other requirements can also be met to prove to USCIS that you are genuinely interested in doing business in the US and that your company was not opened solely to sponsor your visa.

Additionally, you may qualify to file for another type of visa. It may be worth your while to discuss all your options with a qualified attorney.

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