Start Your Own Company
While in H-1B Status
A Simplified Guide for Entrepreneurial H-1B Visa Holders
Starting your own company while on an H-1B visa requires carefully navigating complex legal landscapes, as your H-1B is tied to your specific sponsoring employer and any unauthorized work could lead to serious immigration consequences. With careful planning, however, you can pursue your entrepreneurial dreams without violating your status and prepare to transfer your H-1B to your own company. This guide provides an overview of the general steps to legally establish your company while complying with H-1B limitations.
While at Your Current H-1B Employer
Before you can transfer your H-1B to your own company, you need to lay the groundwork — and do so without jeopardizing your current immigration status. This chapter explains the critical boundaries between permissible passive activities and prohibited active employment.
Know the H-1B Basics
While in H-1B status, you are only authorized to work for the employer that sponsored your H-1B petition. Doing work for any other company — including your own startup — without proper authorization can put your status at risk.
What Counts as Unauthorized Employment?
Unauthorized employment is broadly defined as any productive service or labor you perform for an employer that benefits U.S. customers and has not been preapproved by USCIS. Whether you get paid or not is irrelevant under immigration law — it is the duties and activities you perform that matter.
That said, many startup activities are permissible while in H-1B status as long as they are passive and not active. Understanding the distinction between passive involvement and active employment is essential to protecting your immigration status.
Permissible Passive Activities
While on H-1B status, you can engage in a number of startup-related activities that are considered passive and therefore permissible under immigration law.
What You CAN Do on H-1B
- Company Formation — Set up a company, handle formation paperwork, register the business, file incorporation documents with the state, obtain a Federal Employer Identification Number (FEIN) from the IRS, and open a business bank account.
- Board Activities — Serve as a board member or advisor, participate in board meetings, and make high-level governance decisions not connected to day-to-day management.
- Fundraising and Planning — Raise money for your startup, meet with investors, give presentations, and negotiate funding.
- Research and Development — Work on initial stages of your product, such as market research and development, as long as it does not involve daily operations or result in productive work.
- Non-Employment Engagement — Consult with business associates and participate in industry events like conferences or seminars.
Impermissible Active Activities
Certain activities cross the line from passive involvement into active employment and could violate your H-1B status. You must avoid these until your H-1B has been properly transferred to your own company.
What You CANNOT Do on H-1B
- No Day-to-Day Management — You cannot manage employees, make hiring and firing decisions, or directly oversee business operations.
- Avoid Executive Titles — Do not give yourself a title like "CEO" or "Manager" that implies an active management role.
- No Productive Work — Any productive work performed for your startup is not allowed.
Maintain Clear Boundaries Until Your Company Is Ready
Clearly separate your role as a founder, board member, and/or principal shareholder from the operational day-to-day roles within the company. Consider appointing a U.S. citizen or permanent resident to serve as an officer of the company who may also sit on the board. This individual can be responsible for managing the daily operations of the business and handling the tasks that you, as an H-1B visa holder, must avoid.
Furthermore, as a board member, you may require that this officer present major decisions concerning day-to-day activities to the board for approval. While this may seem like semantics, this is how the law works.
Why This Matters
Immigration law can be complex, and the line between what is allowed and what is not can be blurry. A good lawyer can help you understand the risks and ensure your activities stay within the "safe" zone to avoid potential immigration violations, while also laying the groundwork to eventually transfer your H-1B to your own company. The key is to stay involved in a way that does not constitute active employment, keeping your role passive and high-level until your company is able to sustain your H-1B employment.
Establishing the Employer-Employee Relationship
After establishing your company, the most challenging aspect of transferring your H-1B often involves demonstrating a bona fide employer-employee relationship — especially when you are also the company's owner. This chapter explains how to structure your company to satisfy USCIS requirements.
Board Oversight and Governance
The board of directors must have real authority over the company, including the power to hire and fire you. Ideally, a minimum of three board members is recommended — which could include yourself — to ensure a balance of governance independent of any single member's influence.
Role of Majority Shareholders
If your ownership is 51% or greater, it is critical that the company bylaws do not include any provision granting unilateral decision-making authority to the majority shareholders — such as the ability to remove board members with or without cause. In this scenario, the employer-employee relationship would be undermined because you could, in effect, remove any or all board members, making it impossible for you to be fired. This would lead the government to conclude you are impermissibly self-employed.
Critical Warning for Majority Owners
If you own 51% or more of the company, USCIS will scrutinize whether you can truly be "fired" by the board. Your bylaws must not give majority shareholders the power to unilaterally remove board members, or the employer-employee relationship will fail.
Technical and Supervisory Authority
Preferably, the board of directors should include qualified individuals who can technically supervise your work and potentially take over your role should you be fired or removed from your position.
Employment Agreement with IP Transfer
Your employment agreement should clearly define your role as an employee, including the board's authority over your employment and compensation. It should also include an IP transfer clause to ensure that any inventions, creations, or discoveries made during your tenure are owned by the company. This further establishes that you are an employee of the company rather than a self-employed individual.
Employer-Employee Relationship Checklist
- Board of directors has authority to hire and fire you
- Minimum of three board members recommended
- Bylaws do not grant majority shareholders unilateral removal power
- Board includes members who can technically supervise your work
- Employment agreement defines your role, compensation, and board authority
- IP transfer clause assigns all work product to the company
Valid Job Offer in a Specialty Occupation
Your H-1B transfer requires a valid job offer for a specialty occupation — one that requires at least a bachelor's degree in a related field. Getting the role, qualifications, and wage requirements aligned is critical to a successful petition.
Specialty Occupation Requirements
H-1B visas are only for positions that require a bachelor's degree or higher in a related field. Therefore, the job offer with your own company must be for a specialty occupation role, and you must have the required degree to fill that position.
Aligning Your Role with Wage Requirements
Regardless of your external job title, what matters from an immigration perspective are the specific duties you will be performing on a day-to-day basis and your qualifications for the position. These factors determine which Standard Occupational Classification (SOC) code you fall under and the prevailing wage you must be paid.
Example: Software Engineer vs. CEO
While your qualifications may be suitable for a Software Engineering role, you might not be able to demonstrate you qualify for a position as CEO, which would typically necessitate a degree relevant to business management. More importantly, the compensation for a CEO position must align with the prevailing wage for such roles in your area — often significantly higher than that for a Software Engineer.
The key is ensuring the specialty occupation you undertake matches your academic background and professional experience, and that your company is capable of meeting the prevailing wage requirements for that occupation.
Operational, Financial, and Document Preparation
With the legal structure in place, you need to ensure your company meets the operational and financial requirements for an H-1B transfer. This includes demonstrating the ability to pay the prevailing wage, securing a physical office, and gathering all required documentation.
Operational and Financial Setup
Step 1: Calculate the H-1B Prevailing Wage
The prevailing wage is the required wage set by the U.S. Department of Labor for someone with your skills and qualifications in your geographic area. You can determine this using the OFLC Wage Search tool.
Step 2: Ensure Financial Readiness
Your company must have sufficient funds in the bank to demonstrate the ability to pay the prevailing wage. This is essential to securing the H-1B transfer approval.
Step 3: Secure a Physical Office Address
Obtain a physical office address for your company — not a P.O. box or virtual office. Ideally, this would be a standard commercial office, but it is not always required. If operating from home, confirm that local zoning laws permit business activities from your residence. It must be an actual physical location that an immigration officer could visit and inspect if necessary.
Required Documents for the H-1B Application
Gather all necessary documents for the H-1B application. While not exhaustive, the following list covers the key documents typically required:
H-1B Transfer Document Checklist
| Document | Purpose |
|---|---|
| Articles of Incorporation | Proves the company is legally established |
| Tax Returns | Demonstrates the company's financial history |
| Bank Statements | Shows sufficient funds to pay the prevailing wage |
| Financial Statements (Balance Sheet, P&L) | Provides a comprehensive financial picture |
| Organizational Chart | Shows hierarchy and supervisory structure |
| Pitch Deck or Summary Business Plan | Outlines the company's business model and viability |
| Lease Agreement for Office Space | Confirms a physical work location |
| Photos of the Worksite | Verifies the office is a real, operational space |
| Form SS-4 Letter from the IRS | Confirms your Federal Employer Identification Number (FEIN) |
| VIBE (Dun & Bradstreet) Registration | Verifies the company's legitimacy |
Important Disclaimer
Immigration policies and regulations are complex and frequently subject to change. The information contained in this guide is intended to provide a general overview and may not address your particular circumstances and needs. Serotte Law will assist you with maintaining H-1B status while starting your own business and answer any questions you may have about the process. Request a consultation or give us a call at 888-875-8110.
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Our experienced immigration attorneys can guide you through every step of the process. Schedule a consultation to discuss your specific situation.
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