Visa Basics for Foreign Entrepreneurs, Part 2: What Constitutes Work?
In “Visa Basics for Foreign Entrepreneurs Coming to the U.S.”, I discussed certain immigration statuses (visa waiver, B-1 and H-1B visas) that permit a non-resident alien to take a passive role in a business (such as forming it) but not to work for it. This post discusses the boundary between permissible passive activities and prohibited work.
Let’s assume that the new business is formed as a corporation. Being a shareholder certainly is a passive activity. Being a director (board member) typically should be a passive activity, too, because directors’ role is one of oversight and approval (elect officers, approve major transactions, etc.), rather than running the business.
Being an officer is not permitted, however. Officers are directly responsible for running the business, thus they inherently are actively involved in working for it.
Summary if you are a non-resident alien who must keep his or her activities for a business passive: It’s OK to be a shareholder and a director, but don’t become an officer, employee or independent contractor of the business or do any additional work for it.
Related post: Can I Get an H-1B Visa Working for My Own Company?
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
Dana Shultz is a business-savvy lawyer located in Northern California's San Francisco Bay Area (in the East Bay, near Oakland) who has in-depth knowledge of law, business, technology, and the needs of startup and early-stage companies.
Dana,
I love your service and we appreciate very much!
I currently have F1 student Visa and want to establish a INC and open up a business (or purchase one).
in that case, although i am only the partner of our INC and my partner doing all the work, can i still take the money from that specific income we create?
A student visa does not preclude one from receiving income from a business investment.
Thanks for your post, it is very useful, however I have a question – do you know if you can transfer you H1B visa from your employer to your corporation where you are Director to be able to work also as an officer?
Thanks and best regards,
Jorge Lana
There is no H-1B transfer. Your question really translates to “Can I Get an H-1B Visa Working for My Own Company?”
Hi Dana,
I am a college student on F-1 Visa and making a C-corporation/LLC(haven’t decided yet due to tax issue). My partner will be CEO and I will be President who will only participate in meetings and I will potentially fly to other states with CEO for meetings to meet investors.
Is is legal to hold President position and fly with CEO to other states for meetings? CEO will be doing all the work and I will only participate in meetings till my graduation. Thank you!
Regards,
Wayne
The President is an officer. Quoting from this post: “Being an officer is not permitted, however. Officers are directly responsible for running the business, thus they inherently are actively involved in working for it.”
Hi Dana:
Great blog.
I am on H1b, and I am forming a LLC with other 2 partners who are both US-Citizens. one of them will be managing partner as part of the operation agreement required by LLC. I will be the directional person, for example, answer questions by other partners about what strategic area we should be focusing on. Otherwise i am not involved in the daily operation of our retail establishment. I guess my specific question here is what constitues work Vs. permitted role by H1b for purposes of being a partner. Do you have any citing from anywhere that I can read more about what I can or can not do as a partner? lastly, i own 65% of the LLC, is that an issue?
Ownership is not an issue. I know of no case, or other, authority that established a clear line as to what is permitted and what is not.
To the extent that activities are more like those of a corporate board of directors (oversight and approval), they should not be a problem. To the extent that activities look more like running the day-to-day business, they will not be permitted.
Hi Dana,
I am on H1B visa and opening a General Partnership co. with 2 other partners who are also on H1b visa. Is this fine or should it be LLC.
1. General partnerships have the disadvantage of mutual unlimited personal liability. Please see Is there Any Reason to Form a General Partnership?
2. Your H1-B visas do not permit you to do work for the partnership. They would not permit you to do work for an LLC that you formed, either.