Can I Get an H-1B Visa Working for My Own Company?

Logo of U.S. Citizenship and Immigration Services, which issues the H-1B visa

I have written about opportunities for foreign entrepreneurs who wish to obtain U.S. work visas. (See Visa Basics for Foreign Entrepreneurs Coming to the U.S., Visa Basics for Foreign Entrepreneurs, Part 2: What Constitutes Work?) This post focuses on a particularly interesting aspect of this issue. It asks whether and how a foreign entrepreneur can form a corporation in the U.S. and, then, obtain an H-1B visa to work for that corporation.

Guidance on this issue is provided by one USCIS memorandum (Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements) and two U.S. Supreme Court cases (Nationwide Mut. Ins. Co. v. Darden and Clackamas Gastroenterology Associates, PC v. Wells).

The USCIS memo states that an employee who (a) owns a majority of a corporation and (b) reports only to him/herself may not be able to establish a valid employment relationship (for H-1B purposes). The reason for lack of a valid employment relationship is that the corporation does not control the employee. The memo then states that USCIS uses the criteria discussed in the two cited cases to determine whether a bona fide employment relationship exists.

Nationwide states that the central issue is “the hiring party’s right to control the manner and means by which the product is accomplished”. That case then describes a number of factors to be considered: “the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party’s discretion over when and how long to work; the method of payment; the hired party’s role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party.”

Clackamas Gastroenterology, in turn, focuses on six issues:

  1. Whether the organization can hire or fire the individual or set the rules and regulations of the individual’s work.
  2. Whether and, if so, to what extent the organization supervises the individual’s work.
  3. Whether the individual reports to someone higher in the organization.
  4. Whether and, if so, to what extent the individual is able to influence the organization.
  5. Whether the parties intended that the individual be an employee, as expressed in written agreements or contracts.
  6. Whether the individual shares in the profits, losses, and liabilities of the organization.

So, any foreign entrepreneur wishing to obtain an H-1B visa for his or her own U.S. corporation should strive to ensure that all of the following are in place:

  • The individual should own fewer than half of the corporation’s shares.
  • The individual and the employer should have a written employment agreement.
  • The individual should be paid via the company’s regular payroll processing service, with normal deductions and receiving a W-2 after year-end.
  • The individual should report to another person, or to a board of directors, having the right to set the individual’s pay and benefits; set the individual’s work hours; direct and review the individual’s work; and, if required, terminate the individual’s employment.
  • The individual should work at the company’s office, using company-owned equipment.

Many thanks to Ron Rose, Esq. at Rose Carson Kaplan Choi & White LLP, who pointed me toward the information presented in this post.

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.

24 comments

  1. Marcos says:

    Dear Dana,
    There has been news about the CIS updating the H1-B visa to allow foreigners to start companies AND work for them. When will this take into effect? Or how can I know when the petition becomes effective?

    Here: http://www.washingtonpost.com/national/on-immigration-a-step-in-the-right-direction/2011/08/03/gIQA2bGgsI_story.html

  2. Dana says:

    @Marcos
    To the best of my knowledge, the developments discussed in the article do not affect the content of this post (i.e., the corporation still must control the employee if an H-1B visa is to be issued).

  3. Tmax says:

    Dear Dana
    Thank you for the information. If the math is right “The individual should own fewer than half of the corporation?s shares.” what percentages does this amount to 49% (max?) is this is maximum figure of shares the h1b1 foreign entrepreneur can own?

  4. Dana says:

    @Tmax
    Fewer than half of the shares means fewer than 50% – this is, indeed, the limit on the number of shares that the entrepreneur desiring the H1-B visa should hold.

  5. Ace says:

    Dana,

    Can a company sponsor green card for one of its partner?

  6. Dana says:

    @Ace
    Yes – however, you should expect restrictions similar to those described in this post, but even more stringent for a greed card than for H-1B.

  7. Quora says:

    Can a non-US citizen start a business in the US with an american cofounder?…

    As far as I can tell (from other Quora answers), the answer is: only if you own less than 50% of the company. 1) You can start a C-company or LLC (you need to be a US citizen to start an S-corp which has lower taxes). What are potential issues arising …

  8. Quora says:

    Can a Canadian Citizen be one of the founders in a US based LLC?…

    I am not an immigration expert but I am in a similar situation. Here is what I can gather from reading other Quora answers: 1) A non-US citizen can found a C-company or LLC without problems (you need to be a US citizen to start an S-corp which has lowe…

  9. Quora says:

    How can non-US founders obtain visas to run startups in the US?…

    I’m not an immigration expert but I have been trying to answer this question. Here is my understanding: 1) A non-US citizen can found a C-company or LLC without problems (you need to be a US citizen to start an S-corp which has lower taxes). What are …

  10. David Bailey says:

    Dana, does the same criteria apply for a Trade NAFTA visa (for a Canadian)? Thanks!

  11. @Deuce says:

    Thanks for this post. Does the same analysis apply for an LLC? Or, is a member (on an H-1B) restricted from being “employed” by the LLC in a way that would comply with the H-1B requirements.

    • Dana says:

      It probably will be more difficult to obtain the H-1B in an LLC because there is no separate board of directors to help ensure that there is an arms-length employment relationship.

  12. Swap says:

    Hi,
    I am on H1B visa working for a company.
    I am also 50% owner of another company (C-Corp), but do not work for this company at all.
    However, I am on the board of this company. Are there any implications of being on the board?

  13. Quora says:

    If I (not a US Citizen) want to start a company in the US while I am on an H-1B, what should I do?…

    1. If you form a company, you cannot work for it, unless you obtain a work visa for that company. Please see Visa Basics for Foreign Entrepreneurs Coming to the U.S. at The High-touch Legal Services? Blog ? For Startup Companies. 2. If you want to obta…

  14. Meitei says:

    Dear Dana,

    Thank you very much for this wonderful blog.

    Please help me understand this scenario…(C-Corp)
    I own 49 %
    My Wife own 46 %
    CEO(green card holder) owns 5%

    Will this arrangement be able to sponsor my H1B visa.

    Thanks & regards,
    Meitei

    • Dana says:

      With minority ownership, obtaining an H-1B visa is possible. However, as noted in the bullets at the end of this post, minority ownership is merely one consideration – there are many others that must be satisfied.

      • Sam says:

        So that means, Assuming all conditions in the bulleted points are satisfied the individual (49% share holder) can get a successful H1B. PIease correct me if I am wrong
        In this same scenario, Assuming that all conditions in the bulleted points are satisfied and the 49% shareholder has an H1B through same company ; Is it possible to apply for H1B for the wife so that she can also work (may be part time) for the same company.

        • dhshultz says:

          The questions you have posed are so specific that you should retain an immigration lawyer who specializes in work visas to advise you.

          • Sam says:

            thanks for the quick reply. Can you please at least comment on the first part of the question (“So that means, Assuming all conditions in the bulleted points are satisfied the individual (49% share holder) can get a successful H1B. PIease correct me if I am wrong”), so that I can go forward with plans. thanks again

          • dhshultz says:

            I’m sorry, but you should not take any actions (“go forward with plans”) based on any posts or comments on this blog because they do not create an attorney-client relationship. If you want advice on which you can rely for business purposes, you need to retain a lawyer to advise you (in this case, an immigration lawyer, which i am not).

  15. Kunal Agarwal says:

    Hi Dana – Thank you so much for this advice!
    A natural follow up question is what the startup needs to do in order to sponsor the H1B for the employee?
    I have heard points such as have funding in place, have a business plan, have paying customers, etc. What points are most important to have in place?

    Thanks!

    • Dana says:

      While a business lawyer can help you satisfy such criteria, you need to ask an immigration lawyer what those criteria are.