
By Amber Davis, Principal Attorney at Waypoint Immigration USA
Recent updates announced by DHS and USCIS in the H-1B and O-1 visa categories should make it easier for entrepreneurs to start and run their own businesses in the United States.
H-1B Rule Updates for Beneficiary Owners
DHS has published its long-awaited rule update, officially changing the rules for entrepreneurs who are interested in H-1B starting January 17, 2025.
Prior to 2024, H-1B beneficiaries were not permitted to have “ownership and control” of their petitioning companies. This meant that the vast majority of H-1B entrepreneurs needed to either find co-founders to take shared credit for their business ideas or abandon entrepreneurship entirely in favor of a 9 to 5 job.
Now, entrepreneurs should have a lot more options to work on H-1B status.
Summary of Rule Change
People who have ownership, or a controlling interest, are allowed to be H-1B beneficiaries of the companies they own. Even if they own 100%.
The intention behind this rule update is crystal clear. DHS stated:
“The intent of the beneficiary-owner provisions is to promote access to the H–1B program for entrepreneurs, start-up entities, and other beneficiary-owned businesses while also setting reasonable conditions for when the beneficiary owns a controlling interest in the petitioning entity to better ensure program integrity.”
A strong statement of intent like this is valuable to quote in any later proceeding, like an RFE, appeal, or litigation if USCIS later wants to challenge a legitimate business operation.
Beneficiary owners may obtain an H-1B if they meet all the normal requirements of the program, which include:
working in a specialty occupation
holding a bona fide job offer
being paid the prevailing wage
working for a company that has a legal presence, with FEIN number, and is amenable to service of process (being sued) in the U.S.
Working in a specialty occupation means performing a job that normally requires at least a bachelor’s degree in a specialized field. This means that the person’s job at their startup must be related to their degree (or equivalent combination of education/experience established by an expert reviewer).
DHS recognized that Beneficiary Owners may need to take on operational tasks from time to time that are more related to the business side of things and less related to their underlying technical education. Beneficiary Owners can do things like negotiate contracts, make sales calls, talk with investors, resolve conflicts, do some accounting tasks, purchase supplies, recruit and hire employees, perform scheduling and admin work (DHS mentions “making copies or answering the telephone”), and do the “all hats” kinds of things that entrepreneurs do as long as they are they are performing specialty occupation duties “the majority of the time”. In other contexts, “the majority of the time” means more than 50%. This flexible standard allows H-1B workers to function as real entrepreneurs.
One limitation of the Beneficiary Owner H-1B is that it will only be valid for 18 months. The first extension will likewise only be valid for 18 months. Normal 3-year extensions are available after the first one.
Requirements for H-1B Petition
What is the documentation required?
Identification documentation – passport bio page
Immigration status documentation – evidence of the beneficiary’s current immigration status, if any, which may include paystubs showing that they were working under the terms of their current/last visa status
Education documents – transcripts and diplomas, and any relevant evaluations – showing a degree or combined degree/experience relating to the specialty occupation job
Corporate existence – articles of incorporation/organization and FEIN letter from the IRS. Note that this should be for a separate legal entity, as we do not believe that petitions from sole proprietors are likely to be successful without a separate legal entity (LLC, Corporation, etc.)
Financial documents – while not technically required, USCIS often requests bank statements for new or small companies to demonstrate that the company can pay the required wage. We recommend including these proactively
Marketing Materials – including a few documents about the company or documents demonstrating that products and/or services are actively being advertised helps demonstrate that the company is in fact real and engaged in business. We recommend including a few items
Business Plan – this is optional but recommended. DHS explicitly declined to make it a requirement, so submission of a massive 40-page business plan is not required. However, most new companies will find it helpful to submit something like a 5-page executive summary, a pitch deck, or a short business plan to help show USCIS how the company will develop and grow, and how it will justify the employment of the Beneficiary Owner in a specialty occupation role
Lease or Deed for the company’s business premises. There is not a total prohibition on using a home office, but if one is used, it requires local authorization from the town/city to use the home as a business. To avoid questions, we recommend leasing a physical office space and putting up company signage. Companies can do a sublease, temporary lease, shared space lease (the WeWork model), or other creative things, but there should be some kind of regular visit or activity at the leased space and a procedure spelled out for how to handle a USCIS site visit at the business address
Petition letter containing:
Information about the company – if a separate business plan was not included, it is essential to go into detail about the company’s operations in the petition letter. If a business plan was included, summarize it in the petition letter
Detailed job description. We recommend including approximate percentages of time to be spent on each job duty, so that USCIS can determine if the duties are “primarily” in a specialty occupation. Make sure non-specialty occupation work that founders do is captured in this description so that USCIS can make an accurate determination
A statement demonstrating the minimum educational requirement to perform the job duties
A description of why the education documentation qualifies the Beneficiary Owner to perform the job duties
A signed and certified Labor Condition Application (LCA) – absolutely essential! Remember, wages can be high for startups, and building equity does not count in the H-1B context. The company will either need investors, significant personal capital dedicated to the business, or immediate revenue because the Beneficiary Owner will need to pay themselves a higher-than-normal salary for a founder
Seeking New H-1B Status
Anyone who is an entrepreneur and founder who wants to start working for their own company in H-1B status, but is currently in a different status, should consider entering the H-1B lottery in March.
Entrepreneurs on OPT or STEM OPT will benefit a lot. Other people in the U.S. on TN, E-3, J-1, TPS, or other statuses will also benefit.
Remember, the business needs to be incorporated and have a FEIN number before submitting any lottery registrations.
Leveraging Current H-1B Status
Employees of companies who are working normal H-1B jobs now have a new pathway to pursue entrepreneurial side gigs. It is possible to establish a startup and apply for a part time concurrent H-1B. At Waypoint, we talk with H-1B holders who want to do this all the time and then eventually switch over full time to their own venture once it was fully off the ground. This is now much easier to accomplish. This alone could usher in a golden age of entrepreneurship.
People who already hold H-1B do not need to go through the lottery again. They can just apply for H-1B through their own company.
Applying as Cap-Exempt (No Lottery Required)
The new H-1B rules also significantly expanded the scope of what kinds of ventures are considered exempt from the H-1B lottery.
If the new venture is supporting nonprofit research, government research, or university research, there are also expanded options to apply under the cap-exempt H-1B program. Anyone who has a venture related to these areas should get a cap-exempt assessment done if they do not successfully obtain a lottery slot in the March lottery drawing.
Other Implications
H-1B1 (Chile or Singapore) holders should be eligible for the same entrepreneurship rules as regular H-1B holders, as the treaty merely provides a carve out for H-1B1 numbers and does not significantly change the underlying rules for the program.
E-3s for Australians have similar requirements to H-1Bs, and whether or not they can be Beneficiary Owners is not defined in the treaty between Australia and the U.S., or in the Foreign Affairs Manual. There may be a potential to argue that E-3 is also available to Beneficiary Owners, but note that this is an unexplored legal argument, so get legal advice if considering it.
TNs are unfortunately still restricted and not permitted to be the sole or controlling owner of the petitioning employer.
Other Pathways for Entrepreneurs
The focus of this article is H-1B, but entrepreneurs and aspiring entrepreneurs should also be aware of the various O-1, L-1, E-2, OPT, and Parole programs.
There are also direct immigrant visa options (EB-1, EB-2 NIW, and EB-5) that are not covered in this article but may be worth looking into.
O-1
USCIS also recently updated their policy to endorse O-1 visa holders owning 100% of their petitioning companies. The Policy Manual Update “[e]xplains that a separate legal entity owned by the beneficiary, such as a corporation or limited liability company, may file a petition on the beneficiary’s behalf."
O-1 has a long history of being utilized by entrepreneurs, but the lack of a formal policy around the “ownership and control” piece left some uncertainty among immigrants. It was considered “safer” to have cofounders or have a family member hold the majority ownership interest in case the immigration authorities decided to question this aspect.
Having clear guidance from the agency is a welcome change that helps entrepreneurs build their businesses without the distractions of bureaucratic uncertainty.
L-1
The L-1 visa status has often been used by entrepreneurs who owned and operated businesses abroad and then established a related subsidiary/affiliate/branch in the U.S. Most of these companies need to first file a “new office L” which is only valid for a year, and then show after that first year that the company supports a “Manager or Executive” position, or specialized knowledge position. This continues to be a viable pathway for entrepreneurs who already own a business abroad.
E-2
The E-2 investor visa is only available for citizens of certain countries. It allows investors to set up a company that will have greater economic impact on the U.S. and job creation than just supporting the individual immigrant.
China, India, Indonesia, Nigeria, Brazil, and Russia are the largest countries by population that are not eligible.
F-1 OPT and STEM OPT
Students are permitted to set up their own companies as entrepreneurs for 1-3 years post-graduation.
STEM OPT students must get their companies e-verified for this to work.
Entrepreneur Parole
Entrepreneurs that have obtained significant investor funds might be eligible to apply for parole for up to 2.5 years. This is an unusual status, and not many people apply. However, it is an important pathway to consider if the others do not fit well.
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