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Ask HN: On H1B right now, can I be a co-founder?

45 points by BadassFractal ↗ HN
A friend and I have been working on an exciting software project for a few months now. He's a US citizen and I myself am staying in the US on a H1B while working for a big software company. We would like to incorporate, but I'm really not sure about what that means for me from a legal standpoint.

Would I be breaking any laws if I were to be the co-founder? What happens once we receive any kind of investment, can I pay myself anything? Supposedly you can't have a "salary" unless you have a H1b, so can I get myself a H1B sponsored by my own company? Is having equity against my H1B in the first place? Can I even "work" for this corporation or do I have to use some kind of loophole?

And yes, I went to talk to an immigration lawyer already about this and he basically asked for an extra couple of grand out of me just so he could spend time researching this question, and even then he said he couldn't guarantee to find an answer and might require additional cash :|

33 comments

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marcamillion
Yes, you would be breaking a law if you are a co-founder of a US company while on H1-B.

>The H-1B is a non-immigrant visa in the United States under the Immigration and Nationality Act, section 101(a)(15)(H). It allows U.S. employers to temporarily employ foreign workers in specialty occupations. If a foreign worker in H-1B status quits or is dismissed from the sponsoring employer, the worker must either apply for and be granted a change of status to another non-immigrant status, find another employer (subject to application for adjustment of status and/or change of visa), or leave the United States.

http://en.wikipedia.org/wiki/H-1B_visa

Many people get this mixed up. Non-immigrant visas mean you can only do what your visa specifies that you can do.

A student visa is a non-immigrant studying visa. You can only study.

H1-B visa is a non-immigrant specialty work permit visa. i.e. you are working within your area of study, for a pre-approved company that has sponsored you your visa.

It's probably not the answer you want to hear, but I spent a lot of time researching it and speaking to multiple attorneys while I was trying to do the same thing. I eventually decided to return home, for a number of reasons.

That being said, I have friends that have done it and not gotten detected, but that's a fool's errand. You are risking the company if you do that.

akuzi
You can easily transfer your H1-B to another company (the one you hold equity in), it is not a big deal. What you can't do is work for both companies at the same time.
patrickod
I thought one of the stipulations of the H1-B was that you couldn't self-sponsor ?
ipince
Indeed, this is correct (AFAIK).

Then again, some people have done it, but I'm not familiar with their particular situations or which loopholes they used :)

tmorgan
That's right, but your co-founder(s) can sponsor you, and indeed you them. Provided that you could in theory be fired (a three person board for example) then you can be classed as an employee for the purposes of the H1-B.
karthikm
You can work for two companies at the same time if you are on H1B as long as the companies don't object.
BadassFractal
Very interesting! I'm up for H1B renewal in 2012, it might make sense for me to wait for that to get processed and then I can move the sponsorship from my current company to the startup.
marcamillion
That's not entirely true.

You can transfer it to the company, but if the Feds find out that you own significant equity in that company - they take that as an indication that you are intending to be an 'immigrant' on a non-immigrant visa, which violates the intent and spirit of the visa.

So, sure, you may be able to do it and not get caught. But if you do, you just got a one-way ticket home.

deskamess
You can hold H-1B status with two companies and get paid by both as long as you work the minimum number of hours stated on the H-1B application for each company. So you may end up working about 70-80 hours per week.

The problem is that when applying for, or even transferring, an H-1B the petitioning employer has to show revenue or existing capital and they also ask you if you have any ownership in the company. I am not sure what the impact of putting 'yes' in the ownership column would mean; likely a request for evidence.

Consult a good lawyer to guesstimate your chance of getting an H1 sponsored by your new company. If the odds are good (ideally, preexisting success cases) I would apply for a whole new H1 (not a transfer). If for some reason you do not get it, you are not out of status. If you do get it, turn in your resignation at the existing place. Make sure you work for the required number of hours for both parties during your transition period (2 weeks or whatever).

Lewisham
Yeah, you'll be breaking the law, whether you receive money or not. You cannot do any work for the company. Think of it this way: even if you went out and painted fences for people, you'd be breaking the law. You can't do anything for anyone, aside from volunteering.

I do not know the process for the company to get an H1-B quota, but the likelihood is that it will cost more than you think. If you can't afford the immigration lawyer, you can't afford to play these games with the US government. It's dangerous for both the company and yourself.

You're pretty screwed here (this is the H1-B working by design). What I think I have seen in the past is the immigrant actually leaves the US for their home country, work for the company there, then once its off the ground, you come back.

sabhishek1
I think you can do two things :- 1) Incorporate the company, and sponsor a part-time H1B using it. You can have two H1Bs active at the same time, but only one can be full time. This way you will be able to keep your day job. You will need to pay yourself salary, and pay taxes to uncle sam.

2) Sponsor a full time H1B with your own company. You will need to quit your day job for this. But its possible. Salary requirement is more strict for full time position.

IANAL. This is based on my research from a few years ago.

known
On H1B you can't own a company.

You must be an employee of your H1B sponsored company.

hzay
What follows is hearsay but it might give you an idea of where you stand.

Some co-founders in the latest YC batch are on H1B. I do not know how this can be done but maybe you could look through a list of founders, locate the non-Americans and ask them (by guessing their email, maybe?).

You cannot start a LLC in the US all by yourself, but that should not be a problem if your co-founder is American. He can start it. I've heard that your startup cannot sponsor your H1B visa unless it can be shown that you can be fired, which is not possible unless you give away a lot of equity.

I've heard of someone who was on H1B, attended Startup School, walked around trying to talk people into sponsoring his visa so that he can start his startup, and finally got someone to do it. I'm on H1B and just started sending out feelers.

Good luck!

ipince
You cannot start a LLC in the US all by yourself

This doesn't seem right... Do you have a resource?

Or did you really mean "You cannot start a LLC in the US all by yourself AND have it sponsor you"?

RealGeek
Legally, you can be a co-founder of a company while you are on H1-B. But, you can not participate in business activities and you can not take salary.

You can get H1-B visa sponsored by your own company. Manu Kumar of K9 Ventures was able to do this, read http://k9ventures.com/blog/2009/09/24/my-story-and-support-f...

It should be easier for you with a US citizen co-founder.

BadassFractal
Do you have a guess for what "business activity" means and where you draw the line? And yes, YANAL.

Great link by the way, thanks. This guy has to jump through so many hoops just to stay in here, and seems like he was always a couple of weeks away from being kicked out.

RealGeek
You are not allowed to do any sort of work for your company including programming, business development, marketing etc. You can only be an inactive partner in the company.

But practically speaking, you could get away with it while two of you develop the software from your apartment. USCIS is not going to monitor what you have been doing on your computer at home.

It would be difficult when your business grows and have employees & customers. Make sure that you are able to transfer H1-B to your company by then.

I guess founders of few YC and TechStars companies come to US on Visa Waiver Program or Visitor visa for few months and work on their startup.

Udo
Yeah, that's illegal. But let's look at what you could do instead.

I believe you can co-own an American company as a "normal" foreign citizen and be in the US from time to time for a couple of weeks, as long as you go home to your resident country in between. I know some business people who actually do that, jetting back and forth between two or three countries where they are involved. It's a pretty interesting lifestyle, too, as long as you can afford the plane tickets and (at least) two separate homes.

akuzi
Yes you can but you will need to get your H1-B transferred to the new company.

Non US-citizens can hold equity in C-Corps (not S-Corps), but that by itself does not allow you to live or work in the US. You would need to you get your H1-B transferred to the new company, but this is not a particularly difficult process.

dikbrouwer
I see a few people suggesting that you start a new entity and have that company hire you. Be very careful about this since the DHS specifically tries to prevent this type of setup. In fact, it is very difficult for a startup to prove that they are a 'real company', and having paid employees, an office (pictures help), and money in the bank are almost a must. I've been through this a bunch of times (even with companies that have raised a series A), and it still took 4 months of writing letters before the case was approved.

Secondly, don't make the mistake of trying to hire yourself as the CEO/CFO/C-something, since an H-1B only applies to a 'specialty occupation' as was correctly pointed out. This means that it is much easier to convince the DHS that you are eligible for a visa if you are 'applying' as an engineer, product designer or what have you vs. a general management/C-level position.

ipince
My understanding is that you can own a company (or part of one). However, you most definitely _cannot_ do any work for it or take any salary, because your current visa is not sponsored by it. (You can only ever work for your visa sponsor).

Now, what about quitting your current job and having your own company sponsor you? My understanding there is that you cannot have "control" over the company that sponsors you. I quote "control" because this is where things get fuzzy and I'm not entirely sure how it's defined. But if you want to be "co-founder and c[et]o" of your company, then no...

Despite all this, it can be done. You can "game" the system by, for example, having your cofounder be the only (legal) founder and sponsoring you, where you'd be only a "regular" employee. Or hiring and American and claiming that you never do any work (you just have ownership), and that he/she does. Keep in mind that these examples are going against what the law intends (even though only the second is outright illegal), so the government can and will screw you over if they find out.

Long story short: sorry, you're in a bad situation. I'm the exact same boat... It's doable, but you'd be playing with fire. Be careful!

(Obvious disclaimer: IANAL)

Edit: posted prematurely..

petervandijck
Talk to an immigration laywer. (Someone who specializes in this, not a general laywer.)
patrickgzill
You can own anything that it is legal for any American to own (except for guns and a few other restrictions). So you could definitely have ownership interest in the company.

I would look for a better immigration lawyer - IME many of them are on the lower rungs of lawyerly proficiency to begin with and are dumb, fat, and happy as a result of collecting thousands of dollars to basically help you fill out paperwork.

Finding one that already has experience helping someone with what you want to do is key.

BadassFractal
Great point. I'd have to find someone who's had tons of experience with both corporate and immigration law.
pier0
Homeland Security USA episode 203: Startup Founders

Starring:

BadassFractal the startup founder

H1B the visa

OnlyCash the lawyer

HN crowd the wannabe lawyers

Live now on Hacker News

pm90
umm... does anyone know how vinod khosla(http://en.wikipedia.org/wiki/Vinod_Khosla) start so many companies(Sun Microsystems) just after graduating? I believe he was not a U.S citizen and had come to the U.S only for his education.
vtail
BadassFractal, thank you for asking this question - I'm in the same boat and your question produced an interesting discussion.

I'm wondering whether you're considering to found a company _somewhere else_, e.g. Hong Kong or Taiwan or any other business-friendly place? In that case both you and your cofounder can own shares of the company, you can work(?) for this company, etc.

Obvious disclaimer: IANAL

BadassFractal
I always have the option of going back to the EU and working from there, but as you can understand, most of us would rather be in the country where the majority of the company will be located.

Can you expand on the concept of a country being business-friendly? Wouldn't I be able to work for an American company anywhere in the world, or would my country of residence be able to restrict that?

gopi
There are so many creative (and risky) ways to do it. One way is get your h1b thro a small consultancy which in turn contract you to your company. There are a lot of smalltime bodyshop companies which can do it for you but this requires that your company makes enough money to pay for the consulting company (atleast $50 per hour/2k hours per year)