When becoming involved with a startup in the US, foreign entrepreneurs often face an additional layer of legal issues involving immigration. Quite frequently, I get asked questions relating to how investing in or working for a US company affects immigration status. The short answer is that mere ownership of a US company should not be problematic, while employment or serving as an officer can often be problematic if not specifically permitted by one’s immigration status. With that said, this is often a fact-intensive issue, and a lot depends on the particular immigration status of the foreign national. The following is a brief summary of the rules for common business visas held by foreign entrepreneurs, however, please be advised that you should always contact an experienced attorney before doing anything that could jeopardize or affect your immigration status.
Common US Visa Types
- H-1B Visa: These visas are granted to foreign nationals in “specialty occupations” to work for specific sponsoring US employers. They have a three year duration, and are considered “dual intent” visas, which means that the holder may apply for a green card while holding these visas without affecting their status. A foreign national with a H-1B visa may own equity in a US business, and often serve as a director of the business in an oversight role. However, H-1B visa holders may not be employed by the US business (other than their sponsor), or render services in exchange for compensation.
- B-1/B-2 Visas: These visas are temporary, generally permitting foreign nationals up to six months before an extension is required. B-1/B-2 visas are fairly easy and inexpensive to obtain, although they do not permit employment or other work for remuneration in the US. A foreign national with a B-1/B-2 visa may own equity and typically serve as a director in an oversight capacity, but they may not act as an officer or be employed in the US.
- L-1 Visa: L-1 visas are issued to existing employees of foreign companies who have a US subsidiary or affiliate. There are a number of specific requirements, and these visas are only granted to foreign nationals in management or with specialized-knowledge and skills. The term of these visas depends on the nationality of the holder, ranging from three months to seven years. While the L-1 visa holder may only work for the company listed in their application, the spouse of an L-1 holder may typically obtain a work permit in the US (via an L-2 visa), and obtain employment with much less restriction. As is the case with a H-1B or B-1 visa, the holder of an L-1 visa may own equity and typically serve as a director in an oversight capacity, but they may not act as an officer or be employed in the US by companies other than the one indicated on their visa application.
- E-2 Visas: An E-2 investor visa permits a foreign national to work in the US based on making a significant investment and meeting a number of requirements. These visas are only issued to individuals from treaty countries, and have five year renewable terms, however, the holder of an E-2 visa must leave the US upon conclusion of the business venture (or change their status). The required investment must be “substantial,” and depends on the type of business and industry. The cost of these visas is often quite expensive, and they typically take a few months to obtain from the USCIS. The holder of an E-2 visa may obviously manage and work for the investment which is the basis for the visa, however, they may not work for or be employed by another business. Like the spouse of an L-1 visa holder, spouses of E-2 visa holders may apply for a work permit for other employment in the US. A foreign national with an E-2 visa may own equity and typically serve as a director in an oversight capacity, but nay not act as an officer or be employed in the US by companies other than the one which is the basis for the visa.
As the above bullet-points indicate, most business-related visas limit the visa holder’s ability to render services in relation to new business ventures. When starting a new business, visa holders must abide by such restrictions if they wish to maintain their immigration status with USCIS. As a result of such restrictions, foreign nationals must be very careful when starting new US businesses, as they typically may not serve as an officer, be employed by, or render services in exchange for compensation from such ventures.
Many foreign entrepreneurs holding visas start businesses in the US, however, in order comply with US immigration laws, their involvement must typically be limited to passive ownership of the company or serving as a director in an oversight role – serving as an officer, employee, or independent contractor of a new business venture is typically prohibited.
Immigration concerns often limit the level of participation a foreign national can have in a US startup, however, if the startup is organized with these considerations in mind, an attorney experienced in these issues can often find a workable solution. Due to the potential consequences of violating immigration restrictions, consultation with an attorney in these matters is almost always the prudent course of action.