Janice Lozano
Foreign national students with F1 visas can start a business in the United States, but they are not allowed to work for their businesses or run them. F1 visa holders can, however, invest in their companies and receive dividends. They can also hire employees as long as they comply with all relevant employment laws and regulations. To be able to work for their own business, F1 visa holders must apply for Optional Practical Training (OPT), which is considered valid employment authorization as long as the employment is related to their field of study.
| Characteristics | Values |
|---|---|
| Can F1 students work for a family business without pay? | No, this is not allowed as it is considered unauthorized work. |
| Can F1 students start their own business? | Yes, with limitations. F1 students can start a business but cannot legally work for it or run it. |
| Can F1 students invest in a business? | Yes, F1 students can invest in a business and receive dividends. |
| Can F1 students work on-campus? | Yes, F1 students can work on-campus for up to 20 hours per week as long as the work does not displace a US citizen or lawful permanent resident. |
| Can F1 students work off-campus? | Yes, but only if they obtain employment authorization from USCIS and meet certain conditions such as economic hardship or insufficient on-campus employment. |
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What You'll Learn
F1 students can invest in or start a business
International students on F1 visas can hire employees for their businesses as long as they comply with all relevant employment laws and regulations. They can also receive dividend income from their company and will need to file an income tax return annually if dividend income is earned.
F1 students can use personal savings, loans from family and friends, or approach a venture capitalist to fund their business. They should be prepared to present a business plan or pitch deck to potential investors.
The business location and name will determine the customer base and additional costs like rent and utilities. Students should carefully consider what kind of name and location their customer base will engage with most effectively.
United States law recognizes four main types of business structures: sole proprietorship, partnership, limited liability company (LLC), and corporation. It is important to note that F1 students cannot be self-employed or freelance without authorization through programs like OPT or CPT.
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They cannot work for their own company
F-1 visa holders are not permitted to work for their own company, even if they are unpaid. This is because unpaid work for a for-profit company cannot be considered volunteering and is therefore forbidden for F1 visa holders.
F-1 visa holders can, however, start a business in the United States and invest in their company. They can also hire employees for their businesses, as long as they comply with all relevant employment laws and regulations. However, they must not be involved in the day-to-day running of the company.
To be able to work for their own company, F-1 visa holders must apply for Optional Practical Training (OPT), which is considered a valid employment authorization as long as the employment is related to their field of study. Alternatively, they can leave the business to a capable team after the preliminary planning phase or invest in the business remotely.
F-1 visa holders are also permitted to work on-campus in certain circumstances. This includes work for an on-campus commercial business, such as a bookstore or cafeteria, as long as the work directly provides services for students. However, work located on-campus that does not directly involve services to students, such as construction work, does not qualify as on-campus employment. F-1 students may also work off-campus in some cases, but they must seek special work permission from their Designated Student Officer (DSO) or U.S. Citizenship and Immigration Services (USCIS) and may have to wait until they have spent a year studying.
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They can be a limited partner in a business
F1 visa holders are not allowed to engage in active employment outside of authorised programmes. However, they can be a limited partner in a business, which means they can invest capital into the business but not participate in its day-to-day operations. The general partner would manage the business, while the F1 visa holder maintains a passive role.
There are several types of partnership structures. A General Partnership (GP) involves all partners being general partners and managing the business. A Limited Partnership (LP) includes at least one general partner and one or more limited partners. A Limited Liability Partnership (LLP) typically applies to licensed professionals, with all partners usually having limited liability.
F1 visa holders can invest in their own company and receive dividends, as this is considered passive income. They can also hire employees for their businesses as long as they comply with relevant employment laws and regulations. However, they cannot work for their own company, even without pay, as this is still considered unauthorized work.
If F1 visa holders wish to work for their own company, they can apply for Optional Practical Training (OPT) or CPT, which are forms of employment authorization. This would allow them to work as long as the employment is related to their field of study.
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They can work on-campus for up to 20 hours per week
F-1 students can work on-campus for up to 20 hours per week when school is in session. They can work full-time during periods when school is not in session or during the annual vacation. This includes work that takes place on campus or at an off-campus location that is educationally affiliated with the school. For example, an F-1 student can work for a company that contracts with the school to serve students directly, such as a food service company operating on school facilities. However, they cannot work for the same company at any off-campus locations.
On-campus employment must not displace a US citizen or lawful permanent resident (LPR). It must also be specific to work that directly involves services to students, such as working in a bookstore or cafeteria. Construction work on campus, for instance, does not qualify as on-campus employment.
To apply for on-campus employment, F-1 students must talk to their designated school official (DSO) and receive a letter of approval. They can then take this letter and a letter of approval from their employer to apply for a Social Security Number (SSN). All students who wish to work must apply for an SSN.
If an F-1 student finishes a program and starts another program of study at the same campus, they may continue their on-campus employment as long as they plan to enrol in the new program for the next term. If they have a pending application for reinstatement or change of status, they may also continue to work on campus.
It is important to note that F-1 students must have approval to work, and if they work without it, their DSO must report it through SEVIS, leading to termination of their SEVIS record and immediate departure from the United States.
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They can receive passive income from a business abroad
F-1 visa holders are subject to strict rules and regulations regarding their employment and income opportunities while in the US. They are prohibited from engaging in any unauthorized work or business activity that violates their visa status, which may result in severe consequences such as termination of their program, loss of their visa, or deportation.
However, F-1 visa holders can receive passive income from a business abroad. Passive income is defined as income derived from sources that do not require active involvement or participation from the recipient. This can include dividends, interest, royalties, rents, or capital gains. Here are some ways that F-1 visa holders can receive passive income from a business abroad:
- Investing: F-1 visa holders can open a brokerage account and invest in stocks, bonds, mutual funds, exchange-traded funds (ETFs), or other securities. This is a lucrative and flexible way to generate income from dividends, interest, or capital gains without requiring much time or effort. However, international students should be aware of the tax implications and reporting requirements associated with investment income.
- Real Estate: F-1 visa holders can buy, rent, or sell property in the US. Rental properties, in particular, can provide a stable source of passive income from rents without requiring much management or supervision.
- Business Ownership: F-1 visa holders can start a business in the US, but they cannot run the business or be actively involved in its operations. They can invest in the business and receive dividends as passive income. However, they must ensure that they leave the business to a capable team or have OPT authorization.
- Interest and Royalties: F-1 visa holders may also receive passive income in the form of interest from loans or deposits and royalties from intellectual property, such as books, music, or inventions.
It is important to note that F-1 visa holders must comply with tax requirements and file a US tax return (Form 1040-NR) to report their worldwide income, including investment income, to the IRS annually. They may also need an Individual Taxpayer Identification Number (ITIN) or a Social Security Number (SSN) to receive payments from their passive investments. Additionally, prior approval from the school and the US Citizenship and Immigration Services (USCIS) may be required for some income-generating activities.
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Frequently asked questions
No, working for a for-profit company without receiving pay cannot be considered volunteering and is therefore forbidden for F1 visa holders.
Yes, but they must first file a Form I-765, "Application for Employment Authorization," and pay a fee to USCIS. If USCIS approves the application, the student will receive a Form I-766, "Employment Authorization Document," (EAD) from USCIS and can begin working.
On-campus employment includes work that takes place at the school or an educationally affiliated off-campus location. Employment located on campus that does not directly involve services to students (such as construction work) does not qualify as on-campus employment.
