Creating Businesses In The Usa As An International Student

International students on an F-1 visa in the United States can start a business, but they are not permitted to run it or be actively involved in its daily operations. F-1 visa holders can, however, invest in their company and receive dividends, as long as they file an annual income tax return. To start a business, international students must conduct market research, create a business plan, and obtain the necessary licenses, permits, and insurance. They can also hire employees as long as they comply with employment laws and regulations. To actively work for their business, F-1 visa holders must apply for Optional Practical Training (OPT) which must relate to their program of study.

F-1 visa limitations and opportunities

The F-1 student visa is a non-immigrant visa for international students who want to pursue a degree, diploma, or certificate at an accredited academic institution in the US. It is the most popular student visa in the country, with over 1.2 million holders.

F-1 Visa Limitations

One of the limitations of the F-1 visa is that holders cannot be found "engaging in business." This means that while F-1 visa holders can establish a business and create a business plan, they cannot run the company or conduct business activities that result in compensation or a salary. They can, however, invest in their own company and receive dividends, as this is considered passive income. Additionally, F-1 students may not work off-campus during their first academic year, and any off-campus employment after that must be related to their area of study and authorised by the Designated School Official and USCIS.

F-1 Visa Opportunities

Despite the limitations, the F-1 visa does provide some opportunities for international students to start a business in the US. They can use personal savings, loans from family and friends, or venture capitalist funding to launch their business. Additionally, F-1 visa holders can receive OPT authorisation, which allows them to work off-campus. With careful planning, F-1 visa holders can set up their business for initial success by conducting market research, choosing a suitable business structure, and ensuring they have a capable team in place to run the company.

International Entrepreneur Rule

International students on an F-1 visa can create a business plan and launch their own business in the United States. However, they are not permitted to work for or run their business while on an F-1 visa. F-1 visa holders can, however, invest in their company and hand it over to a capable team they trust.

To work for their business, international students 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. F-1 visa holders can also apply for the International Entrepreneur Rule (IER).

The International Entrepreneur Rule (IER) is a pathway for alien entrepreneurs to work in the United States. Under the IER, the Department of Homeland Security (DHS) may use its authority to grant a period of authorized stay, called "parole," to entrepreneurs who demonstrate that their stay in the US would provide a significant public benefit through their business venture. This rule allows entrepreneurs to work solely for their startup business.

Up to three entrepreneurs per startup can be eligible for parole under the IER. Entrepreneurs may be living abroad or already in the United States when they apply. To be eligible, the startup entity must have been formed in the United States within the past five years and have substantial potential for rapid growth and job creation. Applicants must also demonstrate a substantial ownership stake (at least 10% at the time of the initial application) and a central and active role in the startup's operations.

The IER has unique advantages compared to other immigration options for entrepreneurs. It does not require sponsorship or a specific visa category, and instead focuses solely on startup potential and public benefit. The IER application process involves submitting Form I-941, Application for Entrepreneur Parole, along with supporting documentation, and paying the associated fees. The spouse and children of an entrepreneur granted parole under the IER may also be eligible for parole and can apply for employment authorization. The initial period of parole is granted for up to 2.5 years, with the possibility of an extension for a maximum of 5 years.

Nonimmigrant visa classifications

International students on an F-1 visa can create a business plan and launch their own business in the USA. However, they are not permitted to run the business or engage in business activities after it has been founded. F-1 visa holders can, however, apply for Optional Practical Training (OPT) to get valid employment authorization.

Now, here is an overview of some nonimmigrant visa classifications:

L-1 nonimmigrant visa classification

The L-1 nonimmigrant visa classification requires the new office to have a qualifying relationship (parent, subsidiary, or affiliate) with a foreign business that employed the applicant abroad for at least one year.

O-1A nonimmigrant visa classification

The O-1A nonimmigrant visa classification is for those with "extraordinary ability" who have sustained national or international acclaim in their field of expertise.

EB-1A immigrant visa classification

The EB-1A immigrant visa classification is also for those with "extraordinary ability" and requires the applicant to have sustained national or international acclaim in their field of expertise.

H-1B Specialty Occupation (nonimmigrant visa)

The H-1B nonimmigrant visa classification requires the applicant to work in a specialty occupation related to their degree. It also requires at least a U.S. bachelor's degree in a specific specialty or its equivalent related to the position.

E-2 nonimmigrant visa

The E-2 nonimmigrant visa requires the applicant to have the capacity to develop and direct the enterprise.

K-1 Visa

The K-1 Visa is for fiancé(e)s of U.S. citizens.

K-3 Visa

The K-3 Visa is for spouses of U.S. citizens.

These are just a few examples of nonimmigrant visa classifications. There are many other visa categories available, and the requirements for each visa type vary. It is always recommended to consult with an immigration attorney or expert to determine the best option for your specific circumstances.

Regulatory requirements

International students on an F-1 visa can create a business plan and launch their own business in the USA. However, they are not permitted to run the business or be actively involved in its operations after it has been founded. They can, however, apply for Optional Practical Training (OPT) authorization, which is considered a valid employment authorization for working as long as the employment is related to their field of study.

• Visas and Immigration Status: The F-1 visa is a non-immigrant visa that allows international students to pursue academic studies in the USA. However, it has restrictions on business ownership and active involvement in business operations. International students can consider other visa options, such as the H1-B Visa program, which allows them to work in the USA for 3 years and hold a stake in their company.
• Business Licenses and Permits: All businesses in the USA, including those started by international students, must comply with state and federal regulations and obtain the necessary licenses and permits. For example, a food business will require a food license from the local health department.
• Tax Compliance: International students who receive dividend income from their businesses will need to file an annual income tax return.
• Employment Laws: International students who hire employees for their businesses must comply with all relevant employment laws and regulations.
• Exit Strategy: International students should be mindful of the complex process of exiting their startup in the USA. They may need to consult with an attorney or accountant to ensure compliance with all regulatory requirements.
• Investment and Ownership: International students should be aware of the challenges in accessing capital and attracting investors due to their visa status. They should also consider the restrictions on ownership in certain business entities, such as the S corporation, which bars non-resident aliens from becoming investors.

OPT authorization

International students on an F-1 visa can create a business plan and launch their own business in the USA. However, they are not permitted to work for or run their business while on an F-1 visa. They can, however, apply for Optional Practical Training (OPT) which is considered a valid employment authorization for working as long as the employment is related to their field of study.

F-1 students can apply for OPT, which is temporary employment directly related to their major area of study. OPT authorization can be granted for up to 12 months before completing academic studies (pre-completion) or after completion (post-completion). Students can apply for OPT after being enrolled for at least 9 months, but they cannot begin employment until they receive their Employment Authorization Document (EAD) from the U.S. Citizenship and Immigration Service (USCIS) and have been enrolled for at least a year.

The OPT application process involves several steps and players, and USCIS can take up to 90 days to process the application. Students must work closely with their school's International Student Office, which must authorize CPT and OPT requests. Students must also ensure they do not make mistakes that could delay the final USCIS-authorized OPT start date, such as not filing Form I-765 within 30 days of the DSO OPT recommendation.

F-1 students who have graduated with a degree in a STEM field may be eligible for a 24-month extension of their post-completion OPT if their degree is listed on the Department of Homeland Security STEM-Designated Degree Program List and other criteria are met.

Frequently asked questions