Opening A Us Company: International Student Opportunities

International students on an F-1 visa in the United States may be interested in starting their own business. While this is possible, there are several limitations and challenges to be aware of. F-1 visa holders can create a business plan and launch their business, but they are not permitted to run the business or be actively involved in its operations. This means that they cannot earn a salary or revenue from the business. To be involved in running the business, F-1 visa holders must apply for Optional Practical Training (OPT), which allows them to work for up to 12 months, with possible extensions for certain STEM majors. Additionally, international students may face difficulties in accessing capital for their business due to investor hesitancy. Despite these challenges, starting a business as an international student in the US can be an enriching experience, and there are resources available to help navigate the complex process.

Can an international student open a company in the USA?

F-1 visa limitations

International students on an F-1 visa are prohibited from engaging in business. However, they can establish a business and create a business plan, but they cannot run the business or be involved in its daily operations. This means that they cannot earn a salary or revenue from the business. F-1 visa holders can, however, invest in their company and receive dividends, but they must file an annual income tax return if they earn dividend income.

F-1 visa holders can hire employees to run their company, but they must ensure that their business complies with all relevant laws and regulations, including obtaining the necessary licenses, permits, and insurance. They can also apply for Optional Practical Training (OPT), which allows them to work for a business related to their field of study for a specific timeframe. OPT can be authorized during or after the completion of their studies and can be extended for an additional 24 months for certain STEM majors.

F-1 visa holders must also be mindful of the restrictions on their ability to work, including when and where they can work. For example, F-1 students may not work off-campus during their first academic year and any off-campus employment must be related to their area of study and authorized by the Designated School Official and USCIS.

To avoid any negative immigration consequences, it is recommended that F-1 visa holders consult with a qualified immigration attorney to ensure they do not engage in unauthorized work.

Business planning

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 engage in the daily operations of the business or receive compensation. This means that while they can establish a company, they cannot run it or be employed by it.

Planning is an essential part of starting a business and ensuring its growth and profitability. Here are some key steps and considerations for international students planning to start a business in the US:

Market Research and Regulatory Requirements:

Conduct thorough market research to determine the demand for your product or service in the US market. Understand your target customer base and assess any regulatory requirements, licenses, and permits needed to start your business. These requirements may vary based on your industry, location, and other factors.

Business Plan:

Develop a comprehensive business plan that outlines your business goals, strategies, financial projections, and methodology. This plan should include an executive summary, company description, market analysis, organization and management structure, and details of your products or services. It should also address funding requirements and any key partnerships or assets.

Funding:

Determine your funding sources, which may include personal savings, loans from family and friends, investors, or venture capitalists. Prepare the necessary documents, such as your business plan and pitch deck, to approach potential investors.

Location and Company Name:

Choose a business location that aligns with your customer base and consider the additional costs associated with the location, such as rent and utilities. Select a company name that is memorable and aligns with your branding and marketing strategy.

Hire Quality Staff:

Attract talented employees by offering competitive packages, which may include providing equity in the business or creating a positive work culture. Ensure that you understand how to hire and manage employees, as well as your legal responsibilities as an employer.

Stay Compliant:

As your business grows, stay legally compliant with taxes, employment laws, and any industry-specific regulations. Consider seeking guidance from organisations like the Small Business Administration (SBA) to navigate these requirements effectively.

Running the company

Running a company as an international student on an F-1 visa in the United States comes with several limitations and challenges. While F-1 visa holders can create a business plan and launch a company, they are restricted from actively engaging in the day-to-day operations and management of the business.

Ownership and Investment

Although F-1 visa holders cannot own a business or receive compensation from it, they can be passive investors or partners. This means they can invest their own money in the business and receive returns in the form of dividends. However, they cannot actively manage the business or make operational decisions.

Optional Practical Training (OPT)

F-1 visa holders can apply for Optional Practical Training (OPT), which allows them to work in the United States for up to 12 months, as long as the employment is related to their field of study. The OPT can be completed before or after the student's program of study. For STEM (Science, Technology, Engineering, and Mathematics) majors, the OPT period can be extended for an additional 24 months. However, once the OPT period ends, the student cannot continue working for their business unless they change their visa status or obtain a different work authorization.

Hiring Employees

International students on F-1 visas can hire employees for their businesses as long as they comply with all relevant employment laws and regulations. This includes ensuring that the business has the necessary licenses, permits, and insurance required by both state and federal regulations.

Business Location and Operations

The location of the business will impact the customer base and additional costs, such as rent and utilities. International students should also be mindful of the regulatory requirements specific to their industry and business activities. Compliance with these regulations is essential to avoid legal issues.

Access to Capital

Accessing capital as an international student entrepreneur can be challenging. Some U.S. investors may be hesitant to invest in startups with international student founders due to visa status concerns. However, an international background can also be an asset for attracting foreign investors and expanding the business's marketing potential.

In summary, while international students on F-1 visas can establish a company in the United States, they face restrictions on their involvement in the day-to-day operations. They can be passive investors, receive dividends, and apply for OPT to work for a limited period. To successfully run the company, they will need to hire employees, ensure compliance with regulations, and carefully navigate access to capital.

Accessing capital

One option is to use personal savings or loans from family and friends. F-1 visa holders can also seek funding from venture capitalists or angel investors. However, many U.S. investors may be hesitant to invest in a startup with an international student as one of the founders due to the potential immigration issues adding another layer of risk to the investment. Having a diverse startup team that includes American citizens may help overcome this challenge. Additionally, an international background can be an asset when marketing your expansion potential and ability to attract foreign investors.

Another option for accessing capital is to work with your education institution. Your startup could enter into an agreement with the institution, where it acts as an agent, independent contractor, or joint-venture partner. The institution would then employ you as an employee to perform the work on its behalf. This option, however, requires a close relationship with the institution and may not be feasible for all international students.

A third option is to apply for the H1-B Visa program, which allows international students to work in the U.S. for up to 3 years and is considered a dual-intent visa, providing a pathway to permanent residency. Under this program, however, international students are barred from holding a majority stake in their company.

Finally, international students on an F-1 visa can also apply for Optional Practical Training (OPT), which allows them to work for up to 12 months related to their program of study. F-1 students who have graduated with a degree in a STEM field may be eligible for a 24-month extension.

Visas and pathways

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 run the business or engage in its operations, including receiving compensation or a salary. F-1 visa holders can, however, invest in their company and receive dividends.

International students on an F-1 visa who wish to start a business in the US have several pathways to consider. Here are some options to explore:

• Optional Practical Training (OPT): F-1 students can apply for OPT, which allows them to work in the US for up to 12 months in a field related to their major area of study. The OPT can be either pre-completion or post-completion and must be related to the student's program of study. Certain STEM majors may be eligible for a 24-month extension of the post-completion OPT.
• International Entrepreneur Rule: This pathway requires the business to have been formed within the five years preceding the application and to have substantial potential for rapid growth and job creation. It also requires the applicant to have a certain amount of ownership in the business.
• E-2 Treaty Investor or EB-5 Immigrant Investor: These pathways require the applicant to make an investment or have an ownership interest in the startup entity. The amount of investment and the specific requirements may vary, so it is important to consult with an attorney or immigration specialist.
• L-1 Nonimmigrant Visa: This classification is for businesses that have a qualifying relationship (parent, subsidiary, or affiliate) with a foreign company that the applicant worked for abroad for at least one year.
• O-1A Nonimmigrant Visa and EB-1A Immigrant Visa: These visas are for individuals with "extraordinary ability" who have achieved sustained national or international acclaim in their field of expertise.
• H1-B Visa: While not specifically mentioned as a pathway for entrepreneurs, the H1-B visa is an option for international students starting a business in the US. It allows for a grace period of up to three months of unemployment before requiring a change in visa status or departure from the country.

It is important to note that the visa requirements and pathways can be complex, and it is always recommended to consult with an immigration attorney or advisor to determine the most suitable option for your specific situation.

Frequently asked questions