Dropshipping: International Students' Side Hustle Dream?

Dropshipping is a popular model for e-commerce that allows international students to become active participants in the world of online business. It is easy and inexpensive to start a dropshipping company, and it offers students the opportunity to create a business that suits their busy schedules and finances. However, there are some legal considerations to take into account, such as visa restrictions and tax laws, which vary depending on location. For example, international students on an F-1 visa in the US are not allowed to take up jobs in the US job market, but they are allowed to create revenue and businesses as it brings money to the country.

Characteristics of Dropshipping for International Students

F1 visa and dropshipping

International students on an F1 visa in the US are not permitted to be actively employed or take up jobs in the country. However, there is no restriction on creating businesses and generating revenue. Dropshipping can be considered a form of arbitrage, which is a violation of the F1 visa status.

To be compliant with the law, international students on an F1 visa can hire someone to run their dropshipping business and act as passive investors. This way, they can demonstrate to the U.S. Citizenship and Immigration Services (USCIS) that they are not actively involved in the day-to-day operations of the business and are, therefore, not violating their visa status.

It is important to note that any income earned, regardless of the bank account it goes into, is not permitted for F1 visa holders. This includes income from dropshipping or freelancing, unless it is from authorised on-campus employment or Curricular Practical Training (CPT)/Optional Practical Training (OPT).

International students on an F1 visa considering dropshipping are advised to consult with an immigration attorney or a licensed attorney specialising in immigration law to ensure they comply with all relevant laws and regulations.

Owning a business as an international student

As an international student, you may want to start your own business to gain work experience and earn some money. Dropshipping is a popular business idea for students due to its low overhead and ease of management. However, before starting any business as an international student, it is crucial to understand the legal implications and restrictions.

In the United States, international students on F-1 visas are generally not allowed to work or engage in unauthorized employment. Starting a business is possible, but you must ensure that you are not actively involved in the day-to-day operations. This means that you can own the business but must hire someone else to run it. Your involvement should be "passive," where you make the initial investment, but the operational work is done by others.

If you are an international student in the US, you will have to pay taxes to the IRS and your own country. It is important to consult with an immigration attorney or a tax attorney to understand the specific regulations and tax implications for your situation. They can provide guidance on how to structure your business legally and comply with any relevant laws.

Additionally, consider the practical aspects of owning a business as an international student. Balancing your studies and business demands can be challenging, so ensure you have the time and energy to manage both effectively. Also, assess the financial risks and ensure you have the necessary funds to invest in the business without compromising your student commitments.

While owning a business as an international student is possible, it requires careful planning, legal compliance, and a realistic assessment of your capabilities. Remember to seek professional advice and thoroughly understand the laws and regulations in your country of study to ensure a successful and lawful business venture.

Hiring someone to run your business

As an international student, you can start a dropshipping business, but it's important to ensure that you comply with any visa requirements and tax regulations. One way to do this is to structure your business so that it appears as a "passive" investment, where you are the financial backer but are not actively involved in the day-to-day operations. This means hiring someone to run the business for you.

Define the Role and Responsibilities:

Dropshipping businesses have unique requirements, so it's important to clearly define the role and responsibilities of the person you will hire. They may include tasks such as managing supplier relationships, handling customer service, monitoring sales data, and executing marketing strategies through social media and email campaigns.

Identify the Skills and Experience Needed:

To effectively run your dropshipping business, the person you hire should have certain skills and experience. Look for candidates with a strong understanding of e-commerce, including experience with platforms like Shopify. They should also possess excellent organizational and communication skills, be detail-oriented, and have some knowledge of digital marketing and SEO.

Screen Candidates:

You can find dropshipping talent on freelance platforms like Upwork, where you can post your job for free and receive bids from interested candidates. Screen these candidates based on their profiles, reviews from past clients, and relevant experience.

Conduct Interviews:

Prepare a set of interview questions to assess the candidate's suitability. Ask about their experience with dropshipping, their problem-solving skills, and their approach to managing supplier relationships and customer service.

Make the Hire:

Once you've found the right candidate, discuss the details of the working arrangement, including working hours, communication expectations, and performance metrics.

By following these steps, you can hire someone to run your dropshipping business while you focus on your studies and comply with any visa-related restrictions. Remember to stay involved at a high level and ensure that your business complies with all legal and tax requirements.

Paying taxes in your home country and the US

International students on F1 visas in the US are generally not allowed to be involved in the day-to-day running of a business. This includes dropshipping, which is considered a form of employment and is therefore a severe violation of F-1 immigration status. However, some sources suggest that if your involvement in the business is very limited, you may be able to get away with it.

Regardless of whether you are employed or self-employed, as an international student in the US, you will need to file a tax return. This is a condition of your visa, and not doing so by the deadline of April 15 (or the following Monday if that falls on a weekend) could result in problems with or revocation of your visa, as well as possible ineligibility for a green card.

International students are entitled to a number of benefits and exemptions, so many will not owe anything. If you are a non-resident alien for tax purposes and you file a proper tax return in the US, the US will not tax your income from non-American sources.

If you have earned income in the US, you will have to pay federal and state income taxes. You will need to complete Form 1040NR or 1040NR-EZ (the easy version of 1040NR). Some countries have a tax treaty with the US, and international students from those countries may be exempt or have a reduced rate.

If you worked in the US and received taxable employment compensation, you must apply for a Social Security Number (SSN) with the Social Security Administration. If you are not eligible for an SSN, you must apply for an individual taxpayer identification number (ITIN) from the IRS to use on forms.

Seeking legal advice

While there is some general guidance available online, it is important to remember that this should not be taken as legal advice. The sources suggest that international students can own a business but cannot work in it or receive compensation for services rendered. This would constitute unauthorized employment and could lead to sanctions.

To ensure you are compliant with the law, it is recommended that you seek advice from an immigration lawyer or tax attorney who can provide guidance specific to your situation. They will be able to advise you on the regulations and requirements for your specific country or region. For instance, in the United States, F1 visa students are not permitted to take up jobs, but they can create revenue and businesses as this generates money for the country.

When consulting a legal professional, be sure to have all the relevant information about your situation, including your visa status, the nature of your business, and any other pertinent details. It is also important to remember that the laws and regulations regarding international students and business ownership can vary depending on your location, so ensure that you are seeking advice from a lawyer who is familiar with the laws in your country or region.

In addition to seeking legal advice, it may also be beneficial to consult with a business advisor or accountant who can help you navigate the tax implications of owning a business as an international student. They can advise you on issues such as tax registration and deductions, and any specific rules that may apply to your business structure.

Frequently asked questions