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F-1 Start-Up Activities
Permissible Work for the Immigrant Student Entrepreneur
It is 2 am on a Monday morning; you’re on your 3rd cup of coffee since the Sunday Night football game ended, and studying for midterms…sort of. Your book and notes are off to the side because you and your roommate are working on something that is critical to your start-up’s potential success. Your roommate, and business partner, who was born in the U.S., looks up and says “Hey, did you ever check with the Foreign Student Office to see if you can legally start this business?” You pause, and think to yourself “of course I didn’t check…I’m trying to figure out how to conquer the world!”
But you really have no clue…there’s nothing on your I-20, F-1 visa, or I-94 that says anything helpful, other than constant reminders that you are a foreign student in the United States and you cannot work unless you get special authorization from the government.
Over the next few hours, your roommate’s words keep echoing in your mind and you think to yourself, “What if I really can’t start a business now, what will happen to all my hard work and sleepless nights?” The next morning you head straight to the Foreign Student Office and ask: "Can I start a business as an F- 1student?” The Foreign Student Officer says “You can’t work until you graduate and get OPT”. “You walk out perplexed, and ask yourself: Does starting a business really mean I am working?” Who do I call…Ghostbusters’? Crisis Services? ICE? The government? STOP!
Maybe I should call a good immigration lawyer?
The common belief is that as an F-1 student, you can only go to school, and pursue a full course of study, such as a bachelor’s, masters or doctorate, and that an F-1 student may not work without prior authorization from USCIS. Of course, if you do work without USCIS authorization, and get caught, then you would have failed to maintain your F-1 status, and may have to leave the U.S. You may even be deported, which is usually not a fun experience.
What constitutes unauthorized employment is somewhat of a gray-area in immigration law. Unauthorized employment is generally defined as “any services or labor performed by an alien for an
employer within the U.S. that is not authorized.” Unfortunately, immigration law does not provide a clear definition of “employment” in relation to F- students. But based on over 20 years of practicing immigration law, and focusing on helping immigrant entrepreneurs, many of whom are or have been F-1 students; I have some guidelines for activities you may undertake that don’t violate your F-1 status.
One way to understand what you can do is to know what you can’t do. For example, if you are acting like an investor-manager, engaging fully in the daily activities of a business and managing operations, this is considered unauthorized employment. In one case, an F-1 student purchased a fleet of ice cream trucks as a business investment. He leased the trucks to ice cream vendors and collected rental income and received a percentage of the ice cream sales. The student participated in the day-to-day activities of the business by buying the ice cream, stocking the trucks and occasionally driving and selling ice cream. These activities constitute unauthorized employment.
On the other hand, owning a business alone does not constitute employment. Also, many start-up activities are permissible. You can incorporate a company, conduct market and other research, hold and attend meetings, and develop products, goods or services. These activities will not jeopardize your F- status. In addition, raising money through presentations, and negotiations with Angel Investors, VCs and lawyers to help fund the company would not jeopardize your F-1 status since these are passive activities and not day-to-day business duties. Participating in day-to-day activities of the business is not allowed. The question is whether the activities you perform for the business are activities generally performed by an employee in an “employer-employee” relationship. It is irrelevant for immigration whether you get paid or not; it is the activity that you perform that is relevant.
The key to avoiding unauthorized F-1 activity is to create a level of separation between the daily activities of the company and the Board/Shareholder level decisions. As an F-1 student, you should avoid business activities that are more “active” than “passive.” Hiring and managing workers located in the U.S. is definitely unauthorized. As a principal shareholder and Board member however, you can elect an officer, who could then hire and direct U.S. workers. Furthermore, major decisions concerning day- to-day activities could be presented to the “Board” by the officer (your U.S. business partner) for approval. Sure, this may seem like semantics to you, but that’s how the law works, and a good lawyer will advise you what is black, what is white, and, most importantly, what is in the grey area, including the cost/benefit of performing grey activities. Arguably, the following are permissible business activities that should not jeopardize your F-1 student status:
Valley’s technology and engineering companies were started by immigrants. The majority came to the United States as students.
Figuring out a way to stay in the U.S. after graduation is a critical issue as it may impact your whole future. If not done properly, it may deprive you of a lifetime opportunity of becoming one of those immigrant entrepreneurs who made and will continue to shape the U.S. economy and the country.
