Can a Student Present in the U.S. on an F-1 Visa Open a Business?
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Generally, F-1 visas are designed for foreign nationals who come to the United States to engage in a full course of study. Such studies can range from elementary school attendance to post-doctorate programs, including accredited language training programs. Student visas are relatively easy to get, as long as students can demonstrate that they: 1) Have residence abroad that they have no intention of abandoning, 2) Intend to depart from the United States as soon as their status expires, and 3) Have sufficient funds to stay in the United States for the duration of their school enrollment. Because F-1 visas are meant for individuals pursuing education on a temporary basis, it is fairly restrictive in terms of what activities a student may engage in.
As a rule, off-campus employment, including any kind of self-employment, is prohibited without specific approval by United States Citizenship and Immigration Services (“USCIS”). Any unauthorized employment will be considered a violation of visa status and will make a student removable.
Students can engage in on-campus employment without prior approval if it’s performed on school premises or at an off-campus location that is educationally affiliated with the school. Such employment must be an essential part of the student’s educational program and cannot exceed 20 hours a week while school is in session. However, a student may work on-campus full time if the school is not in session.
After a student finishes a full year of studies and is doing well academically, they may engage in off-campus practical training directly related to their major area of studies and authorized by a school official. A student eligible for off-campus practical training may start a business and be self-employed, as long as the business is related to their degree program.
In short, current regulations allow employment only if it’s directly related to the original goal of the F-1 visa, which is education. Any other kind of employment, including self-employment or volunteering, is prohibited.
Despite the limitations on self-employment, U.S. immigration law does not prohibit students from investing in their own business. Unfortunately, the line between self-employment and purely investor activities is often blurry. The Sixth Circuit Court of Appeals ruled that a student who opened his own ice-cream truck business violated the terms of his student visa. The student purchased the ice cream, stocked the trucks, and drove them in emergencies.[1] The student participated in the day-to-day running of the business and was therefore more than just an investor-manager.
It appears that starting and investing in a company is permissible, as long as a student does not work for the company, run the business, or receive any kind of compensation. The permissible activities include some limited preparation, preliminary steps and planning of the business. Any other management activities have to be performed by employees or partners who are authorized to legally work in the United States. As long as a student is a purely passive investor, they can receive dividends from their investment. In such circumstances, a student has to file an income tax return with the IRS.
Upon graduation, and provided that the company is operating under the supervision of another partner or a board of directors, the company can petition USCIS for an H-1B visa for the F-1 visa holder. H-1B visas are available for foreign nationals employed in a specialty occupation for which a Bachelor’s degree is required. More information about H-1B visas can be found on our website.
[1] Wettasinghe v. United States Department of Justice, Immigration & Naturalization Service, 702 F.2d 641 (U.S. App. 1983)