Startup Founders Series - Part 1
Can I start and work on my company on a B-1 Business Visitor Visa or ESTA Business Visitor Visa Waiver?
Our clients ask us if they can start a US company with a B-1 Visa or ESTA Business Visitor Visa Waiver, and what is permissible or not under this status.
You can set up and own a business while on a B-1/ ESTA status, but you cannot manage the business, and thus be an officer of the company (ie CEO) without work authorization.
Working in the US – including working on your own business, even without pay – requires work authorization. All of the business immigration visas (E, L, O, H, TN, etc.) are designed to allow visa holders to work for a specific company – the company sponsor or petitioner. In addition, many visas prevent individuals from self-employment.
What is permissible without work authorization?
Under Matter of Hira ruling, permissible activities are activities that are incidental to work that will principally be performed outside of the United States, and the principal place of business and the actual place of eventual accrual of profits, at least predominantly, shall remain in the foreign country.
When it comes to performing business activities, the list of permissible activities can be found at 9 FAM 402.2-5 in the Department of State’s Foreign Affairs Manual. Those activities include negotiate contracts, consulting with business associates, participating in conventions, conferences, or seminars. In addition, activities that further international commerce and business are permissible under B-1 status. You can learn more those activities by clicking here.
A member of Board of Directors of a U.S. corporation can enter the US to attend a board meeting or to perform other functions resulting from membership on the Board. Foreign corporate personnel can come to the US to set up a US subsidiary. E-2 investors can use a B-1 to explore E-2 investment opportunities, as explaining in more details here. Those pursuing an EB-5 immigrant visa may also be issued a B-1 to examine or monitor potential qualifying investments, as long as they do not intend to apply for a green card with an adjustment of status in the United States.
On the contrary, activities that are not permissible include managing the business (ie as CEO), including overseeing the business operations, hiring/ firing employees, or performing productive labor. It does not matter whether the activity is compensated: if a US worker could have been hired to perform the activity or services, it constitutes a displacement of a US worker, and the whole US immigration law system is designed to protect the labor market for US workers.
In addition, a business visitor may not receive a salary and be on payrolls from a US source. The US entity may only provide reimbursement for incidental expenses such as meals, lodging, laundry, or other basic expenses.
Foreign entrepreneurs should never take any risk with immigration, because inadvertent violations may seriously impact any chances of working, living or traveling to the United States for good. When starting a business, it is always better to play it safe by applying for work authorization, or by co-founding the company with a US citizen or Lawful Permanent Resident (LPR), or by hiring a US worker.
Summary: Startup founders and entrepreneurs can set up a company in the United States, however, the list of permissible activities is limited to what is allowed under the B-1 Business Visitor Visa status, or ESTA business visitor visa waiver status.
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