August 3, 2011 | 12:35 pm

H-1B visa - an unconventional option for foreign entrepreneurs

Posted by Cedric M. Shen

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Foreign investors and entrepreneurs have had limited options when starting a new business in the United States.  For the most part, the E-2 treaty trader visa and the EB-5 investor green card were the only two options.  Both of these require an entrepreneur to invest a substantial amount of capital, as well as to demonstrate job creation.

However, USCIS Director Alejandro Mayorkas recently announced a series of new initiatives that, among others, adds another avenue for foreign investors and entrepreneurs to obtain a work visa in the United States.  While the initiative is new, the vehicle is not.  Namely, entrepreneurs who start a new business in the United States may now qualify for an H-1B visa.

The H-1B is a temporary work visa designed for employees in a “specialty occupation.”  Traditionally, the H-1B requires a U.S. employer to petition a foreign employee for the visa.  If approved, the employee may work for the employer in that specialty occupation for up to six years.  A key requirement in the H-1B visa is that the employer has a right to control the employee.  This includes the ability to hire and to fire the employee.  Thus, the requirements for an H-1B visa fly directly in the face of an entrepreneur trying to start a business in the United States.  Generally, the entrepreneur is the owner and employer.  The entrepreneur cannot act as an employee and is unable to control him or herself.

Faced with criticism and a desire to increase job growth in the United States, the USCIS has clarified the H-1B requirements in order to allow certain foreign entrepreneurs to qualify.  Thus, foreign entrepreneurs who start their own businesses in the United States may now self-petition for an H-1B visa as long as their business entity is structured in a manner.  A petition still has to show an employer-employee relationship between the employer (company) and the entrepreneur.  However, when the entrepreneur is also an owner, he/she may still qualify as a beneficiary of an H-1B if the company’s corporate governance, such as board of directors, is structured in a manner that allows a board to exercise control over the entrepreneur – including the right to fire the entrepreneur.

There are certainly benefits for an entrepreneur to seek an H-1B visa.  The entrepreneur does not have to invest the high amount of capital that he/she would for an E-2 or EB-5, which can be anywhere from $250,000.00 to $1 million.  Furthermore, unlike the E-2 visa, the H-1B is a path to citizenship.

Entrepreneurs should also consider self-sponsorship of a green card under the EB-2 National Interest Waiver (NIW) category.  The EB-2 category generally applies to employers sponsoring employees with advanced degrees.  However, the USCIS clarified that a foreign entrepreneur may self-sponsor for a green card under this category if he/she can show that the business would benefit the national interest of the United States.