MichaelX

I am trying to figure out how to start and participate in a business on h1b visa and stay safe from IRS/INS.

I know, I can be a passive investor and will own 50% of LLC, so my friend will be handling day-to-day activities, sign all documents, handle things related to sales and all client facing activities. From my side I will be responsible for manufacturing the product.

If we become profitable I will need to declare my profit somehow... I am a bit scared to do this as dividends because it might be a red flag for IRS or INS during my CG processing. So what I can do is to register a company in Canada (I have a Canadian PR status) and sell manufactured products to my friend’s US company at the price to cover my contribution to the American company (where I am listed as a passive investor). While my friends will be handling distribution in the US. This money will go to my Canadian bank account and I will pay taxes in Canada.

Does this scheme work?

Thank you

Noorah101

Where will you physically be located when you do the manufacturing of the product? Where are you now?

What is CG? Do you mean GC (green card)? Are you currently in a US green card process? Does this mean you're in the USA at the moment? What's your status in the USA?

I don't see a problem with the above scenario, as long as YOU are not actually physically doing the manufacturing in the USA (if you don't currently have US work authorization). If the Canadian company is simply selling the product to the USA, I don't see a problem there. The only problem would be if you currently are in the USA and don't have work authorization, and YOU want to physically do the manufacturing (as it sounded in your first paragraph).

Rene

markwm

All sounds a bit convoluted and I don't think it's an H1-B visa to cover this. You really need to speak with an immigration lawyer to properly protect yourself and ensure that you get the correct visa.

Noorah101

Your question seems similar (if not the same) as one you posted in January 2012:

http://britishexpats.com/forum/showthread.php?t=744747

Rene

Nutmegger

Doesn't he mean that he is currently on an H1-B and is worried about being involved in a side project for another company?

Bob

If you're getting the Greencard and have got to the point where you have the EAD, you're all set.

If you're not, then you can't work for this side venture.

Noorah101

But even if he's on an H1B, still working for his H1B sponsor, and has his EAD, I don't think he can work for both employers, can he? Doesn't it need to be one or the other?

Rene

markwm

Doesn't the EAD render the H1-B moot? I'm pretty sure I was told by my lawyer that the H1-B is no longer valid once you have the EAD.

Noorah101

I don't know, to be honest.

Rene

ian-mstm

No, you won't... not if you're doing the manufacturing in the US. If you're on an H-1B and you're in the US, you can work only for the H-1B sponsor. If the business is in Canada and you're in Canada when you do the manufacturing, that's not a problem... but once you cross the US border you can't do any manufacturing. If you're in the US you can be a passive investor, but you can't work for your company, and you can't work for yourself.

BTW, the INS ceased to exist over 10 years ago! As for the IRS, as long as your H-1B income is coming from your H-1B sponsor, and your manufacturing income is being earned while you are physically in Canada, it won't be an issue.

Ian

Bob

Doesn't matter, the EAD allows him to work for whoever, so he can use that to work for the current employer and someone else.

scrubbedexpat099

Just wondering if you are related to the Michael X in The Bank Job?

Would the manufacturing be done abroad?

MichaelX

I am currently in the US on h1 visa and I don't have EAD yet.

I am thinking of manufacturing this product in the US as a side project. The product I am talking about is quite simple so I can order it from a printing house or even do it myself at home.

Also, I KNOW that it violates H1 visa rules... but I am trying to find a way how to minimize the risks. You know, several famous IT companies (e.g. Borland) were founded by tech entrepreneurs who came to the US by tourist visas.

Noorah101

In that case, no...you can't do this.

Have the manufacturing done by someone other than yourself, or have it done outside the USA. Those are the only two ways I can think of to keep you from violating the terms of your H1 visa.

Rene

MichaelX

I already said that I know that it violates H1b visa rules.

I can be travelling between Canada and the US, I can buy materials using my Canadian's company bank account, so how can someone tell for sure where it was manufactured?