OtisUsenet

Hi,

Are H1B visa holders allowed to start Sole Proprietorships?

That is, while keeping the H1B sponsorship from their regular employer,
can they start a Sole Proprietorship on the side? (IT consultancy type
of business)

If so, what about W-9s and taxes?
Should one provide information for W-9s to the clients of this Sole
Propriatorship?

What if the Sole Prop. is profitable, what happens to the profits?
Do they simply have to stay in the bank, since the owner must not pay
him/herself in order not to break the immigration law? In that case,
wouldn't the owner be paying taxes on these profits as taxable income,
yet would be unable to get to that income, because he/she couldn't pay
him/herself?


Thank you.

Joe Feise

OtisUsenet wrote on 11/24/06 09:58:

    > Hi,
    >
    > Are H1B visa holders allowed to start Sole Proprietorships?
    >
    > That is, while keeping the H1B sponsorship from their regular employer,
    > can they start a Sole Proprietorship on the side? (IT consultancy type
    > of business)


A person on H1 can start a business, but the person can *not* work for it, in
any form, without the appropriate work authorization.
In other words, on H1 you are basically limited to being a passive investor.

-Joe
--
I am not a lawyer.
For reliable advice, consult a competent immigration attorney.

OtisUsenet

Thanks, Joe.

Are there any opinions out there about outfits like this:
http://www.independenth1b.com/
They look like a legit way to get around this limitations, but I'm
wondering if anyne has any experiences with it.

Thanks.

Joe Feise wrote:
    > OtisUsenet wrote on 11/24/06 09:58:
    > > Hi,
    > >
    > > Are H1B visa holders allowed to start Sole Proprietorships?
    > >
    > > That is, while keeping the H1B sponsorship from their regular employer,
    > > can they start a Sole Proprietorship on the side? (IT consultancy type
    > > of business)
    > A person on H1 can start a business, but the person can *not* work for it, in
    > any form, without the appropriate work authorization.
    > In other words, on H1 you are basically limited to being a passive investor.
    > -Joe
    > --
    > I am not a lawyer.
    > For reliable advice, consult a competent immigration attorney.

kaushick

This looks like just another consulting company promising 90% bill rate. Go to www.sulekha.com and you'll find 100's like this.

Joe Feise

    >> Thanks, Joe.

    >> Are there any opinions out there about outfits like this:
    >> http://www.independenth1b.com/
    >> They look like a legit way to get around this limitations, but I'm

    >> wondering if anyne has any experiences with it.


That would be nothing more than a consulting company, claiming (as a lot of
consultants do) wrong things.
They just "rent" you out to some client. You are still *their* employee. And you
are paid by *them*. Lots of these consultants, btw, violate the law by not
paying their employees for unproductive time, i.e., time on bench. They couldn't
offer these seemingly good rates if they would pay people on bench, because they
would need to have some reserves to pay for the unproductive times.
Economics 101... As somebody on H1, educated, with a college degree, you should
be able to figure out that if it sounds too good, it probably is...

And trying to work for your own company this way won't work, either. Somebody in
your company would have to sign a contract with them. You obviously can't do
that, since you are not allowed to work for your company. And you can't instruct
the person running the company you invested in to sign such a contract. Doing so
would be work as well.
Bottom line: on H1, you would be limited to passive investment in a company.

-Joe
--
I am not a lawyer.
For reliable advice, consult a competent immigration attorney.

OtisUsenet

Thanks, Joe.
So what is the secret sauce? That is, how do all those non-Americans
in Silicon Valley (just an example) start companies, sell companies,
etc.? I don't have any firm examples, but there _are_ a lot of
foreigners/immigrants starting companies, and I doubt all of them have
Green Cards. I just read something on that topic the other day - the
there is a pretty high percentage of VC-funded companies whose either
founder or co-founder is an immigrant. So how do they do it?

See:
http://www.boston.com/business/techn...by_immigrants/
Some more here:
http://www.google.com/search?q=immig...nded%20venture

Thanks!


Joe Feise wrote:
    > >> Thanks, Joe.
    > >>
    > >> Are there any opinions out there about outfits like this:
    > >> http://www.independenth1b.com/
    > >> They look like a legit way to get around this limitations, but I'm
    > >> wondering if anyne has any experiences with it.
    > That would be nothing more than a consulting company, claiming (as a lot of
    > consultants do) wrong things.
    > They just "rent" you out to some client. You are still *their* employee. And you
    > are paid by *them*. Lots of these consultants, btw, violate the law by not
    > paying their employees for unproductive time, i.e., time on bench. They couldn't
    > offer these seemingly good rates if they would pay people on bench, because they
    > would need to have some reserves to pay for the unproductive times.
    > Economics 101... As somebody on H1, educated, with a college degree, you should
    > be able to figure out that if it sounds too good, it probably is...
    > And trying to work for your own company this way won't work, either. Somebody in
    > your company would have to sign a contract with them. You obviously can't do
    > that, since you are not allowed to work for your company. And you can't instruct
    > the person running the company you invested in to sign such a contract. Doing so
    > would be work as well.
    > Bottom line: on H1, you would be limited to passive investment in a company.
    > -Joe
    > --
    > I am not a lawyer.
    > For reliable advice, consult a competent immigration attorney.

J. J. Farrell

OtisUsenet wrote:
    > Thanks, Joe.
    > So what is the secret sauce? That is, how do all those non-Americans
    > in Silicon Valley (just an example) start companies, sell companies,
    > etc.? I don't have any firm examples, but there _are_ a lot of
    > foreigners/immigrants starting companies, and I doubt all of them have
    > Green Cards. I just read something on that topic the other day - the
    > there is a pretty high percentage of VC-funded companies whose either
    > founder or co-founder is an immigrant. So how do they do it?

Why do you doubt they have Green Cards? The "secret sauce" is to be in
some immigration status which allows them to set up and work for
companies, and the most likely of those is Green Card.

J. J. Farrell

J. J. Farrell wrote:
    > OtisUsenet wrote:
    > > Thanks, Joe.
    > > So what is the secret sauce? That is, how do all those non-Americans
    > > in Silicon Valley (just an example) start companies, sell companies,
    > > etc.? I don't have any firm examples, but there _are_ a lot of
    > > foreigners/immigrants starting companies, and I doubt all of them have
    > > Green Cards. I just read something on that topic the other day - the
    > > there is a pretty high percentage of VC-funded companies whose either
    > > founder or co-founder is an immigrant. So how do they do it?
    > Why do you doubt they have Green Cards? The "secret sauce" is to be in
    > some immigration status which allows them to set up and work for
    > companies, and the most likely of those is Green Card.

And the many who have become citizens before founding their companies
don't have Green Cards, of course ...

Joe Feise

OtisUsenet wrote on 12/04/06 15:38:

    > Thanks, Joe.
    > So what is the secret sauce? That is, how do all those non-Americans
    > in Silicon Valley (just an example) start companies, sell companies,
    > etc.? I don't have any firm examples, but there _are_ a lot of
    > foreigners/immigrants starting companies, and I doubt all of them have
    > Green Cards. I just read something on that topic the other day - the
    > there is a pretty high percentage of VC-funded companies whose either
    > founder or co-founder is an immigrant. So how do they do it?


They have Greencards, or are US citizens. Prime example: Sergey Brin, one of the
Google founders. He immigrated as child with his parents:
http://en.wikipedia.org/wiki/Sergey_Brin
I know of only one company (Borland) founded by somebody on a visitor visa, who
violated the laws by working for his company, and later got a GC, anyway. But
that was in the early 80ies, and wouldn't be possible today, due to changes in
the immigration law since then (major changes happened in 1989, 1996, and 2001):
http://en.wikipedia.org/wiki/Philippe_Kahn

-Joe
--
I am not a lawyer.
For reliable advice, consult a competent immigration attorney.

OtisUsenet

Ah, interesting, so you think they are immigrants, but have acquired
their Green Cards or citizenships, and that is how they started their
businesses/companies. I always assumed that wasn't the case. For
instance, I thought Sabeer Bhatia, the Hotmail co-founder was on H1-B
when he created Hotmail....

...I did a few Google searches, and confirmed that:

"Also, people like Vinod Khosla (co-founder Sun Micro), Sabeer Bhatia
(co-founder Hotmail); the guy who founded i2 Technologies etc
etc...were all H1-b guys"
( from http://blog.meebo.com/?feed=rss2&p=147 )

Vinod Khosla is old school, but Sabeer Bhatia is a relatively recent
history, and I haven't heard of any immigration laws regarding H1-B
holders and business creation changing since the late 90s, when Hotmail
was created.

So... how did they/he do it?

Ok, how about the following, then:

A person on H1-B can start a business, he/she just can't work for it.
In that case, can this H1-B person with a U.S business simply hire
somebody else to do all the work? Imagine an H1-B person who is well
known in his/her field, and thus attracts business/clients just by
being the owner of the business, but after the initial attraction, all
work is done by another person, an employee of the company that the
H1-B person owns.

Is this legal?
Add to that - how about if this employee is an American, but living and
working from abroad?

Thanks.


Joe Feise wrote:
    > OtisUsenet wrote on 12/04/06 15:38:
    > > Thanks, Joe.
    > > So what is the secret sauce? That is, how do all those non-Americans
    > > in Silicon Valley (just an example) start companies, sell companies,
    > > etc.? I don't have any firm examples, but there _are_ a lot of
    > > foreigners/immigrants starting companies, and I doubt all of them have
    > > Green Cards. I just read something on that topic the other day - the
    > > there is a pretty high percentage of VC-funded companies whose either
    > > founder or co-founder is an immigrant. So how do they do it?
    > They have Greencards, or are US citizens. Prime example: Sergey Brin, one of the
    > Google founders. He immigrated as child with his parents:
    > http://en.wikipedia.org/wiki/Sergey_Brin
    > I know of only one company (Borland) founded by somebody on a visitor visa, who
    > violated the laws by working for his company, and later got a GC, anyway. But
    > that was in the early 80ies, and wouldn't be possible today, due to changes in
    > the immigration law since then (major changes happened in 1989, 1996, and 2001):
    > http://en.wikipedia.org/wiki/Philippe_Kahn
    > -Joe
    > --
    > I am not a lawyer.
    > For reliable advice, consult a competent immigration attorney.

Joe Feise

OtisUsenet wrote on 12/09/06 20:25:

    > Ah, interesting, so you think they are immigrants, but have acquired
    > their Green Cards or citizenships, and that is how they started their
    > businesses/companies. I always assumed that wasn't the case. For
    > instance, I thought Sabeer Bhatia, the Hotmail co-founder was on H1-B
    > when he created Hotmail....
    >
    > ...I did a few Google searches, and confirmed that:
    >
    > "Also, people like Vinod Khosla (co-founder Sun Micro), Sabeer Bhatia
    > (co-founder Hotmail); the guy who founded i2 Technologies etc
    > etc...were all H1-b guys"
    > ( from http://blog.meebo.com/?feed=rss2&p=147 )
    >
    > Vinod Khosla is old school, but Sabeer Bhatia is a relatively recent
    > history, and I haven't heard of any immigration laws regarding H1-B
    > holders and business creation changing since the late 90s, when Hotmail
    > was created.

    >
    > So... how did they/he do it?


And he believe that blog??? Geez. Anybody can put up a page and claim anything...
The H1 didn't even exist until the immigration reform of 1989, introduced by Ted
Kennedy. Care to explain how Khosla could have been on H1 in the early 80ies
when he co-founded Sun, when the H1 didn't even exist?
In these times, it was waaay easier to get a GC, and it took under 6 months...
Sabeer Bhatia most likely wasn't on H1, either. He had already been working for
a number of companies, according to his Wikipedia profile, and in the 90ies,
there was no easy H1 transfer like today, so he most likely had a GC at that time.
Knowing about the history of US immigration laws helps...

    > Ok, how about the following, then:
    >
    > A person on H1-B can start a business, he/she just can't work for it.
    > In that case, can this H1-B person with a U.S business simply hire
    > somebody else to do all the work? Imagine an H1-B person who is well
    > known in his/her field, and thus attracts business/clients just by
    > being the owner of the business, but after the initial attraction, all
    > work is done by another person, an employee of the company that the
    > H1-B person owns.
    >
    > Is this legal?


The person as owner can of course appoint a CEO to run his company. Indeed,
that's pretty much the only thing a passive investor on H1 can do.

    > Add to that - how about if this employee is an American, but living and
    > working from abroad?


Where the company CEO is located doesn't matter much. It only matters if the
person is in the US, because then the person has to have work authorization.

-Joe
--
I am not a lawyer.
For reliable advice, consult a competent immigration attorney.

OtisUsenet

Hi,

Joe Feise (Immigration) wrote:
    > OtisUsenet wrote on 12/09/06 20:25:
    > > Ah, interesting, so you think they are immigrants, but have acquired
    > > their Green Cards or citizenships, and that is how they started their
    > > businesses/companies. I always assumed that wasn't the case. For
    > > instance, I thought Sabeer Bhatia, the Hotmail co-founder was on H1-B
    > > when he created Hotmail....
    > >
    > > ...I did a few Google searches, and confirmed that:
    > >
    > > "Also, people like Vinod Khosla (co-founder Sun Micro), Sabeer Bhatia
    > > (co-founder Hotmail); the guy who founded i2 Technologies etc
    > > etc...were all H1-b guys"
    > > ( from http://blog.meebo.com/?feed=rss2&p=147 )
    > >
    > > Vinod Khosla is old school, but Sabeer Bhatia is a relatively recent
    > > history, and I haven't heard of any immigration laws regarding H1-B
    > > holders and business creation changing since the late 90s, when Hotmail
    > > was created.
    > >
    > > So... how did they/he do it?
    > And he believe that blog??? Geez. Anybody can put up a page and claim anything...

Sure, but I happen to have heard this (about Sabeer Bhatia) from
several people in the know, even back in the late 90's, and from a few
people from India, who are very proud of Bhatia.

    > The H1 didn't even exist until the immigration reform of 1989, introduced by Ted
    > Kennedy. Care to explain how Khosla could have been on H1 in the early 80ies
    > when he co-founded Sun, when the H1 didn't even exist?

Was there an equivalent to H1-B? I never heard anything about Khosla
before, only Bhatia.

    > In these times, it was waaay easier to get a GC, and it took under 6 months...
    > Sabeer Bhatia most likely wasn't on H1, either. He had already been working for
    > a number of companies, according to his Wikipedia profile, and in the 90ies,
    > there was no easy H1 transfer like today, so he most likely had a GC at that time.

That's not what I heard. I also know people who've been in the U.S.
for 1-2 decades, working for half a dozen companies for the last 10
years, and still don't have GCs. (they left the U.S. when their first 6
years were up and came back, for example)

But ok, thank you for this information. Even if he was able to pull it
somehow, you are saying it's not really doable today.

    > Knowing about the history of US immigration laws helps...
    > > Ok, how about the following, then:
    > >
    > > A person on H1-B can start a business, he/she just can't work for it.
    > > In that case, can this H1-B person with a U.S business simply hire
    > > somebody else to do all the work? Imagine an H1-B person who is well
    > > known in his/her field, and thus attracts business/clients just by
    > > being the owner of the business, but after the initial attraction, all
    > > work is done by another person, an employee of the company that the
    > > H1-B person owns.
    > >
    > > Is this legal?
    > The person as owner can of course appoint a CEO to run his company. Indeed,
    > that's pretty much the only thing a passive investor on H1 can do.

Can the owner hire a non-CEO? A worker that actually does all the
work? (think sole prop)

    > > Add to that - how about if this employee is an American, but living and
    > > working from abroad?
    > Where the company CEO is located doesn't matter much. It only matters if the
    > person is in the US, because then the person has to have work authorization.

The person you are referring to here is the worker/employee, not the
owner, right? (there is no CEO in the situation that I'm trying to
describe here, just the owner, who is on H1-B and in the U.S., and the
employee or an independent contractor, who happens to be American, but
living abroad).

Thanks.

Joe Feise

OtisUsenet wrote on 12/10/06 07:20:

    > Hi,
    >
    > Joe Feise (Immigration) wrote:
    >> OtisUsenet wrote on 12/09/06 20:25:
    >>> Ah, interesting, so you think they are immigrants, but have acquired
    >>> their Green Cards or citizenships, and that is how they started their
    >>> businesses/companies. I always assumed that wasn't the case. For
    >>> instance, I thought Sabeer Bhatia, the Hotmail co-founder was on H1-B
    >>> when he created Hotmail....
    >>> ...I did a few Google searches, and confirmed that:
    >>> "Also, people like Vinod Khosla (co-founder Sun Micro), Sabeer Bhatia
    >>> (co-founder Hotmail); the guy who founded i2 Technologies etc
    >>> etc...were all H1-b guys"
    >>> ( from http://blog.meebo.com/?feed=rss2&p=147 )
    >>> Vinod Khosla is old school, but Sabeer Bhatia is a relatively recent
    >>> history, and I haven't heard of any immigration laws regarding H1-B
    >>> holders and business creation changing since the late 90s, when Hotmail
    >>> was created.
    >>> So... how did they/he do it?
    >> And he believe that blog??? Geez. Anybody can put up a page and claim anything...
    >
    > Sure, but I happen to have heard this (about Sabeer Bhatia) from
    > several people in the know, even back in the late 90's, and from a few
    > people from India, who are very proud of Bhatia.


Well, unless you hear it from him directly, I would be *very* skeptical about that.
There is a lot of misinformation in the quite emotional issue of H1 increases.
And of course there is bias from his fellow countrymen.

    >> The H1 didn't even exist until the immigration reform of 1989, introduced by Ted
    >> Kennedy. Care to explain how Khosla could have been on H1 in the early 80ies
    >> when he co-founded Sun, when the H1 didn't even exist?
    >
    > Was there an equivalent to H1-B?


No. People who wanted to work in the US got a Greencard. That was very quick at
that time, under 6 months.

.> That's not what I heard. I also know people who've been in the U.S.
    > for 1-2 decades, working for half a dozen companies for the last 10
    > years, and still don't have GCs. (they left the U.S. when their first 6
    > years were up and came back, for example)


Spending a year abroad and then coming back on another H1, while possible,
doesn't strike me as overly intelligent.
The H1 limits a person to working for one particular company, and H1 transfers,
while easier nowadays, are still costly. Having a GC renders all these problems
moot.
There are lots of people who have GCs for decades. One prominent example was
Peter Jennings, the ABC news anchor. He became a citizen only a year or so
before his death.

    > Can the owner hire a non-CEO? A worker that actually does all the
    > work? (think sole prop)


No. The owner would be a passive investor. The owner can not act as CEO. As
passive investor, the owner would not make *any* decision about how the company
is run, about who gets hired, etc.

    >>> Add to that - how about if this employee is an American, but living and
    >>> working from abroad?
    >> Where the company CEO is located doesn't matter much. It only matters if the
    >> person is in the US, because then the person has to have work authorization.
    >
    > The person you are referring to here is the worker/employee, not the
    > owner, right? (there is no CEO in the situation that I'm trying to
    > describe here, just the owner, who is on H1-B and in the U.S., and the
    > employee or an independent contractor, who happens to be American, but

    > living abroad).

In the situation you are describing, who would tell the worker what to do?
Instructing an employee what to do is work, and requires work authorization.
There will have to be somebody who runs the company. That person generally is
called CEO, although that's just a title.
As passive investor, the owner can *not* do any work for the company. As passive
investor, the owner can *not* instruct anybody in the company to do work. Only
the person who runs the company can do that, and that person is generally called
CEO.

-Joe
--
I am not a lawyer.
For reliable advice, consult a competent immigration attorney.