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F-1 Students Starting Companies; Risk or Reward?

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One of the commonly asked questions is whether an F-1 student may start a company in the U.S.

On the one hand, USCIS rules say that F-1 students may not engage in employment “during the first academic year.”  Technically, to qualify for a work permit, the F-1 student would need to have completed a full academic year of coursework.  The most common work permit would allow the F-1 student 12 months of employment, renewable for an additional 24 months if the degree was in a STEM field and certain other criteria are met.

On the other hand, USCIS also says that you may be eligible to start a company (so long as the work permit has been procured), if the company is “directly related to your major area of study.”  (Students in English language training programs are not eligible.)

Um…. it’s a fuzzy gray area.  When folks ask if an F-1 student start a company in the U.S., there’s actually two components to this questions.

What Constitutes Work?

The first issue is whether the activities of starting up a company constitute work.  U.S. immigration law defines employment very generously.  Employment means “any service or labor performed by an employee for an employer within the United States.” The law doesn’t require payment of wages, per se.  So, if one were to startup a company while on F-1 status, one would think that it would be considered “employment”.  However, the nature of the activities may actually be exempted.  USCIS has historically allowed certain activities to be considered “non-work” activities, such as

  • Preparing the paperwork to form a company (incorporate)
  • Conducting market research
  • Hold and attend meetings
  • Raise funding through meetings
  • Conduct presentations
  • Attend conferences to network
  • Serve as a board member at a company
  • Litigate

Getting Permission to Work

The second issue is about obtaining legal permission to work.  Under limited circumstances, an F-1 student could apply for a work permit, with endorsement from their school.  Once that permit has been issued, the student may perform more active, day-to-day activities for the company (and get paid).  So long as the work the student will be performing is “directly to her/his degree field”, then the student has a finite amount of time to get their business up and running so the company is in a position to help sponsor a work visa.

So there you have it, very straightforward, right?

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