Dear Sophie: How can I transfer my H-1B to my startup in 2023?

Dear Sophie,

I am RESOLVED: this is the year I finally live my dream and create my startup! I currently have an H-1B and I’m working in a full-time engineering role at another company. 

How can I transfer my visa to my startup to take over my H-1B? How do we structure the startup company for immigration success?

—Restless & Resolved

Summary: Yes, it’s possible to transfer your H-1B to your startup. To transfer your H-1B to your startup, you will need to give up control over your startup, give up a majority stake in your startup, and make sure your startup is structured to meet these H-1B visa requirements. If you want to find U.S. investors for your startup, you should incorporate your company as a Delaware C corporation, which investors typically require. Read below for more details about the transfer process, green card options, as well as an alternative option. Subscribe to our monthly newsletter for the latest immigration news and our upcoming webinars on H-1Bs and other topics.

Full Dear Sophie article:

Dear Restless & Resolved,

Happy new year! Congrats on embarking on this exciting new adventure and taking the first step toward living your dreams!

H-1B transfer is tricky yet possible!

The short answer to your first question is yes, you can transfer your H-1B specialty occupation visa to your new startup. However, it’s tricky, and it’s super important to establish the correct, compliant foundation before proceeding. 

This setup process can take time (several months), but the peace of mind you’ll have from knowing that everything is correct and you have the freedom to build will be priceless.  You should talk to both a corporate attorney and an immigration attorney. A corporate attorney can help you through the process of setting up your company, including drafting bylaws, and an immigration attorney can help you determine the best immigration strategy for you and any cofounders based on your personal and business goals.

You will need to take steps to qualify your company to petition you for the H-1B transfer, such as taking on a co-founder and funding your startup. Check out one of my early podcasts on H-1B Transfers for Startup Founders.

Structuring your startup for immigration success

To transfer your H-1B to your startup, you may need to give up control over your startup, (sometimes but not always) give up a major stake in your startup, and make ensure your startup is structured to meet all immigration visa requirements. To meet the immigration sponsorship qualifications, you must demonstrate to U.S. Citizenship and Immigration Services (USCIS) that:

• Your startup and you have an employer-employee relationship. That often means you must not own more than 50% of your company, and someone else must formally hire you, supervise you and your work, and have the ability to fire you.
• Your startup has the ability to pay you the prevailing wage based on your position and geographical location, as well as cover the company’s operations for the term of the visa petition (usually up to 3 years for an H-1B transfer).

Start planning now and map out your dream role at your startup, how many co-founders you will have, how much equity everybody else would receive, the roles of your co-founders, and prospective investors for your startup so your attorney can share the viability of the plan with you and offer any alternatives.

You can talk to a corporate attorney to determine how to structure your startup. Generally, U.S. investors want to deal with Delaware C corporations. Even though you incorporate in the state of Delaware, your startup can be based anywhere in the U.S. and separately register to do business there. 

Once your company exists, is operational, has some runway or traction, and has officially extended you a job offer, it can initiate the H-1B transfer process. Once you engage an immigration attorney, your startup needs to get its Federal Employer Identification Number (FEIN) verified by the U.S. Department of Labor’s Office of Foreign Labor Certification. That step typically takes about a week.

Next, your startup’s immigration attorney would need to file a Labor Condition Application (LCA) with the Labor Department. The LCA is aimed at ensuring no American workers are available to fill the position that the prospective H-1B recipient is being offered and preventing any negative impact on the wages and working conditions of American workers. 

If the Labor Department approves the LCA, your startup can file the H-1B petition to USCIS. Check out this podcast about what makes a strong H-1B. For an H-1B transfer, if you are currently maintaining valid H-1B status or in the 60-day grace period, you can start working when your startup receives a receipt notice from USCIS!

Things to keep in mind

While you’re on an H-1B visa sponsored by another company, you are only allowed to work for that company. If you work for your startup—even without pay—before transferring your H-1B, you risk losing your status and your ability to remain in the United States. Talk to your attorney about what is and isn’t allowed.

While on an H-1B sponsored by another company, these ownership-type activities are often permissible:

• Create and register an LLC or C-Corp. (but check your current offer letter and any intellectual property agreements with your current employer first)
• Be a shareholder of the startup without providing advisory services or labor.
• Be a passive investor.
• Serve on the startup’s board of directors without equity.
• Talk to investors and board members.

Another thing to keep in mind: The H-1B visa allows a maximum stay in the U.S. of six years, and that maximum does not reset by virtue of an H-1B transfer alone. With your immigration attorney, make sure you’re on track to start the green card process to extend your H-1B beyond six years, especially if you were born in India or China. Your startup’s ability to sponsor you for a green card depends on how much equity you would hold, so you should check your eligibility for the EB-1A extraordinary ability and EB-2 NIW (National Interest Waiver) green cards, which do not require PERM.

Alternative option

Instead of the H-1B, I often recommend that qualifying early-stage startups invest their limited time, energy, and funds into applying for an O-1A extraordinary ability visa for their founders if they meet the standards for extraordinary ability. While startups must still demonstrate that it has an employer-employee relationship with their founder for an O-1A, this option does not have a wage requirement nor limits on how much equity in the startup a co-founder can hold, like the H-1B.

You may have to invest time and energy into building up your qualifications for the O-1A. You must meet at least three of the following criteria to qualify, but for a strong case, I usually recommend meeting at least four:

• Earned nationally or internationally recognized awards, which can include funding for your startup and being accepted into a highly-competitive accelerator or incubator program with stringent selection requirements.
• Invited to join a group or association that demands outstanding achievements.
• Featured in professional or major trade publications or major media,
• Made significant contributions to your field, such as your co-founder’s work or achievements, have generated widespread attention in the media or have been used by others through licensing patents or contracts, or are advancing your field.
• Judged the work of others in your field in hackathons or pitch competitions and other events in your field.
• Written articles that have been published in major media or professional publications.
• You are a critical or essential employee for a company with a distinguished reputation
• You command higher than the average pay for early-stage startups.

I typically find that early-stage startup founders can get an O-1A in a few months with a little focused effort, and the benefits are especially strong for those seeking the CEO role. An O-1A visa can also put you in a great position to pursue an EB-1A or EB-2 NIW green card.

Congratulations, founder! All the best to you in 2023 and beyond!

— Sophie

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The information provided in “Dear Sophie” is general information and not legal advice. For more information on the limitations of “Dear Sophie,” please view our full disclaimer. You can contact Sophie directly at Alcorn Immigration Law.

Sophie’s podcast, Immigration Law for Tech Startups, is available on all major platforms. If you’d like to be a guest, she’s accepting applications!