Starting a Business in F-1 Status
F-1 students are not prohibited from investing in or having ownership interest in a business. However, students in F-1 status cannot be actively involved in the management of the business unless otherwise authorized to do so. This is because managing one’s own business is also regarded as employment, which would require authorization.
An option for F-1 students to operate their own business is to do so during their Post-Completion Optional Practical Training (OPT). The student would need to show he or she will be working full-time and that the work performed for the business is related to the student’s degree program. The issue, however, is that the OPT period can only last up to 12 months.
The options to continue self-employment beyond the OPT period becomes more complicated. While a 24-month OPT extension is available for STEM degree recipients, self-employment will be much more difficult. While not expressly prohibited, the employment under STEM OPT requires a bona fide employer-employee relationship. This relationship is often difficult to prove if the student has ownership interest in the employer. H-1B sponsorship through a business owned by the F-1 student is difficult for the same reason.
The bona-fide employer-employee relationship requires an independent authority to exert control over the employment. This means that the right to hire, fire, supervise, and control the work is with the company and not with the student-owner. To document this relationship, evidence relating to the terms of the employment, organizational structure, and corporate governance will need to be provided. U.S. Citizenship and Immigration Services (USCIS) has the discretionary authority to determine whether this relationship exists, and any evidence provided will be closely scrutinized.