Can a H1B register a Business?

I have been asked the same question at least by 300 people by now and I keep telling the same stuff every time. I thought it would be a better way to blog and ask people to refer.

Here we go...

1. Can a H1B Register a Firm or Business?

Absolutely Yes! H1B by definition is on a work permit visa for an employer. He should only be working for his employer for earning his direct wage. He cannot get wages from any other source as is restricted by his status. Nonetheless, the status never has a restriction on investing in any business (other than Liquor, Tobbaco, firearms which need minor adjustments).

There is no law which says that a H1B cannot register a business. It is as simple as you invest in a stock and can get capital gains on your investments.

This gain is not your wage rather is the Return on your investment which is taxable. You can even get a dividend from your investment for which you will need to pay dividend tax. These taxes differ between 15% - 20% depending on the current Govt. policy.

Legally, you are entitled to receive any capital gain from any kind of business. So you can register a business and be a 100% share holder. A H1B be can only register a C-Corp type business as, the Sole proprietorship type will report your income as a wage.

2. Ways of retrieving money from your business?

There a numerous ways but you should never pay yourself directly which might effect your legal status. You can declare dividends and pay taxes and there are some other ways, (by the time you have reached this point you will be able to figure the rest of the ways).

3. Can H1B work for his business?

You can work and provide any kind of voluntary services to your firm but you should never be compensated for the work financially by the firm. The only way you are entitled to receive financial benefits is your dividends.

4. Why is Green card required for my business?

Truly speaking it is not required to have Green card for your business unless the type of your business needs someone to take responsibility to answer questions or show that someone is operating the firm (or even if your business is obligated to run some payroll - insider secret).

Suggestion: Do what you love to do. Choose a business which creates value and in which you never feel guilty!

ref: http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States