As we know, the US is a well-known center for entrepreneurs and innovation. There’s a good reason why many international students feel inspired to start new businesses or ventures during their studies.
But this leads to many questions such as: Is it legal for an international student on an F-1 visa to start a business in the US?
The situation is a little tricky. International students can create a business entity within the United States, however, their engagement in the business activities will be based on their visa situation and work permit eligibility.
This is a comprehensive guide to all the legal, structural, and practical steps that a international student must take to start a business in the USA in a legal and successful way.
Understanding Limitations of a Visa
Most international students in the U.S. hold an F-1 Student Visa which is a non-immigrant visa given for full-time academic study. The primary purpose of this visa is education, not work, activity or business.
✅ What You Can Do on An F-1 Visa:
- Form a business entity such as an LLC or Corporation in the US.
- Hold shares or equity in a US company.
- Earn passive income through channels like dividends or profit distributions.
- Appoint US managers or employees to run the business on your behalf.
- Keep your status as an investor or silent partner as long as you don’t participate in the daily operations or decision making while on F-1 status.
❌ What You Cannot Do:
- Work for your own company even if it is unpaid, do not volunteer your services.
- Oversee the business operations, make decisions, act on behalf of the company in any transactions like signing documents or dealing with clients.
- Help run your business (such as through designing, advertising, or software development) without the correct employment permission.
- Breach your visa regulations (terms of stay) which may result in removal from the country or problems applying for visas in the future.
Why It Matters:
U.S. immigration law has a problem with people abusing the system. They do not allow any form of work, even volunteering to help run the company, without approval via an appropriate visa.
If you attempt to assist your company while on an F-1 visa, you will likely face severe consequences, such as deportation or a permanent ban from re-entering the country.
How to Legally Form a U.S. Business as a Student
Despite your visa status limiting your involvement, ownership is not restricted. You can incorporate a company in America as a foreigner, even as a student.
Most Common Company Types:
📌 LLC (Limited Liability Company)
- This is the simplest and most adaptable form of a business for new companies.
- Can be listed as single-member or multi-member LLC.
- Does not incur a corporate tax.
- Ideal for passive owners.
📌 C Corporation
- A company that is taxed on profits at the corporate level.
- Ideal for businesses seeking venture capital or angel investment.
- Mandatory for share issuance and onboarding investors.
📌 Why Choose Delaware or Wyoming?
- Delaware is famous for startups because of its strong corporate laws and the preference of investors.
- Wyoming is best known for privacy, low maintenance fees, and low cost of doing business.
- Bizstartz uses your goals to determine the best state to set up your business.
What You’ll Need to Start:
- A Valid Passport
- Business address in the US or a registered agent (we provide this)
- Company name and business structure
- EIN
- Operating Agreement or Corporate Bylaws
- Physical US address or a virtual office (not required but recommended)
Important: No SSN is required to form a company or get an EIN. Business Start USA takes care of EIN issuance for non-residents which is fast and hassle-free.
Work Authorization: How to Legally Engage with Your Business
If you want to transform your idea into a startup and want to get your hands dirty, you will need work authorization from USCIS. Here are some options:
🔸Curricular Practical Training (CPT)
- This option is open to F-1 students who are pursuing a degree.
- This must be related to your coursework in some way.
- Can be full-time or part-time.
- Some universities permit CPT for entrepreneurs provided that their business aligns with their field of study (for instance, Business or Computer Science).
✅ Example: If you are pursuing a degree in Business Administration and create a marketing platform, your university may provide CPT for you to intern at your startup.
🔸Optional Practical Training (OPT)
- Applicable for up to 12 months following program completion.
- STEM graduates are eligible for a 24-month extension.
- You may work for your own company as long as the position is relevant to your area of study.
✅ Example: A Computer Science graduate can work at a tech startup they founded, as long as it is compliant with his degree and OPT regulations.
🔸H-1B Visa Sponsorship
- Your business is allowed to sponsor you for an H-1B provided it has an adequate corporate structure.
- You have to prove that there is supervision of some sort over you, by a board for example, to show that there is an employer-employee relationship.
- H-1B is a lottery-based visa with strict eligibility and filing requirements.
🔸 Other Options
- O-1 Visa: For individuals with extraordinary ability in their field.
- International Entrepreneur Parole (IEP): A temporary stay for founders of startups with high-potential ventures.
- Change of Status: A modification to a different visa type such as F-1 to E-2 investor visa with adequate preparations.
Funding and Banking for Your Business
Legally starting a business is not the only thing that matters. You need to be able to receive payments and need capital for your business.
💳 Applying for a Business Bank Account in The U.S
- A US address, business documents, and EIN are required.
- Some banks may require an ITIN or in-person visit, while others allow remote account opening.
- Bizstartz works with fin-tech banks that do not require SSN or US residency for international founders to open accounts.
💰 Raising Capital
International students are legally able to receive investments or loans for their business.
You can gather funds from:
- Family and friends
- Angel investors and venture capitalists
- University startups and incubators, as well as business accelerators
📉 Common Mistakes to Avoid
- Combining personal finances with business expenses
- Using a personal account for business dealings
- Receiving payment for work done while on an F-1 visa (without proper authorization)
Compliance: Safeguard Your Status and Your Business
Keeping immigration and tax obligations in check are vital for staying in business. Here are some major rules:
🛡️ Immigration Compliance
- Always ask your DSO (Designated School Official) before starting or engaging in any business activity for your school.
- Refrain from volunteering or working for free without knowing your visa restrictions.
- Maintain documentation of applicable work permission and your job title.
🧾 Tax Compliance
- Complete federal and state filings annually for your business.
- FinCEN may require you to file a Beneficial Ownership Information (BOI) report.
- If you don’t possess an SSN, you can apply for an ITIN to file personal taxes.
- With tax consultancy and BOI filing, Bizstartz helps keep your business compliant.
Final Thoughts: International Students, Yes, You Can Start a Business in the USA
Although there are some restrictions, international students are allowed to start and own a business in the United States. It is critical to know what is permitted under your visa, what work authorization might be necessary, if any, and how to keep your business compliant.
Becoming an entrepreneur as an international student not only can be done, but it can also pave the way toward a future brimming with innovation, impact, and untold opportunities.
Start Your U.S. Business with Bizstartz
At Bizstartz, we assist international students and global entrepreneurs with:
- Forming LLCs or Corporations in all 50 states
- Obtaining EINs and ITINs with or without an SSN
- Providing Registered Agent and BOI filing
- Setting up U.S. business bank accounts remotely
- Explaining visa and compliance issues
👉 Are you ready to properly set up your U.S. business?
We offer hassle-free, rapid, and fully compliant services at Bizstartz, so go ahead and get started today.
