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I-765 (EAD) Discussion Forum
Starting Own Business |
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Like this thread? |  |  |
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Can one start their own business on an EAD or do we have to wait for a Green Card? And is it better for the Dependant to start the business or can the Primary get out of their H1 status and go to EAD to start the company?
Thank you,
Suj
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to ssardesai:
If you just want to form a company, you can form a C corp on H-1B.
If you want to actively participate in the company, then as long as your I-485 was filed 180 days ago and you have your EAD, you're free to start your company and participate actively. You can even quit your job. If an RFE gets issued when your I-485 is being adjudicated, then you will have 84 days to go find a job with responsibilities similar to the one for which your labor application was filed, file AC-21, and respond to the RFE.
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If you just want to form a company, you can form a C corp on H-1B.
If you want to actively participate in the company, then as long as your I-485 was filed 180 days ago and you have your EAD, you're free to start your company and participate actively. You can even quit your job. If an RFE gets issued when your I-485 is being adjudicated, then you will have 84 days to go find a job with responsibilities similar to the one for which your labor application was filed, file AC-21, and respond to the RFE.
to robin:
I am curious to know where you have found the source of the above since I have checked with multiple lawyers and accounting firms and they said you need to have GC in order to form a company. |
to Javan:
I formed my own company (California C Corporation) many months ago. My friends have done that as well. I don't know who you have checked with :)
Since I have my EAD now, I can even form S-corp or LLC.
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S-corp cannot be started by "non-resident aliens". That means green card holders can start S-corp. And I'm quite sure that EAD holders can also start S-corp, that's what my lawyer told me.
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Ofcourse, S-Corp is allowed for non-H1B's (that includes GC, Citizens & EAD's).
If you want to interpret the rules to your inconvinience, that's upto you.
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Well, the discussion is about a gray area. Your advisors may be as correct as mine but if there was a clear cut rule, you and I wont be writing here.
First, the link you provided clearly states in #4 that the shareholder must not be a non-resident alien. And EAD is not a status of 'non-resident alien'. Otherwise you'd know why they tell you all the time that you lose your H1B status the moment you use EAD. Like i said if you want to interpret the fact that non-resident aliens are non GC holders/Citizens then it's clearly upto you and your advisors.
If it were to be started only by GC or Citizens how come many who dont fall into this category form S-Corps ? Common sense would dictate that the IRS (or as an example any of the online incorporators at the time of registration) would verify your eligibility; esp the IRS when you file your taxes every quarter and penalize you if you were not a Citizen and the registration process by itself would eliminate you.
Bottom line, GC or no GC you are allowed to form S-Corp as long as you have a EAD at the very minimum
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to robin:
Robin,
I am on H1B and formed a "C" corp in 2006. There was no income in 2006 and i filed a tax return showing no income. But there was some income in 2007 and i need to file my tax return for that amount. I went thru a couple of forums on "starting a business on H1B" and the comments are not encouraging specially in light of getting GC approved b'cose of constrain on H1Bs not to have other source of incomes other than the income from the sponsered employer. In fact, i have used for my personal purpose the 2007 income of my "C" corp. I would appreciate if you could clarify me on these points.
- I need to pay the tax for 2007 income for my company.
- As i have used that generated income for my personal reasons, how to reflect that used amount in my personal tax return so as not to get problem from USCIS on GC later on.
Thanks in advance for your time.
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Hi Gurus,
I am working on H1B and I have C Corporation in California which was establish on March2006 and it went in to loses of 11,000$ at that time I have no idea with company things and my CPA told me that you can deduct your company losses on your personal 2006 tax return, so we applied 2006 personal tax returns with showing 11,000 loss in business and I got money in last year(2007),yesterday other CPA is saying you can not deduct your business loss in your personal tax for C Corporation which I did it for 2006 year and he is saying when you applied for green card if INS came to know that if you establish business then they may reject your green card, is this true. Can I do amendment on my 2006 personal tax, if I need to pay any money to IRS how much penalty and interest I need to pay?
One more question if I file my company 2006 federal tax returns and don’t file California 2006 company tax return in 2007, can I file now?
Please kindly let me know your thoughts.
Thanks
AK
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to Akdsa3456:
HI
i'm not Gurus
but i'm an accountant(also setting for the CPA)
the IRS rules different than the INS rules about residency..
according to the IRS you are resident if u meet the residency tesy which is being legal in the US for 70-90days
* you can form S-corp with EAD
*you cann't deduct C corp loss in ur personal tax ever never.. it is a rule from the IRS only S-corp can deduct because s-corp is a pass thru entity like partenships
* u can ammend ur taxes and if u didn't the IRS will realize that sooner or later befor the 6years rule of statute of limitation
* the penalty and interest depends on the amount of income u exclude it from ur personal tax.. and the sooner the better
*u can and must file california tax return for 2006 but remember it is C-corp
hope this will help u
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Hi Gurus,
I am working on H1B and I have C Corporation in California which was establish on March2006 and it went in to loses of 11,000$ at that time I have no idea with company things and my CPA told me that you can deduct your company losses on your personal 2006 tax return, so we applied 2006 personal tax returns with showing 11,000 loss in business and I got money in last year(2007),yesterday other CPA is saying you can not deduct your business loss in your personal tax for C Corporation which I did it for 2006 year and he is saying when you applied for green card if INS came to know that if you establish business then they may reject your green card, is this true. Can I do amendment on my 2006 personal tax, if I need to pay any money to IRS how much penalty and interest I need to pay?
One more question if I file my company 2006 federal tax returns and don’t file California 2006 company tax return in 2007, can I file now?
Please kindly let me know your thoughts.
Thanks
AK
to Akdsa3456:
As correctly said by Nayymha, you will have to refile the taxes. You can only open C-Corp on H1B. If you work on EAD then you can convert it to S-Corp, but remember, you can not leave your primary job. You can not sponsor yourself from the company you have opened and can not generate any experience letter through that, the reason being your stake is 5% +
I had done this long time back when I was on H1B. I did close my company and refiled the taxes after discussing with IRS employee. You can call IRS and they will discuss with you. I am not sure, but in NYC they had a seminar where they were giving free consultation and thats where I came to know.
IRS is not connected with INS, but there is a proposal to do that. How soon and what all will connect, no body knows. |
to cyberbabu:
Mr Cyberbabu & Robin,
Been there done that. There are many things that you can do and no body will touch you, but is that right?? Just like illegally many are residing and working and no body gets caught. But if and when you get caught then what happens....
Let me tell you, I opened a company on H1B way back in 2001-2002-2003 and closed it in 2004. There is no one stopping you to open comapny and it is perfectly valid. No hassles there. But if you are on H1B, then you can just be a shareholder and can earn profits out of it. You will have to hire someone to do all the job, from director position to anything.
I am pretty sure you must have filed taxes for the company and you must have even signed the document. Now that is illegal to do. You are not allowed to sign any document. You have to hire a person (Any legal person who is allowed to work in US) and that person will sign the documents.
Ummm where did I get this thing from? huh, as I said been there done that. And hence closed company. As said in earlier post, attended a seminar where top CPA, IRS consultants were giving free advice in Manhattan (Use to work for one of the New York City Agencies). You can earn money but you are not allowed to work. Signing a document once a corporation is filed is considered part of job. And if investigated then obviously GC comes in jeopardy.
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to DOOM:
I think i made it clear (read last line in my last post) that you need to have an EAD at the very minimum to start a business..not sure what you are trying to convey by stressing again that opening a company when on H1 is problematic. No one is disputing that and sure if you get cought you are in trouble. But when in EAD there is absolutely no problem. If you search on Sheela Murthy's site you will find out that she confirms the same.
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to cyberbabu:
Yes...the basic confusion comes from the different definition of residents and non-residents from USCIS and IRS. In the eyes of the IRS, most people on this forum are resident aliens and hence qualify for S-corp.
Which of the three (LLC, C & S) is suitable for a company started by multiple partners? What if one or more partners are living outside the US?
Thanks
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to kaisersose:
Hi nayymha,
Could you please provide me your email address.
Thanks
AK
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I think i made it clear (read last line in my last post) that you need to have an EAD at the very minimum to start a business..not sure what you are trying to convey by stressing again that opening a company when on H1 is problematic. No one is disputing that and sure if you get cought you are in trouble. But when in EAD there is absolutely no problem. If you search on Sheela Murthy's site you will find out that she confirms the same.
to cyberbabu:
Actually I addressed both to you and Robin. Opening company on H1 is valid, but just that you can not sign document. Robin said that you can open company and quit your H1b job and actively work on your own company and if RFE come, then go find job with that skill set. Now that is stupidity. It is giving really false hope and playing with some1 else life by giving these kind of stupid suggestion. Folks have waited 6-7 years for this GC.
And why I included you? Umm reason being the Question was can the Primary quit his H1B job and start company as well? And Robin said yes and although you did not say that the person can quit and work on EAD for his own company, but it gave impression that you are supporting that very stupid idea that Robin gave. My appologies if I offended you. |
to DOOM:
I dont get your point...the question and the whole point of discussion here is "Can one start their own business on an EAD or do we have to wait for a Green Card?"..No one is asking about the H1B situation but I get the picture that there is too much
stress on H1B on the responses i have read from you.
1. Get EAD
2. Quit or Dont quit H1B job (I mean you can run a business as your second job)
3. Start Business (on the safer side just make sure you are 180 days from filing 485)
4. Pay taxes regularly
5. If you receive RFE (for employment) issue a employment letter from your business with the same job desc. as in Labor.
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to cyberbabu:
Cyberbabu,
Can one start their own business on an EAD or do we have to wait for a Green Card? And is it better for the Dependant to start the business or can the Primary get out of their H1 status and go to EAD to start the company?
Read carefully, the question was, can business be started on EAD and by Primary quitting the H1B job?
Do not mislead others with your foolish crap manifested ideas. People have life at stake.
You will get rejected if you issue a letter from your own business with same description as you are 5% stakeholder in the company.
If you are on H1B you can not sign any document o your company. Man don't you get it? If you are doing something illegally , why the hell you mislead others?
If you run a company on EAD and work for the company on EAD and get money on EAD. then your H1B is lost damn it. Half knowledge is dangerous. And specially I hate people who try to mislead because they are doing it. You may get GC smoothly ...but because of that may be some guy may not. You are worse than USCIS man...
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I dont get your point...the question and the whole point of discussion here is "Can one start their own business on an EAD or do we have to wait for a Green Card?"..No one is asking about the H1B situation but I get the picture that there is too much
stress on H1B on the responses i have read from you.
1. Get EAD
2. Quit or Dont quit H1B job (I mean you can run a business as your second job)
3. Start Business (on the safer side just make sure you are 180 days from filing 485)
4. Pay taxes regularly
5. If you receive RFE (for employment) issue a employment letter from your business with the same job desc. as in Labor.
to cyberbabu:
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1. Get EAD --- No problem creating a business.
2. To work or actively participate being an H1 and have EAD --- Gray Area (so many topics and no concrete answer). To be safe, serve only as a passive investor together with your dependent (EAD) or a trusted friend as manager/president/CEO.
3. Again, starting a business is not illegal. ONLY actively participating in it has Gray Areas with regards to H1.
4. Be sure to pay taxes RELIGIOUSLY. We are not only talking about income taxes since there are a lot of IRS/City/County obligations to meet. |
to DOOM:
Kanjoos,
You represent the typical minority that shouts..somewhat like the 'empty vessels make the most noise'
No wonder you are a loser and have been forced to close your company. First, you need to know forum etiquettes and basic writing knowledge to even post your thoughts in a forum like this. Using abusive unparlimentary words does no good to prove that you are savings someone's life here. I have the right to post like everyone else. If you want to be the savior and help lose someone's oppurtunity that's even worse. Just be a loser yourself and let it be..dont spill it on others.
Coming back to your so called misleading allegation...what makes you think i am misleading someone ?? After you receive your EAD (& 180 days after 485) you are open to own the business; not just start it. Which means you can sign cheques, sign documents and do whatever you'd like to do. What is illegal about this ??? I have written confirmation from top attorney to confirm this.
>>If you are on H1B you can not sign any document o your company. Man don't you get it? If you are doing something illegally , why the hell you mislead others?
The point is...if you start a company on EAD then you no longer can claim H1B status; neither are you on one. So where is the question of illegality ?? It is common sense that you decided to lose your H1B status if you invoked EAD. You lose your H1B and are on EAD when running the company that you own say 50% equally between yourself and spouse. As for writing letter, you will need to have your spouse sign the letter for you. Again, this is a proven recommendation from the same top attorney
>>can business be started on EAD and by Primary quitting the H1B job?
The Answer continues to be a firm YES. You lose H1 and operate on EAD.
>>You may get GC smoothly ...but because of that may be some guy may not.
Exactly, my situation may not be the same as yours. It is for the reader to make his own judgement and see where he is in the process to move ahead. I cannot coerce anyone to start a company. And forums are not meant to be the final say. I have the right to post my experience and thoughts. Just dont bother if you are uncomfortable with it.
Why dont you just visit Sheela Murthy's site and search for Startup and get your records straight.
I pay top dollar to get my opinions from attorneys & CPA's and make decisions accordingly. If you ever did that you wont be here whining about starting a company in a situation where you shouldn't have and closed it.
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Kanjoos,
You represent the typical minority that shouts..somewhat like the 'empty vessels make the most noise'
No wonder you are a loser and have been forced to close your company. First, you need to know forum etiquettes and basic writing knowledge to even post your thoughts in a forum like this. Using abusive unparlimentary words does no good to prove that you are savings someone's life here. I have the right to post like everyone else. If you want to be the savior and help lose someone's oppurtunity that's even worse. Just be a loser yourself and let it be..dont spill it on others.
Coming back to your so called misleading allegation...what makes you think i am misleading someone ?? After you receive your EAD (& 180 days after 485) you are open to own the business; not just start it. Which means you can sign cheques, sign documents and do whatever you'd like to do. What is illegal about this ??? I have written confirmation from top attorney to confirm this.
>>If you are on H1B you can not sign any document o your company. Man don't you get it? If you are doing something illegally , why the hell you mislead others?
The point is...if you start a company on EAD then you no longer can claim H1B status; neither are you on one. So where is the question of illegality ?? It is common sense that you decided to lose your H1B status if you invoked EAD. You lose your H1B and are on EAD when running the company that you own say 50% equally between yourself and spouse. As for writing letter, you will need to have your spouse sign the letter for you. Again, this is a proven recommendation from the same top attorney
>>can business be started on EAD and by Primary quitting the H1B job?
The Answer continues to be a firm YES. You lose H1 and operate on EAD.
>>You may get GC smoothly ...but because of that may be some guy may not.
Exactly, my situation may not be the same as yours. It is for the reader to make his own judgement and see where he is in the process to move ahead. I cannot coerce anyone to start a company. And forums are not meant to be the final say. I have the right to post my experience and thoughts. Just dont bother if you are uncomfortable with it.
Why dont you just visit Sheela Murthy's site and search for Startup and get your records straight.
I pay top dollar to get my opinions from attorneys & CPA's and make decisions accordingly. If you ever did that you wont be here whining about starting a company in a situation where you shouldn't have and closed it.
to cyberbabu:
My words were better than your words. I did not call you loser or such stuff. Secondly, you saidquit your H1 or Do not quit...what does that mean? Anyways, I am not gonna argue with you. Neither do you know what i have acheived and nor do I know what you have acheived.
The question was whether Primary can quit his H1B job and still persue the GC, open a company and actively work in it without risking his GC. My answer is NO, and your's is YES.
You pay Top $'s hmmm, yeah I know you are a rich guy. Thanks for trumpeting that :). You mus have also bought USCIS IO by your top $'s by now, and they just approved you GC, go check email from CRIS, welcoming you as Permanent Resident as you paid Top $'s to USCIS and helped remove the pains of poor immigrants like me who are whining. |
to DOOM:
It is always better to ask than to jump aloof..Now that you have asked what I meant by quit H1 or do not quit, i will elaborate it. When you have reached 180 days- you can quit your employer and work elsewhere. If you prefer not to quit you can report your EAD to your HR and continue to work with your H1 employer. EAD allows you to work in more than one job; so you need to simply fill the updated form and hand it over to your employer. The second job will ofcourse be your own business. So, it really doesnt matter if you quit or not - EAD will cover you.
Whether I am rich or poor...I am sharing my experience. It is up to the readers to read, derive knowledge or ignore and I absolutely dont care what you have to think of me. If the situation requires I wont hesitate a minute to hire a top attorney again to fight it out with USCIS.
Before I finish, you are not paying me for what I write, so dont over react. Who gave you the rights to call our posts "stupid" or "foolish crap manifested ideas" and you consider these words better than being called a loser (when you really are one). You dont know what I have achieved but I know that you dint achieve anything by opening your business..so you are not qualified to even respond to this topic. At the time of opening your business there was no 180 day rule, so you wouldnt even know what we are talking about. That explains why you are so lost. Just stay away.
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to cyberbabu:
Top$$Babu,
Get your facts, AC21 was brought in by Clinton. It started way back in 2000 itself. So dont teach me 180 day rule or EAD.
You have little knowledge. Thanks for again telling that you will hire top$ attorney. I am pretty sure you come from Top$ Andhra Pradesh and you gave Top$ to make fake degrees and gave Top$ to get Visa.
Thanks Top$babu. If you are offended my appologies. i just do not have Top$ to fight your attorney on this issue.
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to DOOM:
Oh god, here you are again trying to confuse everyone.
Clinton Administration brought the AC21 primarily focussing on increasing the H1B quota to 195K from 65K. If I remember AC21 also helped in extending an H1B for 3 yr period if your 485 was pending. There was no clear cut guidance on portability and no one used it effectively until the Yates Memo was released in May 2005 with the guidance on Green Card portability (which is the whole point of discussion).
Read this news: http://www.murthy.com/news/n_yatmay.html where it clearly states "many have been awaiting the regulations on AC21 since it became law in Oct 2000".
I hope this is sufficient evidence to conclude your business was not active at the time the Yates Memo was released and immigrants started using it effectively since then. Most importantly read the section "Self-Employment Allowed for AC21 Portability! " which in plain English confirms my discussion thus far.
I dont want to go into your notions on my origin, degree and visa which shows your desperation. FYI - I am not from Andhra Pradesh; I am not surprised you are a master of your conceived notions and that you stoop to this level. Neither do i expect you to have top$ to hire attorneys..otherwise why would you call yourself a kanjoos (a stingy guy)
But you clearly need to attend some forum ettiquette programs (ensure it's free because you cant afford it) if you genuinely have the intent of helping the community. Otherwise you are an absolute half baked nuisance.
While i have provided links and info to prove my case; you have just opened your empty mouth and sidetracked the issue with your failure company which is nothing but a reflection of you (a loser) . Just prove me wrong if you can.
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Oh god, here you are again trying to confuse everyone.
Clinton Administration brought the AC21 primarily focussing on increasing the H1B quota to 195K from 65K. If I remember AC21 also helped in extending an H1B for 3 yr period if your 485 was pending. There was no clear cut guidance on portability and no one used it effectively until the Yates Memo was released in May 2005 with the guidance on Green Card portability (which is the whole point of discussion).
Read this news: http://www.murthy.com/news/n_yatmay.html where it clearly states "many have been awaiting the regulations on AC21 since it became law in Oct 2000".
I hope this is sufficient evidence to conclude your business was not active at the time the Yates Memo was released and immigrants started using it effectively since then. Most importantly read the section "Self-Employment Allowed for AC21 Portability! " which in plain English confirms my discussion thus far.
I dont want to go into your notions on my origin, degree and visa which shows your desperation. FYI - I am not from Andhra Pradesh; I am not surprised you are a master of your conceived notions and that you stoop to this level. Neither do i expect you to have top$ to hire attorneys..otherwise why would you call yourself a kanjoos (a stingy guy)
But you clearly need to attend some forum ettiquette programs (ensure it's free because you cant afford it) if you genuinely have the intent of helping the community. Otherwise you are an absolute half baked nuisance.
While i have provided links and info to prove my case; you have just opened your empty mouth and sidetracked the issue with your failure company which is nothing but a reflection of you (a loser) . Just prove me wrong if you can.
Sure Top$Babu. Did IO not take Top$'s from you? Ummm I guess they dont take bribe haan....
AC21 was enacted in 2000 and the 180 day rule has been since then. Yates memo just clarified it....AC21 was brought for 485 and not for H1B. |
to DOOM:
Read this http://www.immigration-lawyer.com/visa/H1B/A... and refresh your short memory..
Perhaps you were not interested in this piece of AC21...like many other rules within it. Claim to be a savior after all this !! Give me a break.
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Can a nonimmigrant, foreign worker invest money in any venture?
A foreign national who is living or working in the United States can invest money in any venture or enterprise. The law allows foreign nationals in the United States to purchase any assets or property, including real estate. Conversely, in order to protect U.S. workers, both citizens and green card holders, the United States Citizenship and Immigration Services (USCIS) and the U.S. Department of Labor (DOL) require that the foreign national obtain certain work authorization.
In other words, a person on an H1B or other temporary work visa in the United States is legally allowed to invest in any venture or company and could possibly undertake some limited volunteer work on behalf of the venture or company. However, the individual cannot work indefinitely for that company and earn a salary without obtaining prior approval from the USCIS or DOL to work for the particular venture or company.
This information from murthy.com
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Any more thoughts on this subject
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Just to share my experience
I bought my first home in Texas in 2002 while in B2 (Tourist visa) "The bank world savings" aproved my mortgage, for sure I gave 30% as down payment and they gave me the worse APR available then = 12%.
Then in 2003, I moved to Colorado and I Rented my property creating a leasing company (my status was TN for 6 months) then I got my H1B.
In 2004, I had to do repairs on my home and I reported them as a lost on my tax return.
in 2005 I moved to North Carolina (H1B) and I sold my home having a profit from the operation. (I reported to the IRS)
In 2007 during July Fiasco I submitted my I485) to become AOS, and I presented all the information to the CIS.
All those moves were eveluated and advised by my attorney, (she prepared my case). Now using my EAD Im starting my own company (still working for my sponsoring company...) but planning to leave soon; currently my attorney is preparing my case following the AC21 rules.
I guess bottom line here as many of you agreed is "Legal resident" has a different definition for IRS and for CIS. (I think it is written somewhere in the IRS information and was mentioned before"
And as I always said, here in America: Money talks... B..T walks" if you have a million dollars you can get your GC in a blink of an eye....
Cheers to all
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Hello All,
I am on H1B status right now, with an approved I140 (still waiting for available visas to file I485) I am planning to be an independent contractor (my own business). Can I do that and still maintain my status? Also is that gonna create a conflict in getting my greencard? I was told that, for tax purposes, I will be filing 1099.
Appreciate your help.
Sam
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to samantha0916:
My understanding is that you need a full time W2 job. Please verify with qualified people before you act.
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to mand00s:
What do you mean by full time w2 job? I have my h1B full time, is that what you're referring to? I was just thinking if I could be an independent contractor and still maintain my H1B status. Thanks.
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to cyberbabu:
OK. I see so many things being discussed here..some are true and some are not true..I will try to clarify..I am not expert but will try to answer to the required questions.
1. We have three types of company formations S, C & LLC
2. Everyone (H1B/EAD/GC/Citizen) can start/be part of an LLC / C-Corp. But C-Corp has double taxation so I think why many people dont choose it. LLC in many cases same as S-Corp but I learnt from my accountant that it is more complex when it comes to tax filinf which involves higher employment taxes etc. I am not an expert to really list out the diffs b/w LLC & S-Corp
3. Only Citizens/GC people can start/be part of S-Corp per rules but here is a catch that everyone adds their own version to it and is the reason for so many discussions over the web forums. IRS may not bother to really verify your immigrant status when you open an S-Corp as long as you pass the Substatantial presense test which says you should be legal resident in US at some address and have an SSN. Now it is upto an individual/Lawer/CPA to interpret this. With this IRS rule you can still go ahead and start/be part of an S-Corp but when it comes to audit you are taking a risk and you may be penalized or GC processing may get effected
4. Now I see other option people choose is with EAD you can invest in a S-Corp as giving loan to the S-Corp shareholders like personal loan, you can have you/your spouse get profits of the S-Corp as Salary W2 form. But if the S-Corp profits are too high taking your share as W2 Salary could get high. Also to avoid risk from S-Corp partners you can write a separate agreement that you are a partner and made investment in their S-Corp and notarize it to avoid future issues.
In any case this topic is very confusing and it may sounds simple if you are taking legal risks.
My 2 cents.
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Users watching this thread:
ssardesai, robin, Javan, Snow1, Akdsa3456, nayymha, kaisersose, Hinoktok, desigujju, Ana35, samantha0916, mand00s, srisai9
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