As others here have said, an H1B visa requires demonstrating that the company could fire you, which isn't usually true if you own it. In the case of Rapportive, we had 3 cofounders, all needing visas; 3 turns out to be the perfect number for H1B purposes, because any two of you own enough of the company to fire the third. That sounds a bit circular, but made enough sense to USCIS that we got our visas, even though none of us was a US citizen. (Not that it was easy, but our difficulties were more about convincing them we were a real company.)
Of course, this isn't legal advice, and you'll want a good immigration lawyer who can prepare the petition appropriately for this arrangement.
Irrespective of traction,you have to do following which is very frustrating & time consuming.
1. Your company need to demonstrate ability to pay us "prevailing wages" as per SF standards [76k per year per person ] or Santa Clara [82 k per year person], office space and other general needs.
2. You need to hire some one (contractor is okie ) US citizen/Green card holder to sign off on the H1 application. That person can be any non technical person .e.g. accounting or marketing to demonstrate employee employer relationship.
3. You need to hire yourself as software developer demonstrating right skills and acting temp CEO /CTO . C position usually have higher salary ranges and have USCIS complications.
4.Form a board of directors who will have right to hire and fire you
Get lawyer who knows and have experience in immigration.
TL;DR - In practice, this is very difficult to pull off. There are some chicken and egg issues that make it very difficult and the government is a pain in the ass about it too.
The rule of thumbs are that you cannot control the business that is giving you a visa (you can be fired from the job), the company has to demonstrate significant financial resources to employ you, and you have to do the transfer in a way that doesn't raise red flags with the government. Let's break these down.
1 - you cannot have a controlling interest in the business. This means you need a cofounder or cofounders so that your share of the business is less than 50%. Finding cofounders is tough. Especially cofounders who want to run the risk of you being deported during the next 4 years. Yes, there are ways to do it so that you own 49% and your cofounder owns 51%, but then you better be really sure that you want to give up board control and company control to this other person. This also means that your cofounder has to be a citizen or green card holder. Lots of constraints...
2 - financial resources either means you're putting up a million dollars of your own money or you've gotten an investor to give you $500k. But why is an investor going to give you $500k without a product or cofounder ready to go, and with a chance that you may run into visa issues and not be able to run the business? And therein is the chicken-and-egg situation. You can't stay without a financially sound company. But no one will give you money if you can't stay. So most people wait till they have a green card or build something on the side until they can get some traction or get some clients so they can show enough traction to raise funding.
3 - we almost got screwed with one of our employees at Spool because the government thought we didn't exist. Pre-launch we didn't have a website, our address was a UPS box, and though we were funded and clearly real, the USCIS basically rejected the visa transfer for one of our employees because they thought we were a shell company setup just for this guy to stay in the US without working.
Ultimately, there are people in an office at USCIS that make these decisions. These people will reject applications if something smells fishy, will reject it if they think this is a shell corporation just so you can stay in the US, or if they don't understand that startups get started and hire employees in month 1 of existence. Keep in mind that this transfer has to happen quickly. Your previous employer has something like 30 days to report that you don't work there any more. And your new employer gets to keep you in the country as long as the visa transfer is in process, but if you get rejected you're out of the country. So the transfer needs to happen quickly...and often your company just got started, has no other employees, has no website or product in the marketplace yet, and various other red flags as far as USCIS is concerned. The sequencing of all of these events in practice is difficult.
===== The best option ===== There are lots of "clever" options. I don't endorse any of them and you try them at your own risk. The safest option is to try and start something on the side, get enough traction to be able to pull together a seed round, and then have that new company sponsor your h1b. Lots of investors will give you money if you demonstrate the beginnings of a real business. This is extremely difficult though...you will basically need to work two full time jobs until you can raise a seed round.
I really wish it weren't this way but unfortunately the US government's rules were built in a manufacturing era and make no sense in our modern information age.
Disclaimer: This is not legal advice. Go talk to an immigration lawyer for real legal advice.
However, from what I heard - if you're on H1B you can only work for the company that sponsored your visa. So, the "best option" itself is pretty dicey.
There are certainly employment contract issues -- moonlighting clauses, non-solicitation, and non-compete agreements. But those all apply to anyone building something on the side while employed full-time.
if you are working full-time and building something that is not even remotely related to your current full-time job, do those contract issues still apply ?
I'm not an immigration lawyer, so those guys will give you the best advice. Please consult one.
USCIS has updated the rules and clarified that a controlling interest in the company is allowed (i.e. > 50%) as long as the employee-employer relationship is maintained and a board of members exist who can control the employment and terms of the beneficiary.
http://www.washingtonpost.com/national/on-immigration-a-step...
http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f...
Specifically (quote from the page on the second link):
Q: The memorandum provides an example of when a beneficiary, who is the sole owner of the petitioner, would not establish a valid employer-employee relationship. Are there any examples of when a beneficiary, who is the sole owner of the petitioner, may be able to establish a valid employer-employee relationship?
A. Yes. In footnotes 9 and 10 of the memorandum, USCIS indicates that while a corporation may be a separate legal entity from its stockholders or sole owner, it may be difficult for that corporation to establish the requisite employer-employee relationship for purposes of an H-1B petition. However, if the facts show that there is a right to control by the petitioner over the employment of the beneficiary, then a valid employer-employee relationship may be established. For example, if the petitioner provides evidence that there is a separate Board of Directors which has the ability to hire, fire, pay, supervise or otherwise control the beneficiary, the petitioner may be able to establish an employer-employee relationship with the beneficiary.
When you say start something on the side. Do you mean trying to get the web application up and running, possibly even, accepting payments from users , then look for a seed round ?
Short answer - get a US citizen to act as the Majority Partner in the business if at all possible. Do not accept even a cent from your new company if you go this route until it is set up and Generating Payroll. Once founded then transfer your H1 using your new company and then become employee/partner.
There are still ways around the stringent H1-B rules for employment that you can use to start a company in your name. However I must advise extreme caution in using any of them. The USCIS (citizenship and Immigration) might take a dim view of people who enter the US for a "Specialty Occupation" visa and then switch to founding companies.
I wish you the best of luck - it takes a lot of work to get a company going. Doing it while dealing with the complexities of the US Visa system is just adding to the mountain of difficulties you need to overcome.
If you do pull it off legally, maybe you can write a blog post that tackles this issue for other aspiring entrepreneurs who would love to tread in your path.
Things may have changed since 07 (funding requirements, etc). IANAL, though - you definitely want a good immigration lawyer who's familiar with this stuff.
If you are trying to start a company, feel free to incorporate it and own all of it. I would suggest worrying about getting paid once you have revenues coming in.
Then hire a good lawyer to figure out your options.
If you see huge growth getting paid should be easier with investors (IANAL). Alternatively, you can have it run on the side with the company collecting the revenue that you can eventually retire on.
My father's in the process of working through the 'serious problems', please email me (in my profile) if you want more details.
I'm not sure however and I certainly wouldn't go off my word.
The rules for your company employing you is that you should be firable by some other person or the board i.e someone has to have a control over you. You should not taking decisions about yourself.