Dear Sophie: Can an H-1B co-founder own a Delaware C Corp?

Dear Sophie: Can an H-1B co-founder own a Delaware C Corp?

Here is another version of “Dear Sophie”, a consultation column that answers questions about immigration about working in technology companies. “Your questions are vital to the spread of knowledge that allows people around the world to rise above the boundaries and pursue their dreams,” said Silicon Valley Immigration Attorney Sophie Alcorn.

“Whether you’re in the public eye, a founder or looking for a job in Silicon Valley, I’d love to answer your question in my next column.” Additional Crunch members get access to the weekly “Favorite Sophie” columns; Use promotional code ALCORN to purchase one or two year subscriptions for a 50% discount.

Dear Sophie:

My VC partner and I have been working with 50/50 co-founders since their inception – let us call it NewCo. We are exploring pre-seed terms. One founder is on the green card and is already working there.

He is another founder from India and working in H-1B at a large technology company. Can an H-1B co-founder lead this organization? What is the time to square everything? If we invest, we want them to hit the ground running.

—Diligent in Daly City

Hello, hardworking

Thanks for your question. It has always been very exciting for me to hear about new companies launched and it was the year for creativity because of the need to discover. The easiest way is for the founding president and CEO with a green card and the H-1B co-founder to be an employee working in a specialized technical role to qualify to transfer H-1B from an existing employee for a new start.

However, there are a few potential immigration issues to be aware. Check out my recent podcast about proper perseverance in immigrant-established startups. The good news is that we can transfer the work of the H-1B founder to NewCo, although it is a small, pre-revenue company. Perhaps NewCo has a strong business plan. If you can make this investment so that the company has the capacity to pay H-1B conventional wages, we can usually execute the H-1B transfer on behalf of the organization in about 2-3 months.

It is important for founders to be aware of the proposed equity split. The easiest is if the founder in H-1B owns less than 50% of the company. If this person must own the majority, then some structural work can done to qualify for H-1B with the corporate structure, but it is more complicated. In order to qualify for H-1B – whether it be a transfer, initial application or extension – the sponsoring employer must show that there is an employer-employee relationship between the organization and the H-1B beneficiary.

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