A Guide To Start Your Company on H1B/H4 EAD

Since this question keeps popping up, I thought I will share some details to help folks with H4 EAD.

1) Can an H1B VISA holder start a company?
Absolutely yes. Myth is H1B holders can't start their business. Truth is H1B holders can start their business and invest in it as long as they hire someone to manage their business.

2) Who can manage an H1B's business?
This is where your spouse's H4 EAD helps. Your spouse can be listed as the manager of your company and your spouse must run your business. The H1B shouldn't actively contribute to the business but thats a grey area and you can always deny.

3) How often can you get paid?
While on H1B you must draw salary only from your H1B sponsor. Your business can't pay you a monthly salary. However, you can withdraw funds from your profits and it must be reflected at the time you file your taxes. CPAs come in handy for this purpose.

4) Do you need an attorney to setup your business and business documents.
Ideally yes if you have outside investors. Its worth to spend money on good attorneys to draft your company's formation documents. Having said this, if you are the sole investor and you spouse is running the company, I would suggest to use legalzoom to setup your business. Its convenient and they do bulk of the heavy lifting for you. Legalzoom has a default write up for the formation documents and most of the time that is sufficient. it costed me around $600 back in 2018 when I setup my LLC.

5) Do you need a registered agent service?
No. Your H4 EAD spouse can act as the registered agent. Legalzoom charges an atrocious $350/yr for this service. Go through the state's website where your business is registered and look for online forms where you can modify the registered agent. It hardly took me 1hr to have my spouse registered as my LLCs registered agent in Texas. Its worth the effort and money.

6) Do you need a business checking account?
Yes. You want to keep your personal and business accounts separate. Also you need to have a clear trail of the money that you receive and spend. A business credit card helps too where you can get points and save some money there.

7) Do you need a CPA to file taxes?
Yes. They know all the ways to save you money.

8) Which software to use for bookkeeping?
I use quickbooks online to consolidate my transactions from my business checking and business credit cards. Its super easy and cheap. I enable my subscriptions only at the start of the year when I need to consolidate my records. They have a pause feature which you can use and your data is not lost.

9) Do I need to trademark my company's name?
This is important. This helps with any legal issues you face when a competitor infringes your company's name. I can do it for a $100 fee :)

10) Do I need a business insurance?
If you are a startup and your products are not out yet, then this is not required. But once your products are used by end consumers, you want to have a business insurance to protect you from legal issues. Hartford insurance is pretty good. I pay $700/yr for my business which provides upto 1mil in coverage.

11) Do I need a website/app?
Depends on what you sell. I have a website but bulk of my sales comes from Amazon.
I also get occasional pings from my website by customers who wants to know more about my products. So it helps in providing good customer experience. besides providing a gmail/yahoo email address doesn't go well with customers who will think you brand is cheap. I can help setup shopify websites for a price. DM me for details.

12) Do you need a business plan?
Yes, it makes you think about the shortcomings about your product and address them. Without business plan, you will not be able to guide the business well. Spend a good amount of time working out the details.

13) Should I start a DBA/LLC/C-Corp/S-Corp?
For most businesses DBA is better, but I would prefer LLC if you have products which can lead to potential legal issues eg beauty care products, kids toys etc. LLC helps to keep your wealth separate from company's.

Other tips:

We people are making good money these days, we get very excited about starting a business and spend a hell lot of money without our knowledge.
Always ask these questions -
* Is this absolutely required? Its ok to do some repetitive tasks by yourselves than purchasing a machine/service.
* If a purchase is necessary, is a second hand option available? You always dont need the latest. In my case I hand label all my items and I dont have a labelling machine yet as my sales are not very good yet.

BE MINDFUL OF HOW MUCH YOU SPEND.

Advertising is essential to gain customers. You may have a great product, but without advertising/marketing your business will fail.

Its always difficult to get the first 10 orders. Don't get fed up. If you product is good, you will succeed.

Also be mindful when you order supplies. You don't want to order 1000 units when you are going to sell only 100units/yr. Bulk pricing is cheap, but you save $$$ when you order in small quantities. Besides during the early stages you always want to refine and try. Buying in small quantities helps in experimenting.

Startup requires good commitment by all family members. In my case, my spouse doesn't care at all and things didnt turn out well. You need good support from family and friends. Its better to have two co-founders as you can exchange ideas and refine them. Problem with single founders is they tend to think straight and assume it will work. two minds are always better than a single mind.

I will keep updating this post when I come across more details or details which I have forgotten.

Best wishes starting your business.

-B

#startup #h4ead #ead #smallbusiness