F-1 students with an entrepreneurial spirit should not be deterred from moving forward with their business endeavors! F-1 students in the United States seeking to start a business that is directly related to their major area of study may be eligible for Occupational Practical Training (OPT). During the initial period of OPT, students may start, own and work for their own business. However, the work performed must directly relate to their major area of study. Students under STEM OPT must adhere to additional requirements.
OPT
A student may be self-employed on OPT if the student: (1) has the proper business licenses, (2) is actively engaged in the business, and (3) the business is related to the student’s degree program. To comply with the first requirement, the student’s business must be registered with the state, the student must have all their formation documents, and they must ensure that they are complying with any other additional licensing requirements. The business must also have an EIN. To comply with the second requirement, the student must be employed full-time and keep good records that prove this. Lastly, to comply with the third requirement, the Designated School Official (DSO) must decide that the business is related to the student’s area of study.
An F-1 student may start and work for their business while still in school if they have been authorized full-time practical training. They may be authorized up to a total of 12 months at each educational level. If the student is authorized to engage in pre-completion OPT, they may not work more than 20 hours per week while school is in session but may work full-time during annual vacation and other times when the school is not in session.
STEM OPT
Students who graduate with a qualified STEM degree, and are currently in an approved post-completion OPT period based on a designated STEM degree, may apply for a 24-month STEM extension of their post-completion OPT.
In addition to the OPT requirements, STEM OPT requires adherence to several rules for students wishing to be self-employed. First, the business must be registered with the E-Verify system. The E-Verify system is an online service that electronically confirms an employer’s information against government records. In addition, the students must be compensated; they must be on payroll or receive some type of alternative compensation. Such alternative compensations must be commensurate of what other similarly situated U.S. workers at the company are receiving. Furthermore, the student must be in a bona fide employer-employee relationship. To document this, the student must submit a training plan on Form I-983 describing the nature of the employment. Please note: the Department of Homeland Security has made clear that the students cannot provide the attestations on Form I-983, meaning they cannot sign the form on their behalf.
The rules do not bar the student from maintaining equity ownership interest in their company. The company itself and any equity ownership within that company must be structured properly so that all requirements are met.
How to apply for F-1 OPT/STEM OPT?
Once the student has received a recommendation from their DSO to pursue OPT, they must apply for an Employment Authorization Document (EAD) with USCIS. For pre-completion OPT, the student may apply up to 90 days before completing a full academic year. For post-completion OPT, the student must apply within 30 days after their DSO enters the recommendation into the SEVIS record. Additionally, they may apply up to 90 days prior to the program end date but no later than 60 days after the program end date.
If the student has completed a qualifying STEM degree, and they are currently in an approved post-completion OPT period based on a designated STEM degree, they may be eligible to apply for a 24-month STEM extension of their post-completion OPT. For a STEM degree to qualify, it must appear on the DHS STEM Designated Degree Program List. If the student wants to apply for a STEM extension, they must apply for the extension with USCIS before their current OPT work authorization expires, but no more than 90 days before the expiration of their OPT. Additionally, they must apply within 60 days after their DSO enters the recommendation into their SEVIS record.
For more information or any additional guidance to ensure adherence to the requirements, please contact our office today!
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