Appendix C: Self-Sponsoring via your own company

The title of this appendix may mislead you. There is actually no such thing as true self-sponsorship with the O1 visa, but there is a workaround. You can sponsor yourself via a company that you own, but you need to establish an employer-employee relationship between yourself and the corporation. An employee-employer relationship cannot exist if it is impossible to be fired.

According to USCIS wording:

While O-1 beneficiaries may not self-petition, a separate legal entity owned by the O-1 beneficiary may be eligible to file a petition on behalf of the O-1 beneficiary."

However, you can still be the majority or even sole stockholder of your corporation, as long as someone else in the corporation has the authority to fire you.

USCIS will use a number of factors to determine if the corporation really does have the ability to fire you. In all these questions the beneficiary is you, and the petitioner is your corporation.

• Is the beneficiary claimed by the petitioner for tax purposes?

• Is the beneficiary provided with any form of employee benefits by the petitioner?

• Does the beneficiary create the final product which directly relates to the petitioner’s specialization?

• Is the beneficiary’s work-product evaluated by the petitioner i.e. performance and/or progress reviews?

• Does the petitioner have the right to hire, fire, and pay the beneficiary?

• Is the beneficiary supervised by the petitioner and is the supervision on-site or off-site?

• How is the supervision maintained by the petitioner in off-site cases (i.e. routine reporting to head office, weekly calls, or the petitioner’s site visits)?

• Is the petitioner entitled to the control of the beneficiary’s work on a daily basis, if necessary?

C Corp vs LLC

If you're in the process of setting up your corporation, you will need to choose between an LLC or a C Corp. However, it is advisable to consult with an accountant or tax lawyer to discuss your specific use case and determine which option is best for you.

If you are starting a services consulting business, it is recommended to begin with an LLC. One advantage of an LLC is that it is a pass-through entity, which means that you are not required to report taxes at both the corporate and individual levels. This simplifies your operations significantly. On the other hand, C Corps face double taxation. This means that the corporation pays corporate income tax on its profits, and when the profits are distributed, shareholders are also required to pay personal income tax on the dividends. Consequently, this can result in a significant decrease in the net income to shareholders compared to a straightforward pass-through mechanism.

If your service-based business is experiencing growth or if you are considering seeking outside investment, it is possible to convert your LLC to a C Corp when necessary.

You’ll need a C Corp if you are starting a startup and require external funding. Venture capitalists typically prefer the standard corporate structure of a C Corp when making investments, and utilizing any other structure may present challenges. There are other reasons why an LLC may not be suitable for raising funds, such as restrictions on having foreign shareholders or accepting equity investments from other companies.

There are numerous pros and cons to consider when deciding between a C Corp and an LLC, which I won't go into at this time. It is advisable to consult with a professional to make an informed decision here.

In both cases, an employer-employee relationship can be established by hiring a CEO, forming a board of directors, or reporting directly to a supervisor.

You will need to provide evidence of this relationship such as:

• Bylaws showing board member’s names and responsibilities

• How your tasks and activities are determined?

Setting up your Corporation

There are many different online services that make it easy to set up a new corporation. I have come across various services used for incorporation.

• Clerky ($429). C Corps only.

• Stripe Atlas ($500). LLCs + C Corps.

• Capbase ($1k/yr). C Corps only.

Traditionally, there are two main ways to demonstrate the employer-employee relationship: holding minority equity in the corporation (less than 50%) or having a three-member board. Additionally, you will need a job offer from someone else within the company. This job offer can be provided by a co-founder, a partner, a board member, or even an HR agent.

The essence of the employer-employee relationship boils down to two questions: "Is there a job offer from the company?" and "Is there someone within the company (other than the beneficiary) making that job offer?" Some individuals have successfully established this relationship without holding minority equity or having a board by simply receiving a job offer from another person within the company who can demonstrate that they are responsible for managing their work. At the time of writing this (May 2024), this seems to be effective. However, it is highly recommended to consult with your lawyer to ensure its validity.

1) Own less than 50% of the shares

If you possess less than 50% of the company's shares, it indicates that you do not have the majority of power within the company, thus establishing an employer-employee relationship.

2) Establish a board of directors.

In cases where the founder owns more than 50% of the company's shares, they can demonstrate an employer-employee relationship by creating a Board of Directors instead.

If the company is formed as an LLC rather than a corporation, it will have a "Board of Managers" instead of a "Board of Directors". A limited liability company can be either "manager-managed" or "member managed". If you are relying on the employer/employee relationship, it is important to ensure that the entity's articles/certificate of formation, filed with the relevant state, clearly state that it is a manager-managed entity. The Board of Managers is then appointed based on the company's limited liability company operating agreement. If such an agreement already exists, the appointment can be made through an authorized amendment made by the members.

It is crucial to ensure that the founder/employee is not the only member of the Board. If they are a member of the Board, there should be at least two other directors who hold the majority vote.

Additionally, you should verify that the company's bylaws accurately state the number of directors the company is allowed to elect. Furthermore, ensure that the Board makes decisions through majority or supermajority consent on all matters. This way, the founder/employee will be under the supervision of the Board and cannot control its actions.

Other Considerations

Other than the employer-employee relationship, USCIS will want to ensure that you have a legitimate company. Here's some examples of how you can prove it:

• Ensure that you have a website and appear on Google.

• Demonstrate that you have contracts in place with other companies by providing Master Service Agreements (MSAs) between your company and others.

• Show evidence of revenue from sales, such as reports from payment processors like Stripe.

• Demonstrate that you have sufficient funds to pay employees. It is generally recommended to have at least $50,000 in a corporate U.S. bank account as proof that you can pay employees, even if the only employee is yourself.