Overview

On January 17, 2025, the Department of Homeland Security (DHS) implemented the H-1B Modernization Final Rule, the most significant update to the H-1B program in more than a decade.

For the first time, the rules clearly acknowledge that entrepreneurs and startup founders can hold H-1B status through their own companies. The old expectation that founders had to prove an outside party controlled their employment has been removed.

USCIS now focuses on whether the company is a bona fide business, whether the position is a specialty occupation, and whether the prevailing wage is being paid.

What Founders Must Show Under the New Rules

A Specialty Occupation Role: The founder’s position must qualify as a specialty occupation (generally requiring at least a bachelor’s degree in a specific field). Clearly outline the duties, the degree required, and how those duties are central to the company’s work.

A Bona Fide Business: USCIS will require proof that the company is legally established and actively operating. At a minimum, founders should provide:

• FEIN (Federal Employer Identification Number): Confirmation that the business can hire and pay employees.
• Articles of Incorporation / Certificate of Formation: Showing the company exists as a legal entity.
• Bylaws or Operating Agreement: Outlining structure and ownership.
• Business Licenses: If required in the company’s jurisdiction or industry.
• Business Bank Account: Evidence of financial activity.
• Payroll Setup: Demonstrating ability to pay the prevailing wage.

In addition to these formation documents, a business plan remains one of the strongest tools to show USCIS that the startup has substance and direction. A strong plan should include:

• Company overview and ownership structure.
• Market analysis and target customers.
• Clear description of products or services.
• Financial projections for 12–24 months.
• Evidence of funding (bank statements, investor letters, grants).
• Operations plan, including office location and staffing.

Practical Tip: Save and organize business records from day one—formation papers, tax ID, payroll reports, bank statements, and contracts. USCIS will expect to see them during adjudication or in a site visit.

Prevailing Wage Compliance: Founders must be paid the prevailing wage listed on the Labor Condition Application (LCA) through standard payroll with taxes withheld. Equity or “sweat equity” alone does not meet H-1B requirements.

Transparency for Site Visits: The rule reinforces USCIS’s site visit authority. Founders should expect an officer to visit the listed office location and confirm the work matches the petition.

Practical Tips for H-1B Entrepreneurs

• Define the Role Carefully: Describe the founder’s H-1B job in terms of duties, not just ownership.
• Use Payroll from the Start: Maintain proper pay records and tax documentation.
• Build Evidence Early: Save contracts, client correspondence, and funding documents.
• Leverage the Business Plan: Treat it as your central exhibit, supported by real evidence.
• Plan for Long-Term Immigration Options: Consider how H-1B status will lead into EB-1A, EB-2 NIW, or EB-5 as the company grows.

Key Takeaway

The H-1B Modernization Final Rule (effective January 17, 2025) makes H-1B a reliable option for entrepreneurs and startup founders. To succeed, founders should:

• Demonstrate a specialty occupation role,
• Present a detailed and well-supported business plan,
• Pay themselves the prevailing wage through payroll, and
• Be prepared for site visits.

With proper preparation, the H-1B can now serve as a foundation for entrepreneurs to grow their companies in the United States while maintaining lawful status.

By: Adena Bowman

Adena Bowman is a Senior Associate Attorney at Reddy Neumann Brown PC with over 12 years of experience in U.S. immigration law. She helps clients ranging from small businesses to large multinational corporations bring workers to the U.S. and stay compliant with immigration regulations. She also guides individual clients through employment, investment, and family-based immigration matters. Clients rely on her for clear guidance, strategic planning, and personalized support in navigating complex immigration challenges.