International students in the U.S. often dream of starting their own businesses or working independently while on Optional Practical Training (OPT). The good news is that self-employment is generally permitted during the initial 12-month OPT period, offering entrepreneurial students the chance to explore their passions. However, the 24-month STEM OPT extension comes with stricter regulations, making self-employment a challenging, if not impossible, option. This article provides a detailed guide to self-employment on OPT and STEM OPT, highlighting the key requirements and legal considerations.
Key Takeaways
- Self-employment is permitted on the 12-month post-completion OPT but restricted on the 24-month STEM OPT extension.
- To qualify, your business must relate to your field of study, and you must meet all licensing and reporting requirements.
- STEM OPT demands a structured employer-employee relationship, eliminating most self-employment options.
- Legal guidance is crucial to ensure compliance with both business and immigration laws.
Context
Optional Practical Training (OPT) has long been a critical tool for international students, allowing them to work in roles directly related to their academic field. The initial 12-month OPT period provides flexibility for employment, including freelancing or starting a business. In 2008, the U.S. introduced a STEM OPT extension to support students in science, technology, engineering, and mathematics fields. Extended to 24 months in 2016, this program added stricter requirements to enhance training and supervision, making self-employment nearly impossible during the extension.
What Is Self-Employment on OPT?
Self-employment on OPT means starting your own business, working as a freelancer, or contracting with multiple clients. This is an exciting opportunity for entrepreneurial students to gain hands-on experience in the U.S.
Key Requirements for Self-Employment on OPT
Connection to Your Degree: The business must directly relate to your major as listed on your Form I-20. For instance, a computer science graduate could start a web development agency.
Proper Licensing: Students must obtain all necessary business licenses and a Federal Employer Identification Number (EIN).
Full-Time Engagement: You must actively work in your business, typically meeting the minimum of 20 hours per week.
Reporting Compliance: Self-employed students must report their employment details, including how the work relates to their degree, to their Designated School Official (DSO) within the required timeframe.
Starting a business on OPT is possible if it aligns with your field of study and you comply with all reporting and licensing requirements.
Why Self-Employment Is Restricted on STEM OPT?
While the initial OPT period offers flexibility, the STEM OPT extension introduces more structured guidelines. The STEM OPT extension focuses on providing supervised, practical training in STEM fields, which excludes self-employment.
STEM OPT Employment Rules
Employer-Employee Relationship: You must work for an employer who can provide training and supervision as outlined in the Form I-983 Training Plan.
E-Verify Requirement: Employers must be registered with the E-Verify program.
Training Plan Compliance: Employers must outline how the job relates to your STEM degree and provide resources to meet the training plan’s goals.
These requirements make it nearly impossible for self-employed individuals to qualify, as they cannot attest to their own supervision.
STEM OPT’s structured requirements prioritize employer oversight and training, leaving little room for self-employment opportunities.
Forming an LLC While on OPT
Forming a Limited Liability Company (LLC) is a common choice for students pursuing self-employment on OPT. An LLC offers flexibility, limited liability, and ease of management.
Steps to Form an LLC
Choose a State: Register your business in the state where you plan to operate.
Obtain an EIN: Apply for a Federal Employer Identification Number from the IRS.
File Formation Documents: Submit Articles of Organization to the state’s business authority.
Open a Business Bank Account: Separate your personal and business finances.
Keep in mind that your business activities must comply with U.S. immigration laws and remain connected to your academic field.
Forming an LLC on OPT can streamline business operations while maintaining compliance with U.S. laws.
Alternatives for STEM OPT Students
If you’re on STEM OPT and want to explore entrepreneurship, consider these alternatives:
Work for Startups: Join a startup registered with E-Verify to gain valuable business insights.
Collaborate with E-Verify Employers: Use this period to build skills and expand your network.
Prepare for the Future: Focus on skill-building projects outside of your STEM OPT to prepare for entrepreneurship after OPT.
STEM OPT students can still pursue entrepreneurial goals indirectly by working in startups or STEM-focused companies.
Legal Aid and the Need for an Immigration Attorney
Starting a business as an international student involves managing complex immigration and business laws. Consulting an experienced attorney can help you avoid pitfalls and ensure your business is compliant.
How an Attorney Can Help?
Licensing Requirements: An attorney can determine which business licenses are necessary based on your field and location.
Immigration Compliance: Legal experts can confirm that your business activities meet OPT requirements.
Tax Obligations: Attorneys can guide you on tax filing requirements for your business.
Seeking legal assistance is critical for protecting your immigration status and ensuring your business operates smoothly.
Conclusion
Self-employment on OPT offers a unique opportunity for international students to develop entrepreneurial skills in the U.S. While the initial OPT period allows for self-employment, the STEM OPT extension imposes stricter regulations that limit flexibility. By understanding the requirements and seeking legal guidance, students can maximize their OPT period and prepare for future business ventures.
Frequently Asked Questions (FAQs)
Can I start a business during my OPT?
Yes, as long as the business relates to your field of study and meets all licensing and reporting requirements.
Can I be self-employed during STEM OPT?
Generally, no. The STEM OPT extension requires a bona fide employer-employee relationship, which self-employment does not satisfy.
What licenses do I need to start a business on OPT?
The required licenses vary by state and business type. Consult an attorney for guidance.
Can I form an LLC while on OPT?
Yes, but your business activities must comply with immigration and state laws.
What is the role of Form I-983 in STEM OPT?
Form I-983 outlines the training plan for STEM OPT employment, requiring supervision and compliance with STEM field goals.
Should I consult an attorney before starting a business on OPT?
Yes, legal advice ensures compliance with immigration and business regulations, protecting your status as an international student.
Authors: Jonathan Wasden & Justin Rivera, Immigration Attorneys