You can invest money in a business, but the government considers starting a business to be work. Because there is no official safe harbor guaranteeing that equipment leasing counts as purely passive investment, the safest route is to authorize the venture through Optional Practical Training (OPT).
“I am on an F-1 visa and my friends want to start a party rental company. Is it legal for me to purchase the expensive equipment, like a photo booth, and collect a leasing fee, provided a US citizen manages all sales, delivery, and setup, and I do absolutely no work?”
Summary
You did the right thing by checking the rules before buying the equipment. By securing the right authorization first, you protect your visa status and keep your future options open.
Your options depend on whether this party rental venture directly relates to your academic program.
If the leasing venture directly relates to your program of study, you can apply for Optional Practical Training (OPT). This authorizes you to earn income from the business.
If the venture does not relate to your studies, you cannot use OPT. You must make sure the investment involves absolutely no service or labor. You can then apply for an Individual Taxpayer Identification Number (ITIN) to report purely passive rental income.
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Why a lack of daily work is not an automatic exemption
You asked if doing absolutely no daily operational work automatically exempts you from being employed. It does not. The U.S. government explicitly defines starting your own business, or entrepreneurship, as work.
Immigration attorneys advise that while immigration law allows F-1 students to invest in a company and receive dividends, you are not permitted to operate the business, engage in business, or receive revenue or salary once it is established.
You also asked if leasing equipment constitutes unauthorized employment. The documents do not provide a safe harbor to guarantee that leasing equipment will be classified as a purely passive investment rather than unauthorized entrepreneurship. Because any venture classified as a business requires OPT authorization, relying only on a lack of daily work is risky.
Next steps
If the equipment leasing venture relates to your program of study, follow these steps to authorize it:
Confirm the venture relates to your studies
Check that the equipment leasing business directly relates to your F-1 program of study. This is required for OPT.
Request an OPT recommendation
Ask your Designated School Official (DSO) for an Optional Practical Training (OPT) recommendation.
Receive your updated Form I-20
Your DSO will provide an updated Form I-20 with the OPT endorsement.
File Form I-765 with USCIS
Submit your Application for Employment Authorization (Form I-765) to U.S. Citizenship and Immigration Services (USCIS).
Wait for your EAD
You must wait to receive your Employment Authorization Document (EAD) from USCIS before you begin the leasing venture.
Apply for a Social Security Number
Once you have your EAD, apply for a Social Security Number (SSN) so you can report the income.
Legal sources
These facts come from the Department of Homeland Security, the IRS, and immigration attorneys.
Study in the States
The U.S. government considers starting a business to be work, which requires OPT authorization related to your studies.
The U.S. government considers starting your own business in the United States, also known as entrepreneurship , as work.
The Jacobs Law, LLC
Immigration attorneys advise that F-1 students can invest in a company and receive dividends, but cannot operate the business or receive revenue without additional authorization.
Once the business is established, however, {International Students, F1 visa students} are not permitted to operate their own business, engage in business, or receive revenue, compensation or salary.
USCIS Policy Manual Vol 7, Part B, Ch 6
Unauthorized employment is defined as any service or labor performed for an employer without authorization.
Unauthorized employment is any service or labor performed for an employer within the United States by an alien who is not authorized by the INA or USCIS to accept employment
This is general information, not legal advice. Consult a licensed immigration attorney to confirm how these rules apply to your specific situation.
SettleKit is not a law firm. This information is for general guidance and does not constitute legal advice.
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