USCIS Policy Manual Regarding a sole proprietorship L1
USCIS recently updated its policy manual to clarify that they will not approve an L-1 petition filed by a sole proprietorship where the employee being transferred to the U.S. is the sole proprietor themselves. The stated reason for this is that with a sole proprietorship structure, there is no distinction between the individual and the business, therefor a sole proprietor who files an L-1 petition with USCIS would be filing a self-petition, which is not permitted for L-1 visas. It is important to note that this guidance does not mean that sole proprietorships can never sponsor employees for L-1 visas, rather it means that sole proprietorships cannot sponsor the sole proprietor of the company.
The L-1 visa allows an employer to transfer a manager, executive or employee with specialized knowledge to the U.S. There must be a qualifying corporate relationship between the U.S. company and the company abroad and the employee must have worked for the company abroad in a managerial, executive or specialized knowledge role for at least one year out of the past three years. Both the U.S. company and the company abroad must be actively doing business. It is also possible for an employee to be transferred to the U.S. to set up a new office.
For an L-1 application, the U.S. employer must file a petition with U.S. Citizenship & Immigration Services (USCIS). Common business structures in the U.S. include corporations, limited liability companies, partnerships and sole proprietorships.
The scenario above is distinguished from a situation where the sole owner of a U.S. corporation or limited liability company (LLC) wants to apply for an L-1 visa. It is well-established that a corporation or LLC is a separate and distinct entity from the individual owner(s), therefore it is permissible for that distinct business entity to petition on behalf of the owner of the company.
Based on this guidance, if an entrepreneur is opening a new office in the U.S. as a sole owner and wants to apply for an L-1 visa, they should form a corporation or limited liability company.
