There are two main requirements for the employers of H-1B employees: business need and ability to pay. These two requirements can be particularly challenging for smaller companies when USCIS adjudicates an H-1B petition.

The business-need requirement states that the H-1B job offer must be for a bona fide position, and one for which the business has a genuine need. This requirement is meant to prevent companies from filing H-1B petitions for superfluous or phony positions—i.e., to prevent the abuse of H-1B visas. The position offered, the nature the business, the size of the business and a common sense are important factors.

The ability-to-pay requirement states that the company must prove that it has the financial means to pay the employee the wage stated on the application (which must be greater than or equal to the prevailing wage—more on that below). Regardless of the company’s size or whether it is currently making a profit, the company must prove that it is able to pay the employee through its cash flow or equity reserves. Usually, we can submit tax returns, financial statements (balance sheet, P&L, and bank statement etc), employee payrolls, and all other existing/potential income sources to show the firm’s ability to pay.

Technically, USCIS will never approve or reject an H-1B case based on the size of the petitioning firm. However, smaller companies often have a more difficult time meeting the business-need and ability-to-pay requirements, as well as facing other challenges unique to their situation. Thus, there are more chances that USCIS may challenge these requirements on H-1B petitions submitted by small companies.

Challenge 1: Business Need

The first requirement that can be challenging for small businesses to meet is business need. Essentially, a small business applying for an H-1B must demonstrate that the relevant job offer is necessary to the company’s operation; it cannot be something that the company created simply for the purpose of applying for an H-1B visa.

The best ways to overcome this challenge will vary depending on companies’ individual situations. However, the basic rule here is that the employee needs to provide a necessary service that the company will actually use.

For example, in one successful H-1B case that our firm handled, a financial consulting firm was filing an H-1B petition for a financial analyst. The company consisted of two partners who were not on the payroll and no other employees. The petition was approved because the firm had a genuine business need for a financial analyst, who would observe current conditions and help the partners advise their clients.

However, if a very small restaurant wants to hire an alien with a computer master’s degree as its IT manager, USCIS is very likely to challenge the real business need for this position. Normally, a very small restaurant does not need a sophisticated computer system, and there is no need for an IT manager.

Part of this requirement also involves demonstrating that the business is a sound business that will actually be able to use the work of the employee. We once helped a one-person company successfully apply H-1B. The client, Mr. Park, was an F-1 student, when he set up and operated an online shopping company during his OPT time after he got a bachelor degree in the US. Then, he hired one employee to work for the company when he returned to a Master program. During that period of time, the company had decent business. After he got his master degree, he retained our firm to file an H-1B petition for him. In the H-1B petition, he clearly stated that he was the 100% owner of the company. As the company had a well established business and structure, his petition was approved.

Challenge 2: Ability to Pay

It can be difficult for smaller businesses, especially brand new businesses, to prove that they are able to pay an employee’s wages. However, it’s important to remember that for the purpose of this requirement, the company does not need to be profitable; it only needs to prove that it has the cash flow or equity reserves to pay the employee’s salary.

For example, a company that is not yet profitable might still have a certain amount of start-up money. In one case that our firm successfully filed, a man who owned a foreign company was setting up a U.S. branch and wanted to hire his niece to be its operational manager. The owner invested enough seed money (around $50,000) into the new branch to prove that his company was able to pay his niece.

A company might also be able to establish ability to pay based on a future contract, as long as that contract will have gone into effect by the time the H-1B employee starts working.

Challenge 3: Specialty Occupation

Even if there is a genuine business need for a particular position, it still might not qualify for an H-1B petition. An H-1B petition must be filed to fill a specialty occupation.

By definition, a specialty occupation requires “theoretical and practical application of a body of highly specialized knowledge.” Furthermore, a specialty occupation requires a bachelor’s degree or higher (or its equivalent) as a minimum for entry into that occupation.

This requirement can be challenging for small businesses because often, in a small business, one employee will have diverse responsibilities—often ranging from more specialized duties to general management and administration.

Usually, the best way for businesses to overcome this challenge is to choose an occupational title that emphasizes the beneficiary’s education and qualifications, and the specialty nature of the job he or she will be doing. Ideally, the requirements of the position will match the beneficiary’s academic specialties or strengths.

For example, the title of an employee with an M.B.A. from a foreign country should not be “account manager,” but rather something along the lines of “international logistics specialist.” The former title does not necessarily involve a body of highly specialized knowledge; the latter, however, emphasizes the employee’s international education and experience.

In another example, a small home renovation firm (with one owner and one construction worker) hires an alien with a accounting bachelor’s degree as “accountant” to deal with their basic book keeping work, such as entering the bills from vendors, paying bills, processing payroll data, preparing sales invoices, mailing statements to customers, etc. There is a very high chance USCIS will challenge this position as a “specialty occupation” which needs an accounting bachelor’s degree as a minimum for entry into that occupation. Actually, the intended job responsibilities for this small firm are mainly conducted by a “bookkeeper,” which normally does not need a college degree in accounting.

However, an accountant have more complicated and advanced job duties. An accountant needs to review information that a bookkeeper has entered into the general ledger, to prepare adjusting entries, to prepare the financial statements and analyze them, and other more complicated activities. Normally, an accountant supervises one or more bookkeepers. Generally, the accountant will have a four-year or a five-year college degree with a major in accounting.

So for this case, there is a high chance USCIS will deny this H-1B petition.

(More detailed information about offering the right position is available here.)

Challenge 4: Minimum Prevailing Wage

Another requirement of an H-1B petition is that a company pay the H-1B employee the prevailing wage for that particular position in that geographic area.

Specifically, the company must pay the employee whichever is higher: of the actual wage that it pays to other employees with similar experience and qualifications, or the prevailing wage level for the occupation in the area of intended employment. The latter is determined by external agencies, such as the Department of Labor, a state employment agency, or a private organization.

This requirement can be problematic for small businesses because they often pay lower wages to their employees. In general, we recommend that companies in this situation consult an experienced immigration attorney for professional advice. Our strategy for these situations is to consult diverse sources for prevailing-wage information; for example, our firm regularly consults state employment and security agencies and a database maintained by the American Immigration Lawyers Association. However, we may also use other sources if these two fail to resolve a disparity between prevailing wage and the employee’s salary.

Although USCIS may challenge an H-1B petition filed by small companies, USCIS never deny a case simply because of the small size of the firm. After all, most of the big and great companies in the world, like Dell, HP and Yahoo, were small and starting its journey in student dorm, garage or basement.