Introduction

The L-1 (“L1”) nonimmigrant visa category [see category] is for intracompany transferees. While it can be used by business owners to transfer from a foreign company to a related company, the L1 category does not permit self-petitioning. On October 20, 2023, the United States Citizenship and Immigration Services (“USCIS”) published new guidance in the form of PA-2023-29 [link] clarifying its policy that sole proprietorships — that is where the owner and the beneficiary are the same — are not eligible for L1 visa petitions on account of the category’s prohibiting self-petitioning. Below, we will examine the new guidance, which has been incorporated into the USCIS Policy Manual at 2 USCIS-PM L.5 [link] and L.10 [link], including distinguishing sole-proprietorship cases from similar cases where an L1 visa may be available.

L-1 Does Not Permit Self-Employment

The Policy Announcement explains that “[t]he L-1 nonimmigrant visa classification enables a U.S. employer that is part of a qualifying organization to temporarily transfer employees from one of its related foreign offices to locations in the United States.” In short, the L1 category requires the petition beneficiary to have worked abroad for a certain period for a company that has a qualifying relationship with the U.S. petitioner. Certain employment immigration categories permit individuals to petition for themselves. The E-2 (“E2”) nonimmigrant investor category [see category] is a good example in the nonimmigrant context. The L1 category does not permit self-petitioning or self-employment. It requires a qualifying employer to file the petition.

Notwithstanding the L1 visa category’s prohibition on self-petitioning, the category does not strictly preclude a business owner from having his or her own business act as the petitioner. In this way, the L1 category is arguably more flexible for business owners and certain types of entrepreneurs than many other nonimmigrant work visa categories, including H-1B (“H1B”) [see category] and O-1 (“O1”) [see article]. Whether any specific arrangement satisfies the L1 rules will always depend on the facts of the particular case. The USCIS’s new sole proprietorship guidance helps clarify the limits of the L1 category in cases where the beneficiary owns or runs the petitioner.

Defining “Sole Proprietorship”

The Policy Announcement updated the USCIS’s Policy Manual at Volume 2, Part L, Chapter 5(A). The revised guidance defines the term “sole proprietorship” for our discussion: “A sole proprietorship is a business in which an individual owns all the assets, owes all the liabilities, and operates the business in the individual’s personal capacity.”

The USCIS next explains that the term “sole proprietorship” does not describe every case in which a business has “a single owner or shareholder.” The USCIS distinguished this from other common types of businesses: “Unlike a corporation or other separate and distinct legal entity that may have a single owner or shareholder, a sole proprietorship does not exist as a distinct legal entity separate from the individual owner.” It is possible for single owner/shareholder cases to not be sole proprietorships. The question in single owner/shareholder cases is whether there is a distinct legal entity separate from the individual owner or shareholder.

The Policy Manual specifically distinguished sole proprietors from self-incorporated petitioners (e.g., corporation or limited liability company with a single owner) in the L1 context: “Although a self-incorporated or self-organized petitioner may only have one owner, the corporation or the single member limited company is a separate and distinct legal entity from owners, stockholders or members and therefore may petition for that owner.” Thus, so long as the business legally distinguishable from the sole owner, the business is not precluded from petitioning for the sole owner.

Sole-Proprietorships and L1

The Policy Manual explains that the L1 category requires that an L1 beneficiary must have been “employed continuously… by a firm or corporation or other legal entity or an affiliate or subsidiary thereof…” (quoting INA 101(a)(15)(L)). In short, this means that the L1 category presumes an employer-employee relationship between a legal entity separate from the employee and the employee. The Service has long held that this relationship cannot exist in a sole proprietorship. Matter of Aphrodite Investments Limited, 17 I&N Dec. 530 (Comm. 1980) [PDF version]. “Such a petition where the sole-proprietor owner and beneficiary are the same would be considered an impermissible self-petition.”

Sole Proprietorships Petitioning For Employees

While a sole proprietor cannot file an L1 petition for him or herself, a sole-proprietorship can file a petition for a qualifying employee. The USCIS recognizes that “a sole proprietorship may have employees.” There is nothing prohibiting a sole proprietorship from petitioning for an employee provided that all of the generally applicable L1 requirements are met — including the existence of “[a] qualifying L-1 relationship…” (e.g., “[f]or example, a person may be the sole proprietor of an entity abroad and also of one in the United States…”). Before continuing, please note that whether any specific arrangement satisfies the L1 requirements depends on case-specific facts.

The USCIS recognizes that “[g]generally, no special documents are executed when a sole proprietorship is created and commences doing business.” Sole proprietorships in the United States may use the sole proprietor’s own social security number as their Employer Identification Number.

In the context of filing an L1 petition, the sole proprietor must establish ownership and control of the sole proprietorship. The Policy Manual explains that the most common evidence of ownership control is the owner’s individual federal tax return. The USCIS notes that sole proprietors may also submit leases, employment contracts, sales agreements, or similar documents that the owner executed on behalf of the sole proprietorship. The USCIS also requires evidence that identifies the owner of the sole proprietorship. “The evidence may include, but is not limited to, a license to do business, record of registration as an employer with the IRS, business tax returns, or other evidence that identifies the owner of the business.”

Other Relevant Guidance On Ability to Pay Issues

We published an article covering guidance for cases wherein a sole proprietorship has to establish that it has the ability to pay the proffered wage [see section]. We separately wrote about an important administrative precedent decision titled Matter of Sonegawa, 12 I&N Dec. 612 (Reg. Comm. 1967) [see article], which covered ability to pay in the context of a sole proprietorship petitioning for an employee under the former employment-based sixth preference category.

Other Options for Sole Proprietors

The L1 category is not amenable to sole proprietor self-petitions. In certain cases, the E-2 (“E2”) nonimmigrant visa [see category] for treaty investors may provide an alternative, provided that the sole proprietor petitioner is from a treaty country an can satisfy the rules regarding investing in the U.S. business. Those who are investing a more significant amount of money may consider the corresponding EB-5 (“EB5”) immigrant investor category [see category]. A small number of sole proprietors may be able to satisfy the rigorous requirements for an extraordinary ability immigrant visa in the EB-1A (“EB1A”) category. The nonimmigrant O-1 (“O1”) extraordinary ability category may also be worth considering although it precludes self-petitioning.

Conclusion

The L1 category is peculiar in that it prohibits self-petitioning while allowing certain businesses owned by a single individual to petition for their owners. Notwithstanding the L1 category’s flexibility, there are strict limits on when a business can petition for its owner. The rules are clear that sole proprietorships may not use the L1 category to petition for their owners. The new sole proprietorship guidance not only clarifies how the L1 category works for sole proprietorships, but also distinguishes sole proprietorship cases from cases where a business can petition for its sole owner or shareholder.

The L1 category is relatively evidence-intensive, especially in cases where the petition is for a beneficiary coming to the United States to open a new office. We recommend that prospective L1 petitioners always work closely with an experienced immigration attorney or firm in the area of employment immigration. Moreover, as we explained above, there may be cases where a different nonimmigrant or immigrant visa category proves to be a better fit for a particular case than L1.