If you’re an undocumented immigrant in the U.S., you may not be sure about whether you can start your own small business. You probably have questions about the legalities of forming an LLC, getting the tax IDs you need or any consequences you should be aware of. We’re sharing the answers to those questions, so you can move forward with confidence and build some financial security through owning your own business.
Questions on the Legalities of Undocumented People Starting a Business in the U.S.
The good news is that you can legally start a business as an undocumented person.
Can an undocumented immigrant legally start a business in the U.S.?
Yes, you can legally start a Limited Liability Company (LLC) or other types of small business in the United States, including sole proprietorships, partnerships or C Corporations. There are no laws, immigration or otherwise, that prevent an undocumented immigrant from legally forming and owning a business in any state.
Can an undocumented person form a corporation or LLC?
Yes, undocumented people can start LLCs or C Corporations in the U.S. — you do not need to be a resident or citizen to start either type of business. LLCs and C Corporations do not require a specific immigration status for you to start one.
You cannot start an S Corporation as an undocumented immigrant, as S Corporations require their owners and shareholders to be U.S. residents or citizens.
Is it illegal for an undocumented immigrant to start a U.S. business?
No, it is completely legal for an undocumented person to start most types of business in the U.S.
Do I need to have lived in the U.S. for a specific length of time before starting a business?
No, you can start a business at any time in the U.S.
Do I need to provide my address when I form an LLC or corporation as an undocumented immigrant?
If you form an LLC or corporation, there are a couple of different addresses that you will need to include. Firstly, you’ll need to provide an address for your business itself. For that, you can include the address where you operate your business, or, in some cases, a virtual address.
You will also need to provide an address of a “Registered Agent.” You can be your own Registered Agent and include your own address, or use a Registered Agent service.
Are there advantages to an undocumented immigrant owning an LLC or other business?
A successful business can be an excellent way to build financial security. This can be enormously beneficial to supporting yourself and your family, whether they are also in the U.S. or if you are sending money back to your country of origin. Additionally, because businesses are not legally allowed to employ undocumented immigrants, this is a way that you can be self-employed without running into that issue.
Steps to Form an LLC in the U.S. as an Undocumented Immigrant
Here’s what you’ll need to do. We have more information on these steps elsewhere in this guide:
- Get an Individual Taxpayer Identification Number (ITIN).
- Form your business as an LLC.
- Assign a Registered Agent.
- Get an Employer Identification Number.
- Get any state tax IDs that you need.
- Get any permits and licenses you need.
- Start running your business.
Questions on Undocumented Immigrants and Enforcement
What are the risks of being an undocumented person in the U.S.?
The legal risks for undocumented immigrants are that they will be discovered, detained and deported by U.S. authorities. These risks exist whether you own a business in the U.S. or not.
Will the government come after me for my undocumented status if I start a business?
The government does not have any more reason to come after you if you start a business than if you don’t. If the government takes action against you for being an undocumented immigrant, that is likely to be independent of whether you own a business or not.
Are there any U.S. states that are more friendly to businesses owned by undocumented people?
Although we don't have specific information on undocumented business owners, we do have some sources for states and how they treat undocumented immigrants in general.
The Center for Immigration Studies lists 11 states that are known as “Sanctuary” states: California, Colorado, Connecticut, Illinois, Massachusetts, New Jersey, New Mexico, New York, Oregon, Vermont and Washington. “Anti-sanctuary” states include Arizona, Texas, Montana, Mississippi, Georgia and Alabama.
The New York Times has a guide to states and their approach to undocumented immigrants, including driving licenses, tuition benefits, work permits and other information.
Can owning a business as an undocumented immigrant lessen my chances of being deported?
There’s some anecdotal evidence that owning a business may provide a stronger defense against being deported. A document called “Undocumented Entrepreneurs” states, “Many sections of the Immigration and Nationality Act — including those on relief from removal, inadmissibility, and naturalization — explicitly carve out a role for the immigration judge’s discretion. Property and business ties generally weigh in favor of a positive exercise of discretion.”
Other news stories cite that immigration lawyers bring up business ownership as a defense against enforcement and deportation. Owning a business may also help when it comes to applying for a work visa, residence or citizenship.
Questions on Undocumented Immigrants Employing Others in Their Business
Undocumented immigrants can employ U.S. citizens and residents, but not other undocumented people.
Can I employ other undocumented immigrants within my business?
No, employing someone else who is not a U.S. citizen, resident or otherwise authorized to work in the U.S. is against the law. Breaking this employment law could result in arrest, fines, giving up your business assets and other penalties.
Can I employ U.S. citizens or residents as an undocumented immigrant?
Yes, you can employ anyone who has a right to work in the U.S. This includes U.S. citizens, U.S. residents, people on work visas and any other people with the legal permission to work in the country.
Is being self-employed as an undocumented immigrant a breach of employment laws?
This doesn’t have a clear answer. Although, strictly speaking, a self-employed person might be considered “employed,” in practice, enforcement agencies do not seem to specifically be using this definition to rule against self-employed undocumented immigrants.
Questions on Taxes for Undocumented Immigrant Business Owners
Undocumented business owners will need to register for and pay tax on their earnings.
Does the Internal Revenue Service require me to be a legal immigrant to file and pay taxes?
No, the IRS does not require business owners to have legal immigrant status. Undocumented immigrants can obtain an “Individual Taxpayer Identification Number (ITIN)” from the IRS and use that to file their taxes instead of a Social Security number.
How do I get a tax ID for myself as an undocumented immigrant?
Instructions on how to apply for an ITIN are available on the IRS website. There are no citizen, resident or immigration requirements to get a number. You will need a birth certificate or foreign identification documents when obtaining an ITIN.
How do I get an Employer Identification Number as an undocumented immigrant?
Once you have an ITIN, you can apply for an Employer Identification Number, or EIN. You can do this yourself directly with the IRS or have Incfile obtain one on your behalf.
What are the rules for registering for tax with my state as an undocumented immigrant?
Each state assigns tax IDs and collects taxes differently. We recommend speaking with an attorney who understands the specific tax rules in your state.
We hope you’ve found these answers helpful. Everyone’s circumstances are different, so we recommend consulting with an immigration law attorney for answers to your specific questions. When you’re ready to form your LLC, you can do it for free with Incfile.