llc for ilegal immigrant

Can an Illegal Immigrant Open an LLC Business

The US is a place of breaks, with its large economy and plenty of opportunities to offer. Naturally, this condition attracts millions of immigrants to the US, but not all of the immigrants are successful in getting their hands on the documents nor do they have the means to make it legally across the border. So, they do it in the only other way left; illegally. According to the survey conducted in 2014, there were 11.1 million unauthorized immigrants in the U.S.A.

These immigrants might have crossed the border without legal documents but that does not mean they were willing to continue with other illegal activities after they reached the U.S. soil. So they went in search of jobs and returned empty handed because federal law prohibits employers from providing jobs to the people residing illegally in the United States. So these illegal immigrants thought of the next best thing, creating their own jobs and considering self-employment. This gave rise to the question that is being asked by immigrants for centuries, can an illegal immigrant open an LLC business?

For help opening an LLC in the USA please call 407-344-1012 or email us at info@freedomtaxfl.com.

The answer is yes and no. Yes because there are ways in which people have been doing that for centuries, and no because we don’t want to be responsible for encouraging illegal migration into the US. There are living examples of undocumented immigrants who have moved on and started their own business and for the most part, remained low-profile and rarely faced any trouble from the banks, regulators or institutional lenders.

In fact, in many ways, they have proven to be a better illegal USA resident than the ones residing legally. For one, they have created jobs for the Americans and secondly, they are very responsible with their duties and try their best to never let anyone point a finger towards them. However, they do face the prospects of getting deported or being removed from the US soil anytime without warning. Until that happens, these undocumented illegal immigrants continue to create jobs and open their own LLC business.

What Makes A Person An Illegal Immigrant?

According to the Center for Media and Democracy,

“Illegal immigration (unauthorized or undocumented immigrants) refers to the migration of people across national borders in a way that violates the immigration laws of the destined country.”

Most people desire to work and earn in the United Sta5tes but the country does not permit everyone to enter, which leads to people crossing the border illegally sans documents.

So to answer the question, whoever crosses the border without proper papers and legalities is considered an illegal immigrant and these are the ones, who after so many pains, do not want to return back to their country and wish to create jobs for themselves and lead to the question, can an illegal immigrant open an LLC business?

How Does One Become An Illegal Immigrant?

There are four methods of operations that make a person an illegal immigrant. Here are the following conditions:

  1. Every visa states a specific time period for the visitors but there are violators who disregard this epoch and continue to stay. When someone purposefully infringes the laws and overstays their welcome, they join the title of being illegal.
  2. Another kind of illegal immigrants enter the city with documents in hand and all the paperwork the only glitch in their armor is the fakeness of these papers. When the documents are faked and fraudulent means are practiced for entering the states, it makes a person an illegal immigrant. The identity is incorrect as well as the other documents that confirm this forged identity.
  3. The biggest chances of getting caught for the illegal immigrants are through inspection so the third kind avoids it at all costs. They cross borders by means of covert passages, or use sea routes or even air routes at times, choosing a path that is clear of any inspection teams. These immigrations are usually carried out with the help of a larger team whose job is to make this kind of migration possible.
  4. The last kind of illegal immigrant is the one who enter the states with proper documentation but at some point or another, violates it. This violation is normally in the form of employment and working as well as students who began to work in the states on their student visa. These immigrants abuse the conditions that are mentioned in their visa.

What is an LLC business?

You must be wondering how an illegal immigrant can open an LLC business. But first let’s understand what an LLC is. LLC is short for Limited Liability Company which provides a very convenient way for founding your very own business. An LLC provides an opportunity to create a business that encourages features like that of a corporation yet provides tax competences like that of a partnership business.

A Limited Liability Company can have one owner or more than one owner. Also, the business and the members (owners) of the entity are not considered two different entities, but rather one, and are also taxed accordingly. The profits and losses of every member are reported in the personal federal tax returns.

How to Register for a Limited Liability Company:

Answering the question of can an illegal immigrant open an LLC business is closely related with learning about the common method followed for opening an LLC. The procedure is different in various states of the USA but the general procedure is the same throughout. Here it goes:

  • Choosing a name for the business is the first step and rules need to be followed in this regard. The name of the business must be unique and should not be the same as any other existing LLC. Also, every business name should be followed by ‘LLC’ and must not contain words that have been banned or prohibited according to the state rules. The member(s) of the limited company do not have to go out of the way to get the name registered. The name is registered at the same time as the business is being registered.
  • The second step involves providing all the basic information regarding the business and submitting it in the form of “articles of organization”. This process legitimizes the presence of the limited company.
  • The rules for this step differ in different states but are preferred by most, in case of multi-member LLC. It involves submitting an operating agreement which is the structure of basic finances, organizations, percentage, profit sharing and responsibilities. This part benefits the members more than it benefits the state and prevents future disagreements.
  • Whatever the nature of your business is, attain proper license and permits to begin practicing after the registration of the business. This step too will help the business form credibility for their customers.
  • State rules differ but most ask the LLC to announce its opening in a local newspaper, radio or the local news channel.

LLC Taxation Requirements And Why Illegal Immigrants Prefer It?

Every legal and illegal member who is establishing their own Limited Liability Company needs to learn extensively about tax requirements. Even if the members are illegal, they won’t have to face any more charges than they already would have been facing for being an undocumented entrepreneur.

According to the federal government laws, the taxes are imposed on the LLC members individually with their personal income tax returns. That being said, some states do have a rule of imposing taxes on an LLC as a separate entity but that is a rarity.

Can an illegal immigrant open an LLC Business? The answer might be yes, or no but one thing is given, anyone who establishes an LLC business enjoys various benefits. A few of them being:

  • As the name suggests, the liability in this business is limited. Members are not personally liable for any of the actions or decisions made on behalf of the business.
  • In a situation where an LLC might get bankrupt or sued, it will not affect the personal finances of the members nor would they be expected to pay for anything from their personal assets.
  • It is easy to record finances and conduit operations in an LLC. Registration process also requires the least paperwork.
  • An LLC is cost effective as a start-up.
  • There is ease and flexibility in the distribution of profit sharing among members. Whatever they decide amongst themselves is practiced. Investments work in the same way.

Why Illegal Immigrants have to be Careful when considering opening of an LLC?

Before you discover the answer to can an illegal immigrant open an LLC Business? you should be careful and mindful of the following shortcoming of this kind of business. Here it goes:

  • If legal residents of the United States open an LLC with the partnership of an illegal immigrant, then any time this person gets deported, or any of the legal person leaves, then the LLC dissolves and it falls on the remaining members to take care of the closing procedures and fulfill all the other legalities.
  • Self employment tax becomes obligatory in an LLC because basically, the legal or illegal immigrant is self-employed and must pay the income tax.

How Can an Illegal Immigrant Open an LLC Business?

Technically, the answer to the question of whether an illegal immigrant can open an LLC Business would be yes, and here’s how.

There’s an ambiguity in the federal law when it comes to this question. The federal law clearly prohibits employers from employing illegal immigrants in their business. However, there is no law to be found that clearly specifies that illegal immigrants cannot open their own LLC. It’s a loophole and no one has been hanged for it yet. Using this opportunity, many illegal immigrants began to establish their own LLC or began freelancing. This in turn, proved to be even more beneficial for the US as they have these immigrants to thank for reducing their unemployment rate by a good margin and creating jobs for unemployed legal US residents.

The only downside of this whole procedure is the fear of getting deported and losing their lifelong earnings and hard work. The plus side is however, that the LLC is working in their favor during the deportation case. Immigrant LLC owners are aware of their illegal status and do everything in their power to remain low-profile, never get mixed up in illegal activities, pay their taxes and co-exist peacefully with the legal residents. This attitude gives them even more points to win their case and some even attain the position of a legal immigrant within years of applying for it.

Then there is always a possibility of the congress signing a new program that allows guests from other countries to work.

It might seem that there is a possibility after all for an illegal immigrant in America to establish their own LLC while they wait for deportation and in the meanwhile, give it their best shot to avoid being kicked out of the country.

Why can an illegal immigrant open an LLC Business and make it work?

The laws are rather twisted. An illegal immigrant in the USA cannot work in a company but they can open one of their own. And in the process, they end up benefitting the USA. These Illegal immigrants can apply for ITIN as well as EIN and establish their own LLC because no law says otherwise but all the while they are doing this, they can be deported. So it’s a very big risk but usually turns in favor of both the parties, the illegal immigrants and the USA, as their citizens keep on getting jobs with the help of their undocumented immigrants.

History also proves that compared to the residents of the United States, it is immigrants who bring wealth, create job opportunities, introduce new services, new products and even initiate new industries. In the past and in the present of the United States, hundreds and thousands of businesses have been set up by immigrants and over time, they became the backbone of the United States’ economy. Some of the most famous and known entrepreneurs of United States were immigrant such as, Andrew Carnegie, Oprah Winfrey, Henry Ford, Bill Gates and Larry Page.

What Is The Procedure For An Illegal Immigrant To Establish A Limited Liability Company?

Before you begin to panic, let us assure you that applying for an LLC as an illegal immigrant is surprisingly easy and straightforward. First off, you have to apply for an ITIN number (Individual Taxpayer Identification Number) just like any other investor in America.

How Can An Illegal Immigrant Attain An ITIN Number?

To attain this legal tax number, you can show your foreign document which can be your ID, passport, birth certificate or a military identification number. Remember that you don’t need to forge it falsely, show your original foreign one.

Once you receive your ITIN number, use it to apply for the EIN (Employer Identification Number). The employer identification number form asks for one of the two numbers, a social security number or an ITIN number. Since the social security number is only granted to the permanent residents of the United States, the illegal immigrant will pen down their ITIN number.

Once the illegal immigrant receives their ITIN number and the Employer identification number, the rest becomes easy and they can officially get registered as the member of a Limited Liability Company. Keep in mind though that an illegal immigrant can become the owner of a company and even become successful but that still won’t change their illegal status and they can still be deported at any time until and unless there is a change in circumstances.

Tips to remain safe:

It never hurts to be careful just in case as it helps the illegal immigrants last longer in the states and improve their chances of being accepted as the legal resident. Here’s what you can to do remain safe:

  • Make sure you are working in your professional capacity and have all the permits and license to run the business lawfully.
  • Make pains to abide by the US rules not just as a resident but also as a business owner.
  • Make sure you never get involved into practices that might violate health codes, employee degradation, harassments or labor laws.

In 2013, nearly half a million illegal immigrants were granted permission to work and live in the USA legally for two years under a customized program. The main thing to remember is that both scenarios are right. An illegal immigrant can open an LLC and can also not open an LLC. The legal advisors will have the same opinion on the question of can an illegal immigrant open an LLC Business? There is no black and white but a grey approach to take in this regard.

Though it would be much better if immigrants were allowed in the United States more openly and they wouldn’t have to use undocumented means to cross the border, nonetheless, if you have already crossed the borders with no documents in your hands, then might as well use the opportunity and set up your own Limited Liability Company.

For help opening an LLC in the USA please call 407-344-1012 or email us at info@freedomtaxfl.com.

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