Resources

How to Start a Business and Pay Taxes While Being Undocumented

Business owner

Luz Jimenez, the undocumented owner of a taqueria in Philadelphia, was arrested while reporting a crime and faced deportation and separation from his family. But the immigration judge put his case on permanent hold after discovering that Jimenez meticulously ran a legal business, paid taxes, and in all other ways upheld the law.

Tens of thousands of undocumented immigrants own businesses in the United States. And contrary to what many Americans think, foreign-born workers and business owners – even the undocumented – pay billions of dollars in taxes.

In a previous article, we discussed the benefits of obtaining an ITIN (Individual Taxpayer Identification Number) and paying taxes. Doing so helps establish that an undocumented person is of “good moral character” and contributes to the economy, which can improve their chances of legalizing their immigration status in the future. 

Entrepreneurs experience the same personal benefits from legalizing their business and paying taxes, in addition to creating a more secure situation for their employees. 

If a business owner, general partner, or trustor does not have a Social Security Number, he or she must first obtain an ITIN. Then, using the ITIN, it’s easy and free to obtain an Employer Identification Number (EIN) through the IRS’ website for the purpose of paying taxes. (Note: The IRS warns people to avoid other websites that charge for obtaining an EIN.) 

The online application will ask for an ITIN and basic information about the business. Once submitted, you’ll immediately receive your EIN.

The EIN can then be used for:

     • Opening a bank account

     • Applying for business licenses (certain licenses, depending on the state)

     • Filing a tax return by mail

You can find information about applying for an ITIN here.

To apply for an EIN, please visit the IRS’ application page.

For more information on EINs, please visit the IRS’ Frequently Asked Questions page.