Starting a Business with an ITIN: Navigating Risks and Benefits

Note: this article was deeply researched and we were advised by an immigration attorney in the research and writing. However, at Briico, we are not attorneys and this article is only meant to provide general information. It is not legal advice.

In our work with immigrants, we’ve seen the power of starting microbusinesses and getting an Individual Taxpayer Identification Number (ITIN) number – over and over again. Our clients find that starting a business lets them earn much more, with growth in their hands. So many people we’ve worked with have created true financial stability for their families through their businesses. 

In fact, many people don’t realize that in many cases, it can be far safer – and much more profitable – to have your own business than it is to work “under the table” for someone else. Regardless of your immigration status, it is legal to start a business in the United States. And if you don’t have a Social Security Number, getting an ITIN number allows you to formalize that business and run it.

That said, if you are undocumented and/or seeking asylum, every step you take carries some risk. So it's important to understand the consequences of the choices you make. When considering starting a business with an ITIN, you must weigh both the benefits and the risks. While there are no guarantees of absolute safety, certain strategies can help you confidently pursue your entrepreneurial dreams while staying as safe as you can.

So we sat down with Leslie Linares-Polanco of Linares Legal – an experienced immigration attorney – to clarify all the details. 

Understanding Unauthorized Work

If you’re an immigrant to the US and don’t yet have Work Authorization, you face a lot of uncertainty when it comes to supporting yourself. Technically, all forms of earning money are “unauthorized work” if you don’t have Work Authorization. 

Doing unauthorized work can put you at risk in two ways: 

• It could be a negative for pending immigration cases, including, but not limited to, being barred from applying for permanent resident status (green card).

• It can put you at risk for deportation if ICE catches you doing it. 

But there are ways forward that manage these risks and create multiple benefits for you.

The Big Benefits of Starting a Business With an ITIN 

Despite Unauthorized Work being clearly prohibited for those without work authorization, there is one clear way forward that can actually be a positive in your immigration case. 

During our conversation with Leslie Polanco-Linares, Esq., she affirmed  that it is legal to start a business in the US, regardless of your immigration status. You can start a business, hire people, pay taxes, get permits, and get business insurance if you have an ITIN (and get an EIN for the business connected to that ITIN.) Linares says that while actually paying yourself from that business is a gray area legally (not clearly prohibited but not clearly allowed), in practice, “Operating a business with an ITIN, paying taxes, and having insurance is almost always going to be seen as a positive by the courts.”  Courts and authorities usually see earning income through a legitimate business as a responsible approach to self-sufficiency.

For these reasons, Linares emphasizes that starting a business and paying yourself from that business is one of your best possible options for supporting yourself: often safer than working “under the table” in a restaurant or construction company for example. 

Further, starting your own business puts your growth in your own hands, allowing you to earn increasing amounts of money over time rather than getting stuck in a cycle of low-paid work.

So the benefits of operating a small business with an ITIN, even as an immigrant without Work Authorization are: 

• A way to make money that is not as clearly prohibited as working “under the table.”

• The ability to pay taxes, get insurance, and operate with permits. 

• The clear message to judges and authorities that you have chosen to operate legally whenever possible and contributed positively to your community.

• High potential in your earning ability. 

• Flexible hours and location that can fit your life.

Risks of Running a Business as an Undocumented Immigrant

Despite the clear benefits of operating a small business with an ITIN – and paying yourself – there are also risks. These risks fall into three categories: lawsuits, ICE, and impact on your immigration case. 

Potential risks of paying yourself from your business without Work Authorization:

• Lawsuits. Operating a business, even with an ITIN, does not eliminate the risk of lawsuits. And new immigrants may be more vulnerable in this way. However, having proper insurance can provide protection. Linares has found that proper insurance mitigates this risk almost entirely.

• ICE (Immigration and Customs Enforcement). The scary part about ICE is that they can, of course, detain immigrants for any reason or no reason. Which means that if you are more “visible” because of your business, that could put you at risk. According to Leslie Linares, Esq, operating a business with an ITIN and all the necessary permits and licenses can reduce this risk because you’d have a strong argument that you were doing nothing wrong. But while operating your business in the correct manner is important, Leslie Polanco-Linares, Esq still advises to remain cautious as ICE can legally detain anyone without legal status. As a reminder, Leslie also adds, an ITN does not provide legal status and it is just for the legal operation of the business.

• Immigration Case Impact. While engaging in Unauthorized Work and not paying taxes is a negative for an immigration case (like an asylum hearing), supporting yourself with a business using an ITIN and fulfilling tax obligations can actually positively impact your asylum case. Linares emphasizes that while these factors may not be the central focus of your case, they contribute to showing your good moral character to the courts. A note on timing, however: if you plan to operate a business, Linares advises obtaining an ITIN before starting your venture. To minimize risk and to demonstrate compliance to a judge, the timeline (doing the right things in the right order) is important. 

The Key Things You Can Do to Stay Safe 

If you’re operating a small business as an immigrant without Work Authorization, there are several key things you need to do to stay safe: 

• Get an ITIN. 

• Pay taxes.

• Understand what permits and licenses you need and get them. 

• Get business insurance.

• Manage your visibility. (Of course, because every business is somewhat visible, it’s key to find the balance that you feel comfortable with.)
  

Can it be powerful and relatively safe to start a small business (and pay yourself) with an ITIN, regardless of your immigration status? Yes. But do you need to be cautious and manage the risks carefully? Also yes.

Navigating the risks and benefits of starting a business with an ITIN as a new immigrant involves a delicate balance of legal understanding, responsible action, and seeking appropriate guidance. While uncertainties persist, taking steps to operate within legal boundaries, pay taxes, and contribute positively can strengthen your immigration case while helping you establish yourself financially. Which is, of course,  good for you and for your new community. 

Note: this article was deeply researched and we were advised by an immigration attorney in the research and writing. However, at Briico, we are not attorneys and this article is only meant to provide general information. It is not legal advice.