Yes, an undocumented immigrant can own a business in the United States. No federal statute and no state law conditions business formation on citizenship or immigration status, and the IRS issues Employer Identification Numbers without asking about it. What ownership does not do is grant work authorization, create legal status, or shield anyone from removal, and how you run the business can quietly damage future immigration options. The legal room to own a company is wide; the legal room to operate one without status is narrower and has been getting narrower.
Forming the Entity
Business formation happens at the state level. You file articles of organization for an LLC or articles of incorporation for a corporation with the secretary of state, pay the filing fee, and the entity exists. No state asks the organizer to prove citizenship. Filing fees run from roughly $35 to $500 depending on where you file.
Federally, most businesses need an EIN from the IRS. Form SS-4 does not ask about immigration status. If you have a Social Security number or a U.S. address, you can apply online. Without those, you can still get an EIN by mailing or faxing Form SS-4 with a copy of the responsible party’s passport.1Internal Revenue Service. Individual Taxpayer Identification Number (ITIN)
Getting an ITIN and Paying Taxes
An Individual Taxpayer Identification Number is the tax-compliance tool for anyone who earns U.S. income but is not eligible for a Social Security number. The IRS issues ITINs regardless of immigration status.1Internal Revenue Service. Individual Taxpayer Identification Number (ITIN) You apply on Form W-7, usually filed with a federal tax return, and you have to prove identity and foreign status. A passport is the only document that satisfies both requirements on its own; otherwise you combine documents like a foreign driver’s license, national ID, or civil birth certificate, with at least one bearing a photograph.2Internal Revenue Service. Instructions for Form W-7
An ITIN lets you file returns, report business income, and in some cases open a bank account or register a business in states that require a taxpayer ID. It does not authorize employment and it is not proof of legal presence.
If you run the business as a sole proprietor or single-member LLC, self-employment tax kicks in at $400 of net earnings. The rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare.3Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) For 2026, the Social Security portion applies to the first $184,500 of combined wages and self-employment income; Medicare has no earnings cap.4Social Security Administration. Update 2026 You report the tax on Schedule SE with your Form 1040, using your ITIN. Half of what you pay is deductible against income tax.
How the IRS-ICE Agreement Changed the Calculus
Section 6103 of the Internal Revenue Code has long kept taxpayer information confidential, and this protection gave undocumented filers a degree of comfort that paying taxes would not trigger immigration enforcement.5Office of the Law Revision Counsel. 26 USC 6103 – Confidentiality and Disclosure of Returns and Return Information In April 2025, the IRS and U.S. Immigration and Customs Enforcement signed a memorandum of understanding creating a framework to share taxpayer information. It uses Section 6103(i)(2), which allows disclosure to federal agencies for criminal investigations, to let ICE request records on individuals with final removal orders or who are subjects of designated criminal investigations. The IRS is not proactively handing over ITIN lists, but the wall between tax filing and immigration enforcement is thinner than it used to be. Anyone weighing whether to file should treat this as an evolving area.
Passive Ownership vs. Actively Working in Your Own Business
This is the risk most owners underestimate. Immigration law treats “unauthorized employment” as a bar to adjusting status to lawful permanent resident. Under 8 U.S.C. 1255, a person who accepts or continues unauthorized employment, or who was employed as an unauthorized alien, is generally ineligible to adjust status.6Office of the Law Revision Counsel. 8 USC 1255 – Adjustment of Status of Nonimmigrant to That of Person Admitted for Permanent Residence
Whether an undocumented owner who runs their own business counts as an “employee” for these purposes has never been definitively resolved by the courts. But if immigration authorities treat hands-on management as unauthorized employment, that could disqualify you from relief you might otherwise get, such as adjustment through a family petition. Passive ownership, meaning receiving profit distributions without managing day-to-day operations, is generally considered safer from an immigration standpoint. Immediate relatives of U.S. citizens may be exempt from some of these bars, but the analysis is case-specific. This is a conversation to have with an immigration attorney before the business starts, not after.
Licensing, Banking, and Loans
Owning a business and being licensed to practice in a regulated field are not the same thing. Federal law bars states from granting professional or commercial licenses to immigrants who are not lawfully present unless the state has affirmatively passed a law allowing it.7Office of the Law Revision Counsel. 8 USC 1621 – Aliens Who Are Not Qualified Aliens or Nonimmigrants Ineligible for State and Local Public Benefits That covers everything from cosmetology to general contracting. Some states have opt-in laws, most have not, and individual licensing boards may still require a Social Security number for background checks. Contact the specific board that governs your field in your state.
A separate business bank account matters for tax reporting and liability protection. Many banks require a Social Security number, but some banks and credit unions accept an ITIN or a foreign passport. Expect to shop around.
Government-backed lending is largely closed off. In 2026, the Small Business Administration banned foreign nationals and non-citizens from all SBA-backed loan programs. Every applicant must be a U.S. citizen or U.S. national with a principal residence in the United States. The ban covers the 7(a) and 504 programs, the Surety Bond Program, and the Microloan Program.8U.S. Small Business Administration. SBA Bans Foreign Nationals from Accessing SBA-Backed Loans Private lenders, microfinance organizations, and community development financial institutions remain possible, though qualifying without status or a credit history built on a Social Security number is difficult.
Hiring People
An undocumented owner can hire employees, but every employee must be authorized to work in the United States. The Immigration Reform and Control Act of 1986 makes it illegal to knowingly hire, recruit, or continue employing an unauthorized worker.9U.S. Equal Employment Opportunity Commission. Immigration Reform and Control Act of 1986 For each hire, you complete Form I-9, and the worker presents documents proving identity and work authorization from the I-9 acceptable documents list.10U.S. Citizenship and Immigration Services. Form I-9 Acceptable Documents
Penalties for hiring unauthorized workers, as adjusted for penalties assessed after July 3, 2025:
- First offense: $716 to $5,724 per unauthorized worker
- Second offense: $5,724 to $14,308 per unauthorized worker
- Third or subsequent offense: $8,586 to $28,619 per unauthorized worker
A pattern or practice of violations can lead to criminal prosecution, with fines and up to six months of imprisonment. Paperwork violations on Form I-9 carry separate penalties of $288 to $2,861 per form.11Federal Register. Civil Monetary Penalties Inflation Adjustments for 2025
Independent Contractors
Some owners work exclusively with independent contractors instead of employees. Contractors are not subject to I-9 verification. This only works if the person genuinely operates as a contractor: controlling how, when, and where the work is done, using their own tools, and serving multiple clients.12Internal Revenue Service. Worker Classification 101 – Employee or Independent Contractor The Department of Labor’s 2024 final rule tightened misclassification enforcement, and getting it wrong means back taxes, unpaid overtime, and penalties.13U.S. Department of Labor. Final Rule – Employee or Independent Contractor Classification Under the Fair Labor Standards Act
Pay a contractor $600 or more in a year and you file Form 1099-NEC. Collect the contractor’s taxpayer ID number (an ITIN works) on Form W-9. If the contractor refuses to provide one, you’re required to hold back a percentage of payments as backup withholding.14Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC
Partnering With a Citizen or Green Card Holder
Bringing on a co-owner who is a U.S. citizen or lawful permanent resident is one way to handle tasks that require legal status: signing certain contracts, applying for licenses, dealing with government agencies. Common structures include general partnerships, limited partnerships, and multi-member LLCs.
In any co-ownership, the operating agreement is the document that matters. It should set out each member’s ownership percentage, profit split, management duties, and what happens if a member can no longer participate. That last piece deserves particular weight when one owner is undocumented. If the owner is detained or deported, the default state rules could force dissolution, especially for partnerships, unless the operating agreement says otherwise.
Planning for Detention or Removal
A buy-sell agreement protects both the departing owner’s financial interest and the remaining partners’ ability to keep operating. List triggering events that force a buyout: death, bankruptcy, and incapacity are standard, and involuntary departure from the country belongs on the same list. The agreement should also set how the departing owner’s share will be valued and paid.
A durable power of attorney for property is just as important. Without one, family members may not be able to reach business bank accounts, sign contracts, collect receivables, or sell assets on your behalf. Prepare and sign it well before any emergency. Executing one from a detention facility or from another country is not straightforward.
What Business Ownership Does Not Do for Your Immigration Status
Owning a business does not legalize you and does not create a path to a visa or green card on its own. The E-2 treaty investor visa requires lawful admission and a qualifying investment. The EB-5 immigrant investor program requires an investment of $800,000 to $1,050,000 depending on project location, plus job creation, and applicants must be admissible, which generally means lawful status.
At the same time, a record of unauthorized employment in the United States can bar you from adjusting to permanent resident status even if you later become eligible through a family member. Sections 1255(c)(2) and (c)(8) both address this.6Office of the Law Revision Counsel. 8 USC 1255 – Adjustment of Status of Nonimmigrant to That of Person Admitted for Permanent Residence Paying taxes, forming an entity, and operating above board are defensible choices, but they do not create immunity from removal, and active involvement in daily operations can create the very employment record that complicates future relief.
What It Costs
- LLC filing fee: roughly $35 to $500 depending on the state, averaging around $130.
- Annual or biennial report fee: $0 to more than $800 depending on the state, sometimes bundled with a franchise tax.
- EIN: free from the IRS.
- ITIN: no application fee. Using a Certified Acceptance Agent to verify documents (so you don’t mail your original passport) typically runs $50 to $275.
- Registered agent: required in your state of formation. Commercial services run about $50 to $300 per year.
Professional licenses, local permits, and zoning compliance add costs by industry and location. Budget for an immigration attorney and a tax professional who works with ITIN filers. For someone navigating business ownership without legal status, those are not optional line items.