Several immigrants come to the United States of America with high hopes of reaping the dividends of a good economy like better housing, health care, education, and improved infrastructure. Usually, immigrant entrepreneurs look forward to starting a new business and leveraging funding opportunities like ITIN loans, etc.
With reference to a Fiscal Policy report, small businesses owned by immigrants are reported to perform well, accounting for 30% of small business owners’ growth between 1990-2010. However, the truth is, starting a business as an immigrant is not easy, but if you know what’s involved, you can tackle each phase step-by-step. You can find some of the best LLC in the article of The Salt Lake Tribune.
How to start a business in the United States as an immigrant
1. Choose a Company Structure
When starting your business in the United States as an Immigrant, you have to determine your company structure. The options available to immigrants are C-corporation and Limited Liability Company (LLC).
A C-corporation: A C-corporation is great for immigrants because of the legal and tax benefits. With the C-corporation option, your business can have its special legal identity. Under the eyes of the law, the business is entitled to having its rights and responsibilities. Also, shareholders in the business are protected if the business runs into debts.
Finally, with the C-corporation structure, when the business owner passes on, the business continues to operate. The major downside of a C-corporation business is double taxation. Shareholders have to pay corporate-level taxes for being an owner of the company and income tax on dividend earnings.
An LLC: In comparison, the LLC combines the features of corporations and limited partnership. The members of the company/business cannot be held liable if the company becomes bankrupt. If you own a business as an LLC, you directly receive all the profits. Also, you can use your personal tax returns to foot your business taxes.
Also, an LLC-owned business allows for increased flexibility. If there are co-owners in the business, it is up to your discretion to determine how the profits are shared. Interestingly, if you don’t like bureaucracies and paperwork, an LLC is your best bet as there is no need for board meetings and much paperwork.
2. Get an ITIN
ITIN is short for Individual Taxpayer Identification Number, and it is a special 9-digit code allotted to each person for tax purposes. An ITIN can be used to get ITIN loans. The ITIN cannot replace other identification forms. However, it can be used as a form of identification.
At first, immigrants do not have a Social Security Number (SSN), which is important for filing taxes. With an ITIN, it helps to file their taxes. And some financial services accept an ITIN when there is no SSN.
3. Get ITIN loans
After getting an ITIN, it is best to apply for an ITIN loan. With your ITIN, you can apply for a home loan, auto loan, business loan, or personal loan. With an ITIN, you can approach financial institutions like banks to request ITIN loans. The ITIN is the means of identification used in verifying this process.
4. Get an EIN
An EIN stands for Employer Identification Number. An EIN is useful to immigrants in opening bank accounts, tax payments, getting a business license, and hiring employees. When applying for the EIN, it is better to go through the IRS because it is free. In comparison, other services will charge an extra fee for it.
On a final note
If you intend coming to the United States and you intend to start a business, the steps mentioned in this piece would give you a major head-start. Also, if you are thinking about getting major funding for your business, consider putting ITIN loans as one of your options because of the flexibility and benefits it offers immigrants.