Incorporating in the U.S. as an undocumented immigrant


3

My business partner and I are currently a partnership. We run a business in which we publish apps to iOS and Android. We are generating enough profits that we want to incorporate so we can hire employees, grow the company, and offer stock options. We are both located in the San Francisco Bay Area.

Both my partner and I came to the U.S. at a very young age (we were both around 3 years old at the time), our parents brought us here illegally and we've been here ever since ( we are in our mid 20s now). We both attended elementary, high school, and college in California. We ended up dropping out of college to run our business full-time.

We are "undocumented immigrants" we don't have #SS, for filing/paying taxes we use an ITIN (yes we pay taxes on all our income). We are unable to get a drivers license in California (we drive without one) but we can get car insurance (which we do have). Going back to our home country is not an option, both of us do not speak the native language very well and we have no family back in the home country. We've grown up and lived in the U.S. our an entier lives and this the only country we consider home.

We talked to an immigration lawyer, he told us that it is basically impossible for us to take funding form a VC and probably most Angels because they run background checks on you and our issue would come up. We didn't bring up if incorporating would be an issue (that's why I'm posting this question).

Is it possible for us to incorporate the business? Will not having the "proper" documentation be an issue? We are not planning to higher people and pay under the table, we are trying to do this as legitimately as possible with the situation that we are in.

Incorporation Business

asked Sep 9 '11 at 02:00
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User13211
18 points
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2 Answers


3

You can form a corporation - no problem. I have helped dozens of foreign clients (non-citizens, no social security number) go through that process.

With a bit of effort, you can obtain an Employer Identification Number for the corporation. Please see "Foreign Company Alert: Obtaining an EIN may be your Biggest Challenge in the U.S." at http://danashultz.com/blog/2009/11/30/foreign-company-alert-obtaining-an-ein-may-be-your-biggest-challenge-in-the-u-s/.

Your greatest limitation will be that you cannot legally work for the corporation without a work visa - which, I suspect, you will not be able to obtain because your undocumented status would become known. And if you were to raise funds, you would be legally obligated to raise this fact, likely frustrating your efforts.

However, (1) you can be directors of the corporation (please see "Visa Basics for Foreign Entrepreneurs, Part 2: What Constitutes Work?" at http://danashultz.com/blog/2011/01/18/visa-basics-for-foreign-entrepreneurs-part-2-what-constitutes-work/ ), (2) the corporation can hire employees and independent contractors, and (3) the corporation can enter into contracts to carry out its business objectives.

The situation you are describing may be unusual here in the Bay Area, but it is not all that unusual in the Southwestern U.S. I was interviewed by a writer in Arizona who told me that it is quite common for undocumented immigrants there to form LLCs so they can obtain an EIN and, thus, be able to accept payments legally and pay taxes.

Disclaimer: This information does not constitute legal advice and does not establish an attorney-client relationship.

answered Sep 9 '11 at 10:27
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Dana Shultz
6,015 points
  • Thank you so much! The path you mention is definitely where we are likely to head to. I did all the paperwork to establish the company as a partnership, was able to get an EIN number with ease, so that wouldn't be an issue. The scenario of me working for the company as a director and not an employee will not be an option. I been doing consulting/contractor for over 3 years in the U.S. and even though I know it's considered "illegal" work there is no way for me to go around this. I'm here, I need to make a living. I plan to continue to do the same when the business incorporates. – User13211 12 years ago

1

If you're trying to be legitimate, it's time to become a citizen in "the only country [you] consider home." Then you can incorporate, receive VC funds, vote, file tax returns (required for your corporation), and generally never worry about this again. That you can provide a paper trail of your life in the USA, plus the fact you're financially solvent, should cut through any "illegal alien" red tape.

answered Sep 9 '11 at 05:34
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Sold Out Activist
414 points
  • I would like nothing more then to become a citizen in the U.S.. If I could start my paper work and have a path to citizenship I would have done it already. Unfortunately, the way immigration laws are set up, that is nearly impossible for me to do. I have consulted an immigration lawyer, and the only path to citizenship I have right now would be to marry a citizen of the U.S. and as I mention before (as ironic as this sounds) I want to do everything as legitimately as possible in the situation I'm in. So marrying for the sake of becoming a citizen is not a path I'm willing to take. – User13211 12 years ago
  • Contact a different lawyer for a second opinion. I do not suggest proceeding with your incorporation because it will come back to *ruin* your life later on. Every dollar you make for your company might be the one that gets your company audited and kicked out of the country. Not being a citizen is your main problem; fix that first. If you can't-- or won't-- leave the country (Vancouver's nice). That's not me being an "illegal" hater, that's just common sense. You are actively breaking the law in the US. Using loopholes will just make it worse in the long run. – Sold Out Activist 12 years ago

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