In all likelihood, you’re beyond excited to start a business and make money. You came to the U.S. looking for better opportunities and now you realize the way to go is opening your own small business. Immigrants or not, anyone wanting to launch a business must first learn what’s required before proceeding.
Do you know what documents you need or how to find resources to educate yourself on finances?
Maybe you already earn money and need to pay taxes but have no idea how.
This post will provide detailed information on how to start a business and answer any nagging questions you may have. Furthermore, once you start a business, you’ll want to secure funding to keep growing your enterprise. We’ll cover solutions for that concern too.
Impact of immigrant businesses in the USA
Believe it or not, immigrants are a very important segment of the entrepreneurial population in the United States. Without their contribution to the economy and the market, America would not be what it is today.
According to a 2019 report by National Geographic, immigrants and their US-born offspring account for founding 44 of the top Fortune 500 companies. Some of those companies include Amazon, Apple, and Proctor & Gamble which indicates it’s possible to achieve success in America.
JP Morgan Chase recently reported a study conducted by the Stanford Graduate School of Business. Latino entrepreneurs are starting a business as immigrants faster than other segments of the population. Based on their growth, by 2050 Latino-owned businesses will make up 29% of the US population.
Immigrant-Founded Companies Are In Every Industry Across The Fortune 500
So it is not a question of if you could have success as an entrepreneur, it is a question of when you’re gonna achieve that success.
Let’s learn how you can start a business as an immigrant
Visas you could apply for
If you don’t live in the US but would like to, the U.S. Department of State requires that you obtain a US visa to do so. The U.S. Immigration Law defines the type of visa you can acquire. When applying for a visa, you must declare the reason you want to come to the US.
Choices are tourism or visit, business or employment, study or exchange, traveling through the US to another country, and coming to the US as an immigrant.
You may also indicate when applying for a visa whether you have a spouse who is already a US citizen. You can get a visa for other reasons: to marry a US citizen, immigrate based on employment, or learn about the Diversity Visa Lottery.
The type of visa you can apply for depends on the reasons you give for coming.
Business owners who find the right business-related visa can propel their businesses forward. L-1 visas are issued for at least a year to foreign business owners who desire to expand their operations in the US.
Additionally, E-2 visas are offered to individuals who demonstrate how they will run a profitable business in the US.
You may also be able to qualify for an H1-B visa offered to temporary workers with technical skills.
How to start a business as an immigrant when living in the US
If your immigration status hasn’t been finalized, you aren’t allowed to receive a social security number. The first thing you should do is apply for an ITIN (Individual Taxpayer Identification Number).
Having that number is your first step to start a business as an immigrant. Then, you can legally register your business, open a bank account, pay taxes, and even build a credit history when making purchases.
It’s even possible to get a business loan when you have an ITIN.
Keep in mind, rules and laws to start a business can vary per state and town. At first, understanding what’s required is challenging. But it’s important to know the requirements, get your documents in order, and adhere to the regulations.
That said, small business immigrants face specific challenges that other entrepreneurs don’t. For instance, there’s usually a language barrier if immigrants aren’t fluent in English and might also be unaware of cultural norms. Many immigrants haven’t built a support network in their new country to help answer questions about starting a business.
Many immigrants are uncertain about US regulations and taxes, advertising, and may have insufficient funds to start a business. And in many unfortunate cases, they face discrimination and may have trouble finding a suitable business location to rent.
To offset these concerns, it’s important to offer goods and services from your native country. You’ll feel more confident and have an edge in the market because you’re passionate about what your business offers.
Find an English tutor to learn all the particularities of the language, and become a member of the Latino Business Association or a similar group dedicated to helping foreign immigrants.
When you first learn about how to start a business as an immigrant in the US, make sure you find resources for legal help. Free or low-cost legal services are available to address a variety of legal issues.
Bottom line: You can build wealth even if you don’t have legal immigration status.
How to start a business
Anyone desiring to start a business can use this detailed list to complete the necessary steps and start earning money as an entrepreneur, even immigrants:
- Create a business plan. Like anyone taking a road trip, unless you have a map, you don’t know where you’re going. That’s true when starting a business. Make the plan as detailed as possible including sections on marketing analysis, management, a description of your goods and services, marketing and sales, financial projections, and other pertinent details related to your business model.
- Determine how much funding you need to start and sustain your business.
- Where will you operate your business? Do you need to rent space, buy a mobile unit (dog grooming, food truck, or handyman), or use your home’s basement (fitness trainer, bookkeeper, freelancer)? Where you operate your business determines the local, state, and federal requirements.
- Decide what business structure is best. Common business structures include sole proprietorship, partnership, limited liability company, and several types of corporations. The structure you choose determines how much taxes you pay, paperwork that’s required, and your personal liability. An accountant can advise you which business structure works best for your type of business.
- Choose a business name. Make sure the name isn’t already being used. It should reflect what your business is about or your brand. Register your business name with state and local governments.
- Look into getting business insurance to protect you against accidents, natural disasters, and lawsuits. Shop prices and benefits and reassess your needs as the business grows.
- Unless you operate your business as a sole proprietorship and use your social security number (or your ITIN), you should apply for federal and state tax ID numbers. You’ll also use the ID numbers to pay taxes, hire employees, and file tax returns.
- Regardless of which identity number you use, open a bank account to keep your personal and business expenses separate.
- Secure a business license and any permits required by local, state, and federal authorities to run your business. For example, you need a license to transport animals, sell alcoholic beverages, operate a commercial fishery, or drill for natural gas or oil on Federal land.
- Choose an accounting system. Even if you keep your books yourself, it’s important to keep your financial affairs in order. Accounting software can help you set up a budget and chart of accounts and streamline your finances.
- Decide if you need to hire employees. How many do you need? How much will you pay them? It’s vital to answer all these questions before you start looking. You can hire one or more employees or use independent contractors.
- Decide whether you need help. When you start a business, you may need help with several things. You may need to hire a small business coach or an advertising expert. Finding someone to help out financially is also important, researching small business loans is encouraged to grow a business.
Financing for immigrant business owners
After you arrive in the US, get settled, and start a business as an immigrant, it’s not uncommon to need funding. As you know, it’s challenging to keep your business going unless you have sufficient capital.
The JP Morgan Chase report mentioned earlier also indicates that 40% of non-citizen Latino businesses are rejected when applying for business loans. Only half of the Latinos surveyed had secured outside funding.
Finding someone that believes in you and your small business is not impossible. Here at Camino Financial, we know what it is to be an immigrant in need of money to grow a small business. That’s why we offer loans specially designed for Latinos living in the U.S.
Why not apply for a business loan with us?
Because we have fewer loan requirements than most lenders, the application and funding processes are quicker. We take your financial concerns seriously and enforce our motto, “No Business Left Behind.” We take steps forward with you so your business grows.
It’s rare for a lender not to require a social security number, but we don’t. We know the difficulties immigrant entrepreneurs face to access capital. Learn how and why we lend to immigrants that don’t have an SSN: