Do Your Homework to Avoid Costly Fines and Headaches

There is no secret about differences in opening a business in many Latin America countries and in the United States. Latinos decide to become micro-entrepreneurs in their own countries because of the lack of jobs. They need to provide for themselves and their families and move to what is known as the informal or grey economy.

The informal economy under any governing system is diverse and includes small-scale, occasional members (often street vendors and garbage recyclers). It also encompasses larger, regular enterprises (including transit systems such as those in Lima, Peru). Garment workers who operate from their homes are another example.

Statistics on the informal economy are unreliable by virtue of the subject. Yet they provide a tentative picture of its relevance. For example, informal employment makes up 48% of non-agricultural employment in North Africa, 51% in Latin America, 65% in Asia, and 72% in sub-Saharan Africa.

This sector of the economy is neither taxed, nor monitored by any form of government. In the United States, many industries are regulated. These include construction, restaurants and grocery stores, monetary service businesses (cashing checks and wire transfers), daycares, hair salons and others. They also require varying licenses and permits from government organizations at the Federal and State level.

As you plan to open a business, I encourage you to start conversations with local, state, and federal agencies. Research your industry online and talk to organizations like REAP who can provide assistance. Being proactive will avoid expensive fines, business shutdowns, or multiple headaches.

We’re here to help! In the last quarter, the REAP Hispanic Business Center assisted 708 individuals; 124 people were trained; and 8 loans totaling $124,500 went to Latino business owners. Contact me, Juan Sandoval, at to learn more.