How Do I Register a Business in the US?
According to the federal government, what is needed to start a business is to submit a state application, submit an Employer Identification Number (EIN) application, and obtain an EIN. There are currently over 30.7 million small businesses operating in the US, consisting of 99.9% of the country’s businesses. Small businesses have up to 500 employees and can be in any market sector. It can take up to ten days for an application to be approved for small businesses to be registered and running.
By registering a business in the US, a small business owner joins its competitors in creating over 60% of job opportunities for citizens. This means that they help towards financial growth towards the US economy, as every time small businesses are registered and opened, 1.5 million jobs can become available. Small and medium-sized businesses are responsible for over 90% of the business population in the US.
Why Are Small Businesses So Popular?
One of the most common reasons small businesses are popular to open is because of the concept of “being your own boss.” Those aged between 25 and 30 years old are the most likely to start a business in the US if they have a Bachelor’s degree. However, the average age of a small business owner to succeed is 40 years old.
Given the current economic crisis from the COVID-19 pandemic, 31% of small businesses have had to temporarily or permanently close due to lockdown restrictions. In noncrisis times, however, it is common for small businesses to fail the first year due to cash flow shortages. Then, they only pick up slowly over the next few years.
Nearly 55,000 businesses open monthly in the US, heavily relying on social media advertising to gain customers that will purchase online or rely on online reviews for businesses.
Where Is it Popular to Start a Business?
Business.org also notes that Washington D.C. is the most popular place to start a business. North Dakota was the highest-ranked state, and Colorado was second. However, what is important to consider as a business owner is that you need to find the right state with the right tax laws for the business, the right demographic audience, and the correct location to gain an annual revenue. It all falls down to the market sector of the business and how it will operate.
The National Federation of Small Businesses carried out a study in 2019 that indicated that small businesses could be affected due to the government regulations, increased percentage of taxes, and issues recruiting workers with the right skills. The problems that have held small businesses to develop have continued to do so this year and the next few years.
Are They More Likely to Succeed or Fail?
Small businesses can run for an average of ten years if they have success and a health cash flow. Most small businesses are done online, with plenty of startup businesses using online platforms to take advantage of the high demand in the digital era. However, a reported 42% of businesses fail because there is a lack of that niche in the market or too much competition that they cannot compete with.
In 2019, a Small Business Administration (SBA) report stated that small business owners were having a hard time finding workers. Given the current world crisis that we are facing with the coronavirus, there has been high unemployment and businesses temporarily closing, because of the restrictions and social distancing. It will take at least two years for businesses to see healthy cash flow and consistency, depending on the market sector that they are in.
With temporary bans on visas by the government, foreigners are not allowed to come to the US to work as they have done so within the previous years. This puts small businesses at risk, for they will have to put an extra effort into finding qualified workers locally.
About the Author
Mariliana has an MSC in consumer analytics and business strategy. She has a special interest in fast-moving industries and big data.