A small business is a firm that is independently owned and operated and is not dominant in its industry. 98% of all U.S. companies are considered small businesses, and have generated 64% of new jobs during the last 15 years. Employing more than half of all private-sector (non-government) workers, these businesses hire 40% of high-tech workers such as scientists, engineers, and computer programmers. In terms of the general economy, small businesses create new jobs and new industries, hiring workers who traditionally have had difficulty finding employment at larger firms.
However, it is not easy to survive in a competitive environment. About seven of every ten new businesses survive at least two years, but by the tenth year, 82% have closed. Failure is often attributed to management shortcomings, inadequate financing, and difficulty meeting government regulations.
First-time business-owners often assume their firms will immediately generate enough funds from their initial sales to finance continuing operations. Commercial banks and other financial institutions are the largest lenders to small businesses, accounting for 65% of total traditional credit to small firms. Furthermore, credit cards remain an important source of financing for small businesses, especially for firms with fewer than 10 employees.
Taxes are another burden for small firms—local, state, and federal income tax, workers’ compensation, Social Security, and unemployment benefits. The burden of taxes is balanced with tax incentives—including tax credits for use of biodiesel and renewable fuels, research activities, pension-plan start ups, and access for individuals with disabilities.
However, it is not easy to survive in a competitive environment. About seven of every ten new businesses survive at least two years, but by the tenth year, 82% have closed. Failure is often attributed to management shortcomings, inadequate financing, and difficulty meeting government regulations.
First-time business-owners often assume their firms will immediately generate enough funds from their initial sales to finance continuing operations. Commercial banks and other financial institutions are the largest lenders to small businesses, accounting for 65% of total traditional credit to small firms. Furthermore, credit cards remain an important source of financing for small businesses, especially for firms with fewer than 10 employees.
Taxes are another burden for small firms—local, state, and federal income tax, workers’ compensation, Social Security, and unemployment benefits. The burden of taxes is balanced with tax incentives—including tax credits for use of biodiesel and renewable fuels, research activities, pension-plan start ups, and access for individuals with disabilities.
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