If you are thinking about starting a small business, you probably have a million questions swirling around in your head.
The best way to have all of your questions about starting a small business answered is by meeting with an experienced business lawyer who can give you all of the business planning information you need. But here are some answers to a few common questions that the Small Business Administration receives.
How many small businesses end up being successful? Roughly half of all new small businesses survive five years or more and about one third make it to the 10-year mark or longer, the Bureau of Labor Statistics reports.
Interestingly, the survival rate of small businesses has remained largely unchanged over the years, despite the fluctuating economy. One way to increase the odds of your small business surviving is with effective planning.
How are small businesses financed? Many small businesses are financed through owner savings; loans from commercial lenders, family members or friends; investments; stocks or bonds; and other arrangements. Venture capital is an unconventional financing option that is growing in popularity.
Can I operate my small business out of my home? Yes, in fact, a little over half of the country’s small businesses are primarily operated out of the home, according to the U.S. Census Bureau. Operating out of your home while you are just getting started may be a great way to save on startup costs.
What is the most common legal form of organization for small businesses? Most small businesses are sole proprietorships or partnerships, the SBA reports. Other options include S corporations and C corporations. Determining which legal form of organization to choose is a very important decision and can affect many issues, including tax rates.
What is the average tax rate for small businesses? The average tax rate for sole proprietorships was 15.1 percent in 2013, according to the SBA. Partnerships were taxed at 29.4 percent on average the same year, and S-Corps were taxed highest at 31.6 percent on average in 2013.