Businesses
Businesses, their structure and size
Businesses come in many sizes and legal forms. Their general purpose is to earn money, and they are producers of goods and services within the economy. Since markets are ruled by competition, there is a general rivalry between businesses within the same sectors. The government is tasked with upholding a general competitive climate by preventing monopolies, and investigating unfair competitive practices.
About three quarters of all U.S. business firms have no payroll, because they are self-employed persons operating unincorporated businesses, and may or may not be the owner's principal source of income.
Businesses in the US can exist in the following legal forms:
Sole proprietorship: is the most basic type of business to establish. One owner operates the company and is responsible for its assets and liabilities.
Limited Liability Company: An LLC is designed to provide the limited liability features of a corporation and the tax benefits and operational flexibility of a partnership.
Cooperative: People form cooperatives to meet a collective need or to provide a service that benefits all member-owners.
Corporation: It is more complex and generally suggested for larger, established companies with multiple employees.
Partnerships: They come in several different types, which depend on the nature of the arrangement and partner responsibility for the business.
S Corporation: Is is similar to a C corporation but you are taxed only on the personal level.
(Source: www.sba.gov)
These different legal forms for business entities can be distinguished by a) the nature of the business itself, and b) by the degree of shielding between the business and its owners/operators. The people who own or operate a corporation do not want to be legally fully liable for all the business actions, and corporations and LLC's are designed to limit this responsibility. As a result, the business entity itself gets treated as if it were a person - it can enter into contracts, etc.
Business Size and Distribution
Here are some numbers about the size and distribution of businesses in the US. Sources for these numbers are the website for the small Business Administration, www.sba.org, and the US Government website, www.census.gov.
About half of all U.S. workers are employed by organizations with 500 or more employees, but about a fifth work for small firms with 19 or fewer employees.
In the US, small business (fewer than 500 employees) accounts for more than half of GDP and around half the private sector employment.
The top job provider is those with fewer than 10 employees, and those with 10 or more but fewer than 20 employees comes in as the second, and those with 20 or more but fewer than 100 employees comes in as the third.
The most recent data shows firms with fewer than 20 employees account for slightly more than 18% of the employment.
There are approximately 17 million sole-proprietorships in the US, and 22 million small businesses (fewer than 500 employees). the number of large businesses, with 1000 or more employees, is approximately 12,000. (2012 numbers, http://www.census.gov/econ/smallbus.html)
It has been found that small businesses create the most new jobs in communities.
Local businesses provide competition to each other; they also challenge corporate giants.
In any given year, about half a million businesses start, and half a million die. Most business births and deaths are small firms, but several hundred that start or die each year have more than 500 employees apiece.