Online Course Outline: Understanding Business Ownership in the USA

Understanding Business Ownership in the USA
Business ownership in the USA is diverse and regulated differently depending on the state and the type of business structure. There are three main types of business ownership: small businesses, midsize businesses, and corporations — each with unique characteristics and challenges.

1. Small Businesses

• Definition: A small business is typically defined by the Small Business Administration (SBA) as a business with fewer than 500 employees.
• Scale: Small businesses make up around 99.7% of all businesses in the USA, employing nearly 47% of the private workforce.
• Common Structures:
  • Sole proprietorships (owned and run by one person)
  • Partnerships (owned by two or more people)
  • Limited Liability Companies (LLCs) (providing personal liability protection)
• Regulatory Impact: Small businesses face fewer reporting and compliance requirements, but state regulations for licensing, taxes, and employment laws vary. For example:
  • California has stricter labor laws and higher minimum wages.
  • Texas has lower taxes and a more business-friendly environment.

2. Midsize Businesses

• Definition: Midsize businesses are typically defined as having between 100 and 999 employees and generating between $10 million and $1 billion in revenue annually.
• Structure: Most midsize businesses are structured as LLCs, S-corporations, or privately held corporations.
• Challenges:
  • Increased regulatory oversight from state and federal agencies (e.g., OSHA, IRS).
  • More complex tax structures and multi-state compliance requirements.
• State Variations:
  • A midsize business operating in multiple states may need to register and comply with tax laws and labor laws in each state.
  • States like Delaware and Nevada are preferred for incorporation due to favorable business laws and tax benefits.

3. Corporations

• Definition: Corporations are large businesses that are publicly or privately held, often employing over 1,000 employees and generating revenues in the billions.
• Structure:
  • C-Corporations (subject to double taxation on profits)
  • S-Corporations (pass-through taxation to shareholders)
  • Publicly Traded Companies (regulated by the Securities and Exchange Commission – SEC)
• Regulatory Impact:
  • Corporations face higher scrutiny and must comply with federal regulations, including labor laws, environmental regulations, and securities laws.
  • State regulations on business taxes, employment laws, and environmental policies can differ significantly. For example:
    • New York and California have higher corporate taxes and stricter labor laws.
    • Wyoming and South Dakota offer tax incentives to attract corporations.

Why It Matters

• Understanding the size and type of business helps in customizing your approach when cold calling.
• A small business owner might be focused on cost savings and operational efficiency, whereas a corporation might prioritize regulatory compliance and scalability.
• State-specific regulations and costs can affect how businesses operate and make decisions — influencing their interest in products or services that improve efficiency or reduce costs.