Small business makes up most US companies and drives innovation, job creation, and economic resilience in communities across the country. Often, these entrepreneurs take on considerable financial risk to bring their ideas to life—but they also reap the rewards for their efforts.
To qualify as a small business, companies must meet size standards that vary by industry and revenue. These requirements, which are set by the Small Business Administration and Consumer Financial Protection Bureau, determine which companies can access government programs and funding. Small businesses can range from solo ventures and family-run shops to rapidly growing companies with hundreds of employees.
Aside from meeting size standards, small businesses must also select a legal structure, which impacts taxation and liability. Common structures include C corporations, S corporations, and sole proprietorships. Each has its own benefits and drawbacks, but all can provide greater flexibility than large corporations.
Regardless of the legal structure, small business owners should consider general and professional liability insurance to protect themselves against damage or injury to customers, as well as worker’s compensation coverage if they have employees. In addition, a business owner’s policy (BOP) may be beneficial to cover expenses and liabilities not covered by other policies.
Running a small business can be difficult, especially in today’s uncertain economy. In order to thrive, entrepreneurs must be able to manage their finances, market their business, and grow at a steady pace. It’s also important to understand the regulatory environment, including the necessary permits and compliance with local, state, and federal laws.
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