Business Structure
• The most common legal form of business organization among small employers is the Subchapter S-corporation (31%). It is followed in frequency by the C-corporation (26%), the proprietorship (21%), the limited liability corporation (LLC) (12%), and the partnership (6%).
• It is uncommon to change legal forms. Of those who do change, most move from proprietorships to other forms. Changes occur most frequently for liability reasons.
• Boards of directors of small C-corporations typically have three members. Those members appear to have notable business experience and functional expertise. However, boards are more likely to serve in simple fulfillment of legal requirements (68%) than as advisory bodies (27%).
• A single individual (including a spouse) owns 59 percent of employing businesses. Another 27 percent have two owners. Both the number of owners and the composition of ownership changes little over time.
• Seventy-eight (78) percent of small employers have a single business location (excluding temporary work areas like a construction site). Another 14 percent have two. Most small employers with multiple locations have them exclusively in one state. One percent of all businesses have at least one location outside the United States.
• The home, including a garage, basement annex, etc., is the primary location for more than one in four employing businesses. The overwhelming majority of those have fewer than 10 employees. Twenty-six (26) percent with businesses located outside the home have home offices, i.e., a room (s) in the home that is used solely for business purposes.
• Employing businesses are typically open five days a week (52%). Just 3 percent are open fewer. The rest are open six (19%) or seven (26%) days a week.
• Employing businesses are open an average of about 11 hours per day and a median of almost nine. Six (6) percent are open 24 hours a day.
• A management structure (beyond the owner) often appears when businesses have relatively few employees. Thirty-five (35) percent of all employing businesses have at least one person in addition to the owner(s) whose primary job is directing, managing, or supervising others. Two-thirds of firms employing 10-19 people have at least one such person and 80 percent of those with more than 20 employees do.
• Eighty-five (85) percent of small businesses are operated by owner/managers. The separation of ownership and management is most common among larger, small businesses.
• As businesses grow, employees more frequently functionally specialize in their work duties. For example, 36 percent have at least one employee whose sole function is accounting, bookkeeping, or finance. A non-ownership management structure seems to appear before specialized employee functions.
