During Small Business Month, we applaud small business owners and recognize their vital role in our world today. In 2023, American small businesses employ more than 60 million people and generate more than 40 percent of the country’s economic activity. In today’s digital world, we know that small businesses rely on online financial tools for success in everything from processing payments to complying with complex regulations. More can be done.
The State of Small Businesses Online
The future of small businesses and their continued livelihood depends on technology. Thanks to digital tools, small businesses operate across different states and regions, offering an expanded reach beyond Main Street. Even amid recent economic uncertainty, new business formation has increased 44% since 2019, and 10.5 million new business applications were filed during 2021 and 2022. Operating online also brings demanding compliance requirements and laws that change depending on location because each small business must comply with every jurisdiction they sell into.
Businesses must navigate these complex environments with their time and resources or bring in outside consultation to help guide them through the process.
In a recent Stripe survey of more than 1,400 small business owners, only 22 percent reported that it’s easier to open a business today than five years ago. Nearly half said they struggle to stay on top of regulations in the almost 11,000 United States tax jurisdictions. Another 86 percent agreed that the government should simplify tax compliance and filing requirements. Coalition efforts led by FTA member Carta have pushed the IRS to provide relief around electronic signatures. Now, Congress can help by passing the Eliminating Paperwork for Startups Act, bipartisan legislation that would allow new businesses to electronically file and sign 83(b) forms with the IRS.
Greater investment in online government tooling for businesses can provide relief for current small business owners and enable future growth, particularly around priority areas like tax compliance, access to capital, and access to government services. One example of a straightforward solution is to permanently enable small businesses to apply online for Employer Identification Numbers (EINs), essential to apply for business permits, open a bank account and hire employees. Allowing small businesses to submit official documents to government agencies electronically would also make it easier for them to fulfill tax obligations and access government programs.
What’s Next
Fintech has changed the way Americans operate because of the value it provides to consumers and small businesses, helping them solve their biggest problems and succeed. Small businesses are the backbone of the American economy and it’s critical we act to support them. We also need their help in shaping policy. To get involved with efforts to streamline 83(b) elections and other matters, contact FTA. Efficient, user-friendly government services can unlock greater potential for small businesses, allowing them to continue to thrive and grow, now and for decades to come.