According to a new report from the U.S. Census Bureau, entrepreneurs filed more than 1.5 million applications for Employer Identification Numbers during the third quarter of 2020 – a more than 77% increase from the second quarter.
What some consider even more astounding is the total number of business applications so far this year during the COVID-19 pandemic totals more than 3.2 million compared to 2.7 million at the same time last year. Despite the economic challenges, new businesses are being formed at the fastest pace in over a decade.
Factors for the rise in business applications
Tens of millions of Americans remain out of work, and while many jobs may not come back anytime soon, some people see advantages to starting a business now, including:
- The Federal Reserve lowering interest rates to near zero, reducing the cost of borrowing money
- With businesses shutting down across the country, new companies may stand out
- Many talented, capable and business-minded individuals lost their jobs and see this time as an opportunity
With opportunity comes risk
Even during robust economic times, starting a new company comes with a lot of hazards. Statistics show that half of all new employee businesses fail within five years. The risks are even greater during the current pandemic.
That’s why it’s crucial – especially for high-asset ventures – to seek knowledgeable legal guidance over planning, formation and choosing the proper entity as well as pursuing financing, negotiating contracts and raising capital.
Working with experienced business law attorneys who can offer guidance for all phases of the startup and operational phases is vital for a business getting off on the right foot and navigating the many complexities and challenges that will arise.