PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Optimism About the Future: New Business Applications Up in April

By at 17 May, 2021, 8:26 am

by RAYMOND J. KEATING-

Amidst the economic mess brought on by COVID-19, one measure in particular has been a beacon of hope. Specifically, signs of increased entrepreneurship.

The latest U.S. Census Bureau report on business formation statistics showed an 8.9 percent jump in “business applications for tax IDs as indicated by applications for an Employer Identification Number (EIN) through filings of the IRS Form SS-4” in April 2021 compared to March 2021. These monthly business applications are an indicator of future business formations.

Within the data are high-propensity business applications – that is, applications that have a high propensity of turning into businesses with employees. High-propensity applications increased by 6.6 percent in April.

Looking over the past year-plus, new business applications took a big dive in March and April of 2020 as the pandemic hit. But subsequently, the number of applications skyrocketed to record levels, and have largely remained at those heights.

Again, that’s hopeful for for the future of entrepreneurship, and therefore, the economy. A key factor moving ahead will be how policy treats entrepreneurship, and the investment needed to start-up and expand businesses. These business applications are intentional, which means confidence among these aspiring entrepreneurs and conditions needs to remain favorable.

Straightforward economics makes clear that increased tax and regulatory costs (as we are now seeing through various proposed policies from both Congress and the Biden Administration) will dampen such vital activity, while tax and regulatory relief will encourage it.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

 

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