Now We’re in Business: The Rise of the Pass-Through Entity

As the debate about who the job creators are in this country continues, interesting information has come to light regarding the entity type of most employers in the country. A recent Tax Foundation article showed that the majority of people in private industry work for pass-through entities, e.g.,  sole proprietorships, partnerships (including LLCs), and S-corporations. These sorts of business are typically used by smaller enterprises and startups. What’s particularly interesting about this is not the percentages, but that more companies are held privately, and that this represents a change over the previous 30 years.

The percentage of people employed by pass-through entities suggests that entrepreneurship really is on the rise in the United States, a trend I think will continue over the next ten years. A future post  will explore this change in greater detail, including why more people are starting businesses and why this matters for business owners, their employees, and the economy at large.

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