Chamber of Commerce

Cities Where AI Threatens Employment the Most (2023)

Chamber of Commerce Team — Thu, 20 Jul 2023 11:19:32 +0000

From bank tellers and retail workers to software engineers and doctors, no line of work or type of business is entirely immune to artificial intelligence.

Despite AI’s potential to save employers on labor costs, increase productivity and spur overall economic growth, it can also lead to the disruption or loss of millions of jobs throughout the next several years.

In fact, the World Economic Forum (WEF) estimates that approximately 83 million jobs could be automated worldwide by 2027. The recent WEF study surveyed more than 800 companies, which employ 11.3 million workers across 45 countries, to gauge the fastest-growing and fastest-declining jobs. Meanwhile, Goldman Sachs places the estimated number of job losses even higher at 300 million jobs.

But what might AI-related job losses look like in the United States and how many potential jobs could be affected? To answer this question, we analyzed U.S. Bureau of Labor Statistics data, focusing on the top 10 most at-risk occupations from the WEF study, and determined the number of susceptible jobs in major metropolitan areas across the country.

Key findings

Administrative roles such as record-keeping and cashiers as well as accounting, bookkeeping, factory, and traditional security roles face the largest potential job losses due to AI.
Las Vegas, Miami, Louisville, Orlando, and Grand Rapids are home to the highest number of at-risk jobs.
Across the most populated 50 metropolitan areas, more than 10 million jobs fall into the category of “at-risk” occupations.

Where will AI replace the most jobs?

In terms of the top 10 most susceptible occupations, most of these roles are related to administration, such as cashiers, clerks, data entry, accounting, and bookkeeping. According to WEF estimates, more than 26 million record-keeping and administrative jobs could be eliminated by 2027.

Elsewhere, traditional security guards, housekeepers, bank tellers, retail sales, and door-to-door sales are also considered “at-risk” occupations, which have already been declining.

The decline of these occupations has been accelerated by technology and digitalization, which are two factors that will lead to continual job losses within these fields throughout the next five years.

Job losses are also accelerating with the recent introduction of generative AI technology such as Chat CPT, Bard, and DALL-E. According to WEF, this fast-growing technology could make tasks related to reasoning, communication, and coordinating more automatable in the coming years.

Our analysis included the total number of susceptible occupations within the top 50 most populated metropolitan areas across the country. Rankings were based on the percentage of potential job losses within each metro area.

Top five cities with the most at-risk jobs

#1. Las Vegas, Nevada

Total employed: 1,024,390
Number of at-risk jobs: 161,840
Percent of potential job losses: 15.80%

#2. Miami, Florida

Total employed: 2,623,770
Number of at-risk jobs: 393,920
Percent of potential job losses: 15.01%

#3. Louisville, Kentucky

Total employed: 643,330
Number of at-risk jobs: 96,420
Percent of potential job losses: 14.99%

#4. Orlando, Florida

Total employed: 1,297,460
Number of at-risk jobs: 190,000
Percent of potential job losses: 14.64%

#5. Grand Rapids, Michigan

Total employed: 549,710
Number of at-risk jobs: 79,910
Percent of potential job losses: 14.54%

Cities with the fastest declining jobs

Many of the nation’s most susceptible jobs have already been on the decline due to economic factors, digitalization, technology, or a combination.

We took a closer look at the fastest declining jobs in major metro areas by analyzing BLS occupational employment data. Our analysis looked at more than 800 occupations and compared the number of job losses and gains for each of those occupations from 2018 to 2023.

Even though technology such as AI will undoubtedly change and disrupt the workplace for years to come, it’s important to remember that this new technology is also estimated to create more than 69 million jobs worldwide by 2027, according to WEF.

Roles such as data analysts, scientists, machine learning specialists and cybersecurity experts could grow as much as 30% within the next five years. And according to management consulting firm PriceWaterhouseCoopers, global GDP could grow $15 trillion by 2030 due to AI and robotics.

It’s easy to let the fear of the unknown seep in when it comes to AI, but using AI to your advantage could not only protect your job or business, but it could also help it grow.

Whether you’re an employee or a small business owner, taking the right steps now to learn AI and adapt it within your daily work routine can help you properly prepare for the future.

Methodology

To determine our ranking, we considered the most at-risk occupations according to data from the World Economic Forum’s “Future of Jobs Report 2023.” These occupations include accounting, bookkeeping, and payroll clerks; administrative and executive secretaries; assembly and factory workers; bank tellers and related clerks; building caretakers and housekeepers; business services and administration managers; cashiers and ticket clerks; client information and customer service workers; data entry clerks; door-to-door sales workers; news and street vendors, and related workers; security guards; material recording and stock-keeping clerks; postal service clerks; retail salespersons and telemarketers.

Using U.S. Bureau of Labor Statistics employment data, we then analyzed employment numbers for these occupations within the 50 most populated metropolitan areas. Potential job loss estimates are based on the percentage of at-risk jobs within each metro area.

To find each metro area’s top three fastest declining jobs, we compared BLS employment numbers across more than 800 occupations from May 2018 to May 2023.

Sources: U.S. Bureau of Labor Statistics, World Economic Forum, Goldman Sachs, PriceWaterhouseCoopers

Fair Use: Feel free to use this data and research with proper attribution linking to this study.

Media Inquiries: For media inquiries, contact media@thisisnoble.co

The post Cities Where AI Threatens Employment the Most (2023) first appeared on Chamber of Commerce.

States with the Most Student Loan Debt (2023)

Chamber of Commerce Team — Thu, 06 Jul 2023 09:41:25 +0000

After more than three years of being put on pause, student loan payments are set to resume on Oct. 1, 2023.

Tens of millions of borrowers will now need to rearrange their monthly budget in order to account for payments, but which states have the highest amount of student loan debt?

According to the U.S. Department of Education, 43.6 million Americans across the country have federal student loan debt, amounting to more than $1.64 trillion.

Among those who have federal student loans, nearly 70% (28 million) owe $10,000 or more, while 25% (10.3 million) owe $40,000 or more.

To determine the average student loan debt as well as student loan debt by age group, we conducted an analysis of outstanding balances on student loans across all 50 states, Washington, D.C., and Puerto Rico.

Key findings

One-quarter of borrowers (10.3 million) owe $40,000 or more in federal student loans.
The average federal student loan debt is $37,717.
Since 2020, the nationwide amount of federal student loan debt has increased by $102 billion, and the number of borrowers has increased from 42.6 million to 43.6 million in 2023.
Washington, D.C.; Maryland; Georgia; Virginia and Florida have the highest average student loan debt in the nation.

Which states have the most student loan debt in 2023?

Since March 2020, when student loan payments were put on hold, federal student loan debt has seen a significant increase of $102 billion, according to the U.S. Department of Education.

Washington, D.C. takes the top spot in the nation for the highest average student loan debt. Borrowers in the nation’s capital owe an average of $54,856.

In Maryland, the state’s 808,600 borrowers face an average debt of $42,666, while borrowers in Georgia owe an average of $40,438.

Borrowers in Virginia and Florida round out the top five, with an average debt of $38,679 and $37,848, respectively.

Top five states with the most student loan debt

#1. Washington, D.C.

Total Debt: $6.1 billion
Number of Borrowers: 111,200
Average Debt Per Borrower: $54,856

#2. Maryland

Total Debt: $34.5 billion
Number of Borrowers: 808,600
Average Debt Per Borrower: $42,666

#3. Georgia

Total Debt: $65 billion
Number of Borrowers: 1,607,400
Average Debt Per Borrower: $40,438

#4. Virginia

Total Debt: $41 billion
Number of Borrowers: 1,607,400
Average Debt Per Borrower: $38,679

#5. Florida

Total Debt: $95.8 billion
Number of Borrowers: 2,531,200
Average Debt Per Borrower: $37,848

Nationwide, the average student loan debt is $37,717. Out of the 43.6 million Americans carrying student loan debt, roughly 9.1 million borrowers owe between $20,000 and $40,000. However, a significant number of borrowers, 3 million, owe $100,000 or more.

According to the U.S. Department of Education, borrowers who attended public colleges and universities (23 million) owe $654.5 billion in student loan debt, while those who attended private schools (11.9 million) owe $506.9 billion in student loan debt.

Student loan debt by age

Student loan debt not only varies based on school type and location, but also among different age groups.

For individuals aged 24 or younger, the average student loan debt is $14,296. However, this amount more than doubles to $32,223 for those aged 25 to 34. It increases to $45,703 for those between the ages of 35 to 49.

Surprisingly, even seniors face the burden of student loan debt. In fact, more than 112 million seniors aged 62 and over owe an average of $45,636. Average student loan debt is highest for seniors living in Vermont ($55,556) and lowest for those who live in West Virginia ($36,082).

Regardless of age or location, student loan payments will resume this fall for tens of millions of Americans. It’s important for borrowers to start rearranging their monthly budgets now in order to prepare for repayments as interest will start to add up on any unpaid loans.

Methodology

To determine our ranking, we analyzed federal student loan debt balances in all 50 states as well as Washington, D.C. and Puerto Rico via the U.S. Department of Education and the Federal Student Loan Portfolio. Data were also included for borrowers who did not include a current address as well as for borrowers living outside of the U.S. states or territories listed within the report. This federal student loan portfolio includes Direct Loans, Federal Family Education Loans (FFEL), and Perkins Loans with outstanding balances.

Sources: U.S. Department of Education, Federal Student Loan Portfolio

Fair Use: Feel free to use this data and research with proper attribution linking to this study.

Media Inquiries: For media inquiries, contact media@thisisnoble.co

The post States with the Most Student Loan Debt (2023) first appeared on Chamber of Commerce.

Cities With the Most New Homes (2023)

Chamber of Commerce Team — Tue, 06 Jun 2023 17:49:50 +0000

For house-hunting Americans, the supply is limited.

Due to a tight housing market for existing homes, the demand for new home construction is growing as homebuyers seek more options.

But which cities have the most new home construction in 2023?

To get a better sense of the current market for new homes, we analyzed building permit data for new residential construction from the U.S. Census Bureau and the Department of Housing and Urban Development (HUD).

Our analysis looked at the number of building permits for privately‐owned housing units in more than 200 of the largest metropolitan areas across the country.

Key findings

With 23,062 new residential home permits issued this year, the Houston metropolitan area tops the list.
Along with Houston, several other Texas metro areas rank within the top 20, including Dallas-Fort Worth (No. 2); Austin (No. 7), and San Antonio (No. 18).
The number of permits for new home construction is down 21.1 percent year-over-year.
Kansas City, Milwaukee, and Honolulu have seen the largest year-over-year declines in new home construction permits. Meanwhile, Miami, Louisville, and Tampa have seen the largest increases.

Which cities have the most new home construction in 2023?

Compared to this time last year, the number of permits for new home construction is down 21.1 percent, according to the Census Bureau and HUD.

But even though new home construction is down nationwide year-over-year, metro areas such as Houston, Dallas-Fort Worth, New York City, Phoenix and Atlanta are home to the most new home construction in 2023.

In Houston, more than 23,000 permits for new homes have been issued this year, while Dallas has seen more than 20,000. Both of these cities have been averaging more than 5,000 new home construction permits per month.

These new home construction permits represent both single-family homes and multi-unit residential homes such as apartment complexes and condominiums. Houston ranks No. 1 for new single-family home construction with 15,391 homes, while New York City tops the list for multi-unit residential homes with 10,155.

Top five cities with the most new home construction

#1. Houston, TX

Average monthly new home permits in 2023: 5,766
New single-family homes: 15,391
Multi-unit residential homes: 7,671
Total new homes in 2023: 23,062

#2. Dallas-Fort Worth, TX

Average monthly new home permits in 2023: 5,156
New single-family homes: 12,738
Multi-unit residential homes: 7,887
Total new homes in 2023: 20,625

#3. New York, NY

Average monthly new home permits in 2023: 3,552
New single-family homes: 4,053
Multi-unit residential homes: 10,155
Total new homes in 2023: 14,208

#4. Phoenix, AZ

Average monthly new home permits in 2023: 3,459
New single-family homes: 6,597
Multi-unit residential homes: 7,238
Total new homes in 2023: 13,835

#5. Atlanta, GA

Average monthly new home permits in 2023: 3,294
New single-family homes: 7,385
Multi-unit residential homes: 5,790
Total new homes in 2023: 13,175

Largest declines in new home construction

Numerous factors such as limited inventory in the existing home market, high mortgage rates, and supply chain issues have created a bottleneck for new home construction.

Several cities across the country have experienced larger declines in new home construction compared to others. For example, permits for new homes in the Kansas City metro area are down two-thirds (66.1%) year-over-year.

Elsewhere, new home permits in the Milwaukee metro area are down 50.6%, while Honolulu has also seen a 50% drop compared to this time last year.

Among the 56 largest metro areas in the country with a population of one million or more, only nine have seen a year-over-year increase, including Miami (35.5%); Louisville (20.5%); Tampa (17.5%); Portland (14.2%), Cincinnati (12.8%); Riverside (9.7%); Nashville (6.8%); Baltimore (5.8%) and Grand Rapids (1.3%)

It remains to be seen whether new home construction will catch up with the current demand, but it’s clear that some cities are experiencing a building boom when it comes to new homes.

Methodology

To determine our ranking, we analyzed new home construction permits across 225 metropolitan areas via data from the U.S. Census Bureau and the Department of Housing and Urban Development (HUD). Metro areas were ranked based on the total number of permits for privately-owned residential housing units in 2023. These units include both single-family homes as well as multi-unit residential units such as apartments and condominiums. Data for this study includes new home construction permits issued from January through April 2023, which is the most recent data available as of June 1, 2023.

Sources: U.S. Census Bureau, Department of Housing and Urban Development

Fair Use: Feel free to use this data and research with proper attribution linking to this study.

Media Inquiries: For media inquiries, contact media@thisisnoble.co

The post Cities With the Most New Homes (2023) first appeared on Chamber of Commerce.

Average Income Needed to Afford Rent (2023)

Chamber of Commerce Team — Tue, 30 May 2023 11:28:27 +0000

“Why is rent so high?”

It’s a question renters across the country have been asking themselves as the nationwide median rent climbs to $1,967 per month, according to data from Zumper.

Factors such as a lack of housing inventory and high mortgage rates have driven up rental costs across the country, which has left renters with limited options when it comes to finding affordable housing.

So, how much do Americans actually need to earn in order to afford rent in 2023?

We took a closer look at the true cost of rent in cities across the country by determining how much yearly income is needed in order to afford a one-bedroom rental in each city. Our analysis included the median rent for a one-bedroom apartment as well as the median income in more than 120 cities.

From there, we used a rent-to-income ratio of 30% in order to determine how much Americans would need to earn to afford rent without spending more than 30% of their income on rent. A rent-to-income ratio determines the monthly or annual gross income a tenant should earn to afford rent each month.

Key findings

The income needed to rent a one-bedroom apartment in New York City is twice as high as the city’s median income. The median income for women in New York would need to increase by roughly $76,624 per year in order to afford rent for a one bedroom.
Miami is home to the largest rent-to-income gap. Renters would need to earn $120,000 per year for a one-bedroom apartment, which is $78,713 higher than the city’s median income.
Laredo, Texas; Toledo, Ohio and Wichita, Kansas are the top three most affordable cities on our list. Renters in these cities would only need to earn less than $28,000 per year to afford rent.

Cities with the highest incomes needed to afford rent

More than one-third (34.6%) of households in the U.S. rent homes, according to the Census Bureau. Depending on the city they live in, many of these renters are facing payments of more than $1,500 per month for a one-bedroom apartment. In fact, 46 cities within our analysis have a median rent of $1,500 or more, while 32 cities have a median rent of $2,000 or more.

According to our analysis, renters would need to earn $60,000 or more in order to afford rent within these cities.

However, the top seven most expensive cities on our list require a median income of at least $100,000 or more in order to afford a one-bedroom rental.

Top five cities with the highest incomes needed to afford rent

#1. New York, New York

Median Rent for One Bedroom: $3,495
Median Income: $65,317
Income Needed for One Bedroom: $139,800

New York City tops the list of cities in our analysis. Renters need to earn an average of $139,800 per year in order to afford a one-bedroom unit in The Big Apple. Based on the current median rent ($3,495), renters in New York can expect to pay an average of $41,940 per year on rent, according to our analysis.

#2. Miami, Florida

Median Rent for One Bedroom: $3,000
Median Income: $41,287
Income Needed for One Bedroom: $120,000

For those looking to rent a one-bedroom unit in Miami, they can expect to pay $36,000 per year, which means renters would need to earn roughly $120,000 per year if they want to avoid paying more than 30% of their income on rent. That’s $78,713 more than the current median income in Miami, which is $41,287.

#3. San Francisco, California

Median Rent for One Bedroom: $3,000
Median Income: $103,978
Income Needed for One Bedroom: $120,000

Six out of 10 cities on our top 10 list are located in California, but nowhere in the Golden State is more expensive for renters than San Francisco. The average one-bedroom rental in San Francisco runs for $3,000 per month, which means renters would need to earn $120,000 per year in order to avoid spending more than 30% of their income on rent.

#4. Irvine, California

Median Rent for One Bedroom: $2,718
Median Income: $91,246
Income Needed for One Bedroom: $108,720

We head south to Orange County, California to find the fourth most expensive city for renters. The yearly cost for a one-bedroom rental in Irvine will set renters back $32,616 per year, or $2,718 per month. In order to afford rent in Irvine, renters need to earn at least $108,720 per year, which is $17,474 less than the median income.

#5. Boston, Massachusetts

Median Rent for One Bedroom: $2,650
Median Income: $72,077
Income Needed for One Bedroom: $106,000

With a median rent of $2,650, $31,800 per year, Boston takes the fifth spot on the list. Renters in Boston would need to take home at least $106,000 per year in order to avoid spending more than 30% of their income on rent.

Cities with the largest rent-to-income gaps

Along with analyzing the cities with the highest incomes needed to afford rent, we also looked at cities with the largest rent-to-income gaps.

These cities have the largest gaps between the current median income and the income needed to afford a one-bedroom apartment.

It might not come as a surprise, but Miami and New York City top the list. Renters in these cities would need to earn at least $75,000 more than the median income in order to afford the median rent.

Elsewhere, those living in Hialeah, Florida would need to earn at least $47,531 more per year, while those living in Oxnard, California would need to bring in an additional $44,049 per year.

Whether you’re considering a move to a new apartment within your city or relocating to a new state, it’s important to keep the 30% rule in mind when budgeting for a new place to live.

The cost of living can also affect what you can and can’t afford, so be sure to keep these factors in mind before signing a new lease.

Methodology

To determine our ranking, we analyzed median rent for one-bedroom rentals as well as median earnings for full-time, year-round workers in the most populated 120 census-defined places via the U.S. Census Bureau’s American Community Survey. Cities included in the analysis have a population of at least 200,000. We then calculated the average income needed to afford rent based on the current median rent for a one-bedroom rental as of May 2023. We considered a rent-to-income ratio of 30% within our calculations. According to The Department of Housing and Urban Development (HUD), households spending more than 30% of their gross income on housing are considered cost burdened. HUD recommends a rent-to-income ratio of no more than 30%.

Sources: Zillow, U.S. Census Bureau’s American Community Survey, Department of Housing and Urban Development, Zumper

Fair Use: Feel free to use this data and research with proper attribution linking to this study.

Media Inquiries: For media inquiries, contact media@thisisnoble.co

The post Average Income Needed to Afford Rent (2023) first appeared on Chamber of Commerce.

Cities With the Most Expensive Airbnb Rentals (2023)

Chamber of Commerce Team — Fri, 05 May 2023 09:20:12 +0000

Whether you’re planning a summer getaway, a business trip, or working remotely on a workcation, Airbnb has become a go-to option for short-term travel accommodations. And even though short-term rentals offer convenience, expenses for Airbnb rentals can quickly add up and bust your travel budget.

Between cleaning fees, service fees, and taxes, the daily rate for an Airbnb can easily soar to hundreds of dollars.

But which cities are the most expensive for Airbnb customers?

In order to find out, we analyzed data from more than 160,000 listings located within the largest cities across the country. Our analysis included the average daily rate for a rental in each city as well as the number of listings in each city per 100,000 residents.

Key findings

Cities in California and Arizona dominate the list of the top 25 most expensive markets for Airbnb rentals. Overall, California is home to seven of the top 25 most expensive markets and Arizona is home to five.
Oxnard, California; Scottsdale, Arizona and Austin, Texas are the top three most expensive cities to rent an Airbnb.
Miami, Florida; Scottsdale, Arizona and St. Petersburg, Florida have the most active Airbnb listings per 100,000 residents.

Which cities have the most expensive Airbnb rentals?

When it comes to the priciest Airbnb rentals, look no further than California’s Pacific coast. An average night at an Airbnb in Oxnard, California will set travelers back nearly $500. A two-bedroom rental costs an average of $273, while a three-bedroom in Oxnard is $405.

Overall, several California cities are home to the most expensive Airbnb rentals, which probably isn’t much of a surprise considering the Golden State has some of the most expensive real estate in the country.

Other expensive Airbnb destinations within California include San Diego, which ranks 8th ($295), Santa Clarita, which ranks 9th ($292), and Huntington Beach, which ranks 10th ($287).

Arizona’s metro Phoenix area is also a hot spot for expensive Airbnb rentals. Scottsdale ranks 2nd ($394), while nearby Glendale ranks 12th ($282) and the city of Phoenix ranks 13th ($282).

Top five cities with the most expensive Airbnb rentals

#1. Oxnard, California

Avg. Daily Rate: $488
Avg. Rate for One Bedroom: $110
Avg. Rate for Two Bedroom: $273
Avg. Rate for Three Bedroom: $405
Listings Per 100,000: 95

#2. Scottsdale, Arizona

Avg. Daily Rate: $394
Avg. Rate for One Bedroom: $114
Avg. Rate for Two Bedroom: $151
Avg. Rate for Three Bedroom: $264
Listings Per 100,000: 1,370

#3. Austin, Texas

Avg. Daily Rate: $373
Avg. Rate for One Bedroom: $127
Avg. Rate for Two Bedroom: $203
Avg. Rate for Three Bedroom: $297
Listings Per 100,000: 606

#4. Las Vegas, Nevada

Avg. Daily Rate: $360
Avg. Rate for One Bedroom: $106
Avg. Rate for Two Bedroom: $187
Avg. Rate for Three Bedroom: $221
Listings Per 100,000: 801

#5. Honolulu, Hawaii

Avg. Daily Rate: $315
Avg. Rate for One Bedroom: $167
Avg. Rate for Two Bedroom: $346
Avg. Rate for Three Bedroom: $389
Listings Per 100,000: 940

Cities with the most Airbnb listings

Along with analyzing the most expensive cities for Airbnb rentals, we also took a look at which cities offer the largest number of listings per 100,000 residents.

Overall, Miami tops the list of cities with the most active Airbnb listings. The city offers more than 1,400 Airbnb listings per 100,000.

Elsewhere, Scottsdale comes in at No. 2 with 1,369 listings, followed by St. Petersburg, Florida (1,274); Orlando, Florida (1,252) and New Orleans, Louisiana (1,035).

Airbnb can provide convenient accommodation but be sure to budget carefully depending on where you plan to stay. Remember to keep in mind that fees for cleaning as well as taxes can be tacked-on to the final cost and drive-up expenses.

When booking your trip, consider avoiding travel dates during major holidays and try staying outside of large tourist destinations in order to save on expenses.

Methodology

To determine our ranking, we analyzed more than 160,000 Airbnb cities in the most populated 115 census-defined places via the U.S. Census Bureau’s American Community Survey and Airbnb listing data. The average daily rate included listings for studios and up to five or more bedrooms. Data for the number of Airbnb listings in each city only includes active Airbnb listings as of April 2023.

Sources: Airbnb, U.S. Census Bureau’s American Community Survey

Fair Use: Feel free to use this data and research with proper attribution linking to this study.

Media Inquiries: For media inquiries, contact media@thisisnoble.co

The post Cities With the Most Expensive Airbnb Rentals (2023) first appeared on Chamber of Commerce.

Cities With the Most House Poor Homeowners (2023)

Chamber of Commerce Team — Tue, 25 Apr 2023 15:34:17 +0000

Many homeowners across the country have found themselves stuck in homes they can’t afford.

Whether it’s due to high interest rates or simply choosing to live beyond their means, homeowners spending more than 30% of their income on housing costs are considered “house poor.”

The “30% rule” is a popular standard for budgeting, which advises homeowners to avoid spending more than 30% of their income on housing expenses. But for many homeowners, it’s not an easy rule to follow.

These cost-burdened homeowners have found themselves facing budget-busting housing expenses such as monthly mortgage payments, property taxes, homeowners insurance and utilities.

In order to get a better understanding of where homeowners are living beyond their means, we analyzed monthly housing costs and median household income from more than 9 million households across the country via the U.S. Census Bureau.

Our analysis looked at the number of homeowners with a mortgage who spend more than 30% of their household income on housing costs.

Key Findings

Miami, Los Angeles and New York City are the top three cities with the most homeowners living beyond their means. More than 4 in 10 homeowners are considered to be “house poor” in these cities.
Cities located in Florida and California dominate the list of top 30 cities. Overall, six cities within the top 30 are in Florida and 14 are located in California.
Nationwide, 27.4% of homeowners are considered “house poor.”

Which Cities Have the Most “House Poor” Homeowners?

Nearly 3 in 10, or 27.4% of U.S. homeowners with a mortgage are considered to be cost-burdened with housing expenses, according to the Census Bureau. Overall, 21% of cost-burdened homeowners have a household income of less than $75,000.

However, the number of cost-burdened homeowners living in the Miami metropolitan area far exceeds the national average. Overall, nearly 60% of homeowners living in Hialeah, Florida are living beyond their means, according to the Census.

Elsewhere, 44% of homeowners living in nearby Miami are cost-burdened. Los Angeles ranks No. 2, with 48.7% of homeowners considered cost-burdened, followed by New York City (45.3%).

Top Five Cities With the Most House Poor Homeowners

#1. Hialeah, Florida

Percentage of House Poor Homeowners: 59.3%
Number of House Poor Households: 10,918
Median Household Income: $64,386
Median Monthly Household Costs: $1,632
Median Yearly Household Costs: $19,584

#2. Los Angeles, California

Percentage of House Poor Homeowners: 48.7%
Number of House Poor Households: 179,821
Median Household Income: $122,032
Median Monthly Household Costs: $2,972
Median Yearly Household Costs: $35,664

#3. New York City, New York

Percentage of House Poor Homeowners: 45.3%
Number of House Poor Households: 272,355
Median Household Income: $120,618
Median Monthly Household Costs: $2,848
Median Yearly Household Costs: $34,176

#4. Miami, Florida

Percentage of House Poor Homeowners: 44.6%
Number of House Poor Households: 14,565
Median Household Income: $92,897
Median Monthly Household Costs: $2,308
Median Yearly Household Costs: $27,696

#5. Hollywood, Florida

Percentage of House Poor Homeowners: 44.3%
Number of House Poor Households: 10,180
Median Household Income: $98,131
Median Monthly Household Costs: $2,039
Median Yearly Household Costs: $24,468

Cities With the Most Budget-Minded Homeowners

Our analysis also took a look at cities with the most budget-minded homeowners. Not only do the majority of homeowners in these cities live by the 30% rule, but they go above and beyond it by spending less than 20% of their income on housing expenses.

For example, nearly two-thirds of homeowners in Huntsville, Alabama spends less than 20% of their income on housing costs. Nationwide, less than half of homeowners (47%) spend less than 20% of their income on housing expenses.

Elsewhere, nearly 60% of homeowners in Raleigh, North Carolina are budget-minded homeowners, followed by Pittsburgh, Pennsylvania (59.3%).

When it comes to owning a home, it’s always best to expect the unexpected.

Monthly housing expenses can build up and quickly eat away at your budget, especially when it comes to mortgages with high interest rates, second mortgages and property taxes.

While the 30% rule can help you gauge how much household income to set aside each month for housing costs, it’s also a good idea to speak with a financial advisor before purchasing a home. Mapping out your mortgage budget in advance can be the difference between being a “house poor” or a “budget-minded” homeowner.

Methodology

To determine our ranking, we analyzed median household income and median monthly housing costs across more than 9 million households located in the most populated 170 census-defined places via the U.S. Census Bureau’s American Community Survey. Cities were ranked based on the percentage of homeowners who spend more than 30% of their household income on monthly housing costs. The Census Bureau defines monthly housing costs as the sum of payments for mortgages, deeds of trust, contracts to purchase, or similar debts on the property (including payments for the first mortgage, second mortgages, home equity loans, and other junior mortgages); real estate taxes; fire, hazard, and flood insurance on the property; utilities (electricity, gas, and water and sewer); and fuels (oil, coal, kerosene, wood, etc.).

It also includes any applicable monthly condominium fees for condominiums, mobile home costs (personal property taxes, site rent, registration fees, and license fees). Selected monthly owner costs were tabulated for all owner-occupied units for units with a mortgage.

Sources: U.S. Census Bureau’s American Community Survey

Fair Use: Feel free to use this data and research with proper attribution linking to this study.

Media Inquiries: For media inquiries, contact media@thisisnoble.co

The post Cities With the Most House Poor Homeowners (2023) first appeared on Chamber of Commerce.

Cities With the Most Self-Employed Workers (2023)

Chamber of Commerce Team — Tue, 21 Mar 2023 14:00:03 +0000

One-person businesses are on the rise.

The number of self-employed workers has increased by nearly one million (988,418) since 2016, according to the Census Bureau.

Whether they’re designers, consultants, plumbers or painters, there are nearly 16 million self-employed workers among the more than 156 million workers in the United States.

For many, self-employment provides a gateway to entrepreneurship, more flexible work hours, and the opportunity to be their own boss.

But which cities are home to the most self-employed workers?

We analyzed U.S. Census Bureau data in 170 of the most populated cities across the country in order to determine which cities have the highest percentage of self-employed within the workforce.

Key findings

Cities within Florida dominate the top 10 list of cities with the most self-employed workers. Overall, six out of the top 10 cities are all located in Florida, and the top 3 are all located within the Miami metropolitan area.
Among the 170 cities on our list, there are only 16 cities where self-employed females outweigh the number of self-employed males.
The average nationwide income for self-employed workers is $54,232, which is $107 higher than the nationwide median income for all workers ($54,339).

Which cities have the most self-employed workers?

Florida dominates the list of cities with the most self-employed workers, specifically in Miami-Dade County, which is home to the most cities within the list of top 10.

In the city of Miami, nearly 19% (or 43,536) workers are self-employed. In nearby Hialeah, Florida, the percentage of self-employed workers is 20%, which makes it the No. 1 city on the list.

Elsewhere, Los Angeles ranks within the top five. Nearly 16% (297,479) of its workforce identify as self-employed. Meanwhile, the Los Angeles suburb of Glendale ranks No. 7 on the list. Among the top 30 cities, 12 are located within California.

Top five cities with the most self-employed workers

#1. Hialeah, Florida

Percent of Workforce Self-Employed: 20.3%
Number of Self-Employed: 21,900
Percent of Self-Employed – Females: 33.2%
Percent of Self-Employed – Males: 66.8%
Average Income of Self-Employed: $31,570

#2 Miami, Florida

Percent of Workforce Self-Employed: 18.9%
Number of Self-Employed: 43,536
Percent of Self-Employed – Females: 41.1%
Percent of Self-Employed – Males: 58.9%
Average Income of Self-Employed: $46,046

#3 Hollywood, Florida

Percent of Workforce Self-Employed: 18.0%
Number of Self-Employed: 13,806
Percent of Self-Employed – Females: 28.9%
Percent of Self-Employed – Males: 71.1%
Average Income of Self-Employed: $50,661

#4 Cape Coral, Florida

Percent of Workforce Self-Employed: 16.2%
Number of Self-Employed: 15,964
Percent of Self-Employed – Females: 40.4%
Percent of Self-Employed – Males: 59.6%
Average Income of Self-Employed: $42,730

#5 Los Angeles, California

Percent of Workforce Self-Employed: 15.9%
Number of Self-Employed: 297,479
Percent of Self-Employed – Females: 38.0%
Percent of Self-Employed – Males: 62.0%
Average Income of Self-Employed: $61,171

Where do self-employed workers earn more than the median income?

Along with looking at cities with the highest percentage of self-employed workers, our analysis also examined income levels for those who are self-employed.

Overall, there are 89 cities across the U.S. where self-employed workers earn more than the median income.

The largest income gap can be found in Amarillo, Texas. The median income in Amarillo is slightly above $47,000, but the average income for self-employed workers is $110,625, which is more than $63,000 higher. Among the city’s working population, 9.7% are self-employed, which is roughly 9,385.

Elsewhere on the list, Modesto, California is another city where self-employed workers out-earn the median income. On average, self-employed workers in Modesto earn $46,729 more than the median income. Cincinnati ranks 3rd ($30,914); Knoxville ranks 4th ($24,758) and Chattanooga ranks 5th ($23,167) for cities where self-employed workers make more than the median income.

Cities with the most self-employed women

Nationwide, only 8.3% of all females within the workforce are self-employed, but there are several cities across the country where a large percentage of the female workforce is self-employed.

Topping the list is Miami, Florida (17.1%), followed by Hialeah, Florida (14.4%); Huntington Beach, California (14%); Cape Coral, Florida (13.6%) and Oakland, California (13.2%).

Starting a business may seem like a daunting task, but not everyone looking to leave their job has to run a massive corporation or large business. Self-employment provides a middle-ground for those looking to run their own business while maintaining a work-life balance.

Whether you’re looking to start an LLC or a sole proprietorship, there are several different options to choose from when it comes to starting your own business. But be sure to map out your goals and write down a business plan first. Putting the right pieces in place before you go off on your own can help turn your dream of self-employment into a tangible goal.

Methodology

To determine our ranking, we analyzed the class of workers among those employed ages 16 and older in the most populated 170 census-defined places via the U.S. Census Bureau’s American Community Survey. We then analyzed median earnings for workers ages 16 and older. Data for self-employed workers include both self-employed working in incorporated businesses as well as unincorporated businesses. We compared the median income for those within both incorporated and unincorporated businesses in order to find the average income for self-employed workers. In order to determine which cities have the most self-employed women, we calculated the percent of all females within the workforce who are self-employed.

Sources: U.S. Census Bureau’s American Community Survey

Fair Use: Feel free to use this data and research with proper attribution linking to this study.

Media Inquiries: For media inquiries, contact media@thisisnoble.co

The post Cities With the Most Self-Employed Workers (2023) first appeared on Chamber of Commerce.

Cities with the Largest Gender Pay Gaps (2023)

Chamber of Commerce Team — Tue, 21 Mar 2023 13:43:51 +0000

Despite decades of advocacy for equal pay, the pay gap between men and women in the United States still remains wide.

Overall, full-time, year-round working women earn about 82% of what their male counterparts earn. The gap is even wider among full-time workers with a bachelor’s degree (70%), according to the U.S. Census Bureau.

In order to gain a better understanding of where gender pay gaps are the largest, we took a closer look at earnings in cities across the country as well as all 50 states.

Our analysis looked at earnings for full-time, year-round workers within the most populated 170 cities in the United States. We also compared earnings among those over the age of 25 with a bachelor’s degree.

Key findings

The Silicon Valley city of Sunnyvale, California has the largest pay gap in the country, with an earnings difference of $40,584 between men and women.
California cities dominate the top 10 list of cities with the largest pay gaps, including Sunnyvale (No. 1); Huntington Beach (No. 6); Fremont (No. 7); Irvine (No. 9), and San Francisco (No. 10).
In terms of states with the largest pay gaps, Wyoming ranks No. 1, with an earnings difference of $18,877 between men and women. On average, the pay gap in Wyoming has increased $2,376 per year since 2017.

Which cities have the largest gender pay gaps?

Nationwide, the pay gap between men and women is about $11,165. Full-time, year-round working men earn an average of $60,428 while their female counterparts earn $49,263.

However, in Sunnyvale, California, the pay gap is $40,584, which is more than three-and-a-half times the nationwide average.

Top five cities with largest gender pay gaps

#1. Sunnyvale, California

Median Earnings: Men – $143,664
Median Earnings: Women – $103,080
Pay Gap: $40,584
Median Earnings: Men with Bachelor’s Degree – $133,086
Median Earnings: Women with Bachelor’s Degree – $90,421
Pay Gap with Bachelor’s Degree: $42,665

#2. Frisco, Texas

Median Earnings: Men – $111,458
Median Earnings: Women – $71,599
Pay Gap: $39,859
Median Earnings: Men with Bachelor’s Degree – $123,775
Median Earnings: Women with Bachelor’s Degree – $57,389
Pay Gap with Bachelor’s Degree: $66,386

#3. Cary, North Carolina

Median Earnings: Men – $103,944
Median Earnings: Women – $64,453
Pay Gap: $39,491
Median Earnings: Men with Bachelor’s Degree – $110,765
Median Earnings: Women with Bachelor’s Degree – $58,587
Pay Gap with Bachelor’s Degree: $52,178

#4. Scottsdale, Arizona

Median Earnings: Men – $95,611
Median Earnings: Women – $63,769
Pay Gap: $31,842
Median Earnings: Men with Bachelor’s Degree – $98,259
Median Earnings: Women with Bachelor’s Degree – $60,768
Pay Gap with Bachelor’s Degree: $37,491

#5. McKinney, Texas

Median Earnings: Men – $90,401
Median Earnings: Women – $61,386
Pay Gap: $29,015
Median Earnings: Men with Bachelor’s Degree – $103,300
Median Earnings: Women with Bachelor’s Degree – $62,131
Pay Gap with Bachelor’s Degree: $41,169

Largest gender pay gaps: Bachelor’s degrees

When it comes to those who are 25 and older with a bachelor’s degree, the nationwide pay gap between men and women is $22,326, which is twice as high as the total gender pay gap in the U.S. ($11,165). On average, men with a bachelor’s degree earn $73,592, while women earn $51,266.

The Dallas-Fort Worth suburb of Frisco, Texas has the largest pay gap among men and women with a bachelor’s degree. Overall, men in Frisco with a four-year degree earn $123,775, while women with a four-year degree earn $57,389, according to Census data. This is a staggering difference of $66,386.

Meanwhile, the smallest pay gaps among those with a four-year degree can be found in Rancho Cucamonga, California ($78); Port St. Lucie, Florida ($171) and Ontario, California ($255).

Elsewhere, there are only three cities where women with a four-year degree earn more than their male counterparts, including Modesto, California ($403); Santa Ana, California ($5,307) and Fort Lauderdale, Florida ($10,806).

Which states have the largest gender pay gaps?

Among all 50 states, Wyoming, New Hampshire, Utah, Washington and Louisiana have the top five largest gender pay gaps. In Wyoming, the median earnings for men is $59,853, while the median earnings for women is $40,976, which is a difference of $18,877.

New Hampshire ranks second with an earnings gap of $16,686, followed by Utah ($16,562); Washington ($16,501) and Louisiana ($14,942).

As far as states with the smallest gender pay gaps, Vermont ranks No. 1 with a difference of $3,872, followed by Alaska ($6,849); Nevada ($7,492); New York ($7,643) and Arkansas ($7,803).

However, the pay gap among those with a four-year degree in those same states is considerably higher. In Vermont, the pay gap among those with a four-year degree is $9,608, followed by Alaska ($18,478); Nevada ($13,096); New York ($14,616) and Arkansas ($19,817).

Methodology

To determine our ranking, we analyzed median earnings for full-time, year-round workers in the most populated 170 census-defined places via the U.S. Census Bureau’s American Community Survey. We then analyzed median earnings for full-time, year-round workers ages 25 and older with a bachelor’s degree. The same datasets were also analyzed in order to determine the earnings gap in all 50 states.

Sources: U.S. Census Bureau’s American Community Survey

Fair Use: Feel free to use this data and research with proper attribution linking to this study.

Media Inquiries: For media inquiries, contact media@thisisnoble.co

The post Cities with the Largest Gender Pay Gaps (2023) first appeared on Chamber of Commerce.

Sole Proprietorship vs Corporation: What’s the difference?

Chamber of Commerce Team — Tue, 31 Jan 2023 10:39:40 +0000

Choosing the most suitable business structure for your business is one of the most important decisions you’ll make as an entrepreneur. Irrespective of whether you’re starting a large or new small business, the entity type you select should reflect your company’s goals for you to have the best possible benefits and results. Two of the most common business structures are sole proprietorships and corporations. However, each entity type has its own advantages and drawbacks. The following guide will outline the differences and similarities between sole proprietorships and corporations and help you make an informed decision.

What is a sole proprietorship?

Sole proprietorships are unincorporated businesses having only one owner. However, if more than one owner is involved, it is automatically considered a general partnership. A sole proprietorship’s profits or income is taxed as the owner’s personal income.

They are also one of the easiest entity types to set up and maintain, making them one of the most common business structures. However, it’s not considered a separate legal entity by the IRS like other structures such as limited liability companies and corporations.

When starting a sole proprietorship, there are no forms to file or fees to pay. You only need to consider if you’re going to be using your own name as your business name. If not, you’ll need to register a DBA or “doing business as” name per your state laws and regulations.

Sole proprietorship benefits

Easy formation: One of the most obvious advantages of creating a sole proprietorship is the simple establishment of the entity. Aside from that is also quite inexpensive and less time-consuming than creating a corporation.
No restrictions on the number of employees: Sole proprietorships don’t limit the number of employees you can have, allowing you to grow and get closer to incorporating your business.
Business name protection: When running a sole proprietorship, your business’s legal name is, in fact, your name. If you’d like to change this or operate under a different name, you can register a trademark through the USPTO or file a DBA with your state or county clerk’s office.
Complete control: As a sole proprietor or owner of your business, you have complete control of the day-to-day operations, decision-making process, etc.

Sole proprietorship drawbacks

Unlimited legal liability: Since there’s no separation between the sole proprietor and the business, the sole proprietor is liable for all debts and obligations, malpractice claims, lawsuits, etc., brought against the business.
Skills and experience: It can be quite challenging for sole proprietors to manage all aspects of the business alone. A sole proprietor must have the necessary skills and experience to make sound decisions that ultimately cause the business to succeed or fail.
Backup and succession: If the owner does not want to run the business, it ends. Additionally, since sole proprietorships do not have separate legal identities, the business cannot pass any tangible assets from one owner to another.
Limited access to credit: Other types of business structures like corporations, limited liability companies, and partnerships have more history and income when applying for credit than sole proprietorships, so it becomes increasingly challenging for sole proprietors to secure financing as they are seen as individuals and not businesses.

Check out our guide to sole proprietorships.

What is a corporation?

Corporations are considered legal entities that are distinct from their owners or shareholders. Therefore, corporations have limited liability protection, so owners’ personal assets are protected if the corporation is sued or has debts and business expenses to be paid.

However, you should be aware that corporations are subject to double taxation, which means that the profits of a corporation are taxed twice, first on the corporate level and then again on the personal tax returns of the owners or shareholders.

Therefore, corporations are subject to corporate and personal income tax on the shareholder’s tax returns.

Additionally, compared to sole proprietorships, corporations have many more corporate formalities involved, such as filing the Articles of Organization or Articles of Incorporation, nominating a registered agent, holding annual shareholder meetings, and keeping all important legal documents in a safe place.

Corporation benefits

Personal asset protection: One of the benefits of incorporating your business is enjoying limited liability protection. Limited liability or personal liability means that your personal assets cannot be used to pay off business debts.
Quicker funds and easy transfer: Corporation ownership can be transferred. Capital can be raised through a stock sale, and banks and financial institutions have faith in lending money to incorporated businesses.
Tax benefits: Corporations can gain tax benefits by writing off certain expenses, such as savings on self-employment taxes, health insurance premiums, and life insurance.
Privacy: If you value your privacy and don’t want your involvement with a small business to be public knowledge, then the best way to do this is to incorporate your business.

Corporation drawbacks

Double taxation: The default corporation structure is the C corporation, which is liable for double taxation. Double taxation means the corporation is taxed at the corporate level, while individuals or shareholders are again taxed on their share of the dividends.
Stringent formation and compliance requirements: The formation of corporations includes initial and annual record-keeping requirements compared to other types of entities like partnerships and sole proprietorships.
Initial and ongoing fees: Incorporating a business is not a cheap affair. This is because you need to pay fees when forming and operating the business to keep it in good standing.

At a glance: How is a sole proprietorship different from a corporation?

Corporations are considered legal entities that are distinct from their owners or shareholders. Therefore, corporations have personal liability protection, so owners’ personal assets are protected if the corporation is sued or has debts and business expenses to be paid.
However, you should be aware that corporations are subject to double taxation, which means that the profits of a corporation are taxed twice, which is first on the corporate level and then again on the individual tax returns of the owners or shareholders.
Additionally, compared to sole proprietorships, corporations have many more corporate formalities involved, such as filing the Articles of Organization or Articles of Incorporation, nominating a registered agent, holding annual shareholder meetings, and keeping all important legal documents in a safe place.

Should I start a sole proprietorship or corporation?

Deciding whether to form a sole proprietorship or corporation involves careful consideration. If you are trying out a new business idea and you’re not entirely sure if you will continue with it in the long run, a sole proprietorship could be a better option.

This is because you can run your business under a different name or DBA and enjoy a favorable tax advantage without investing too much money in forming the business.

However, if you plan on having more than one owner involved in your business, you anticipate that the business will grow at a speedy rate and will be in it over the long run. Therefore, you might find it beneficial to incorporate it.

Ultimately, there are several factors to consider when deciding whether to choose a sole proprietorship vs. a corporation.

Find more information on how to start a corporation.

Sole proprietorship vs. corporation taxes

There are quite a few differences between the sole proprietorship business entity type and the corporate structure. One of those differences involves how each of these structures pays taxes.

Sole proprietorship taxes

Sole proprietors are responsible for reporting their business income and expenses on their personal income tax returns using the Schedule C Form.
Therefore, your business income is liable for federal and state income and self-employment taxes. When you’re an employee, your Social Security and Medicare taxes are subsidized partly by your employer, who also withholds the other half of your pay.
However, when you’re a sole proprietor, the full amount of Medicare and Social Security taxes fall on you solely.
Social Security and Medicare taxes are also known as self-employment taxes.
Additionally, estimated taxes on self-employment income must be paid by sole proprietors quarterly to avoid penalties, fees, and a huge tax bill in April of the following year.

Corporation taxes

You can decrease taxable income by ordinary business expenses when forming a corporation. All expenses needed for the competent and effective operation and running of the business are fully tax-deductible.
Any real estate or investments bought intending to bring in money for the company are also tax-deductible.
Corporations are also allowed to deduct employee salaries, bonuses, health benefits, and tuition reimbursement. Furthermore, they can choose taxable income by deducting travel expenses, interest payments, insurance premiums, bad debts, excise taxes, sales taxes, and fuel taxes.
The default corporation structure is liable for double taxation. This means that the company’s business income or business profits are taxed at the corporate level, and the shareholders are still taxed on the individual level on their portion of the dividends.
Corporations may elect the S corporation or S corp status, allowing business profits to pass through to the company owners.
The corporation will no longer be liable for corporate tax; however, each member or shareholder of the corporation will be liable for individual tax on their share of the profits.

Sole proprietorship vs. corporation: Formal requirements

The process of forming a corporation significantly differs from the process of forming a sole proprietorship. Let’s take a look at the key differences when it comes to formal requirements:

Formal requirements for sole proprietorships

When it comes to starting a sole proprietorship, there are no official forms or documents for that matter to submit or file with the state.
All you need to do is decide on a name for your sole proprietorship, and you can give your business another name aside from your own. However, you must register it with the appropriate authorities where you plan on conducting business.

Formal requirements for corporations

Starting a corporation requires you to fulfill certain legal obligations and requirements to maintain ongoing compliance.
Corporations must follow a few additional steps compared to forming a sole proprietorship.
Corporations must file the Articles of Organization or Incorporation with the secretary of state and create bylaws similar to an operating agreement when forming an LLC.
After that, a corporation is liable for filing annual reports, holding the annual shareholders meeting, and remaining in good standing by ensuring that business taxes, necessary filing fees, and so on are complied with.

Ongoing compliance

Corporations have more complex compliance requirements such as submitting annual reports, paying annual fees, renewing licenses and permits, holding annual shareholders’ meetings, keeping records of those meetings, etc. On the other hand, a sole proprietorship will simply need to renew its licenses and permits and pay its taxes.

Sole proprietorship vs. corporation: Management structure

Sole proprietorships and corporations are managed differently. Let’s take a look at the key differences:

Sole proprietorship management

The sole proprietor is the owner and the manager of his or her company.
He or she is responsible for making all management decisions affecting the business.
Starting when the business opens, the management duties involve setting the hours of operation and deciding the prices at which goods and services will be sold.
If you need to hire extra help, you’ll need to hold the interviews, hire the right candidates, and provide training and ongoing management for your employees.
Additionally, you will be solely responsible for this function as a sole proprietor when it comes to marketing or attracting additional business.

Corporation management

A C corporation or C corp is a type of business managed by a Board of Directors, officers, and shareholders.
These parties are responsible for the corporate governance and overall management of the corporation.
The board appoints the officers who are ultimately responsible for the day-to-day management and operations of the company.

Sole proprietorship vs. corporation: Ownership structure

One of the most striking differences between sole proprietorships and corporations is the ownership structure. So let’s take a look at the key differences:

Sole proprietorship ownership

Sole proprietorships are owned and operated by an individual who is also the business owner.
It’s one of the simplest business entities to form due to the flexibility of ownership and management.
Since the sole proprietor is also the manager of the business, there’s complete freedom in how the business is owned, operated, and managed daily.
A single individual or a married couple may own sole proprietorships.

Corporation ownership

Regarding corporations, ownership of the business is decided by who owns the shares.
Therefore, all the shareholders in a corporation are the actual owners, while the Board of Directors is responsible for the corporation’s management.

Summary

A sole proprietorship is the ideal business structure if you own and manage the business yourself. It’s also a good choice if you’re unsure whether you will be in that specific industry or business type over the long term. However, a corporation may be the better choice if you plan on growing your business and running it over the long run. Whether you start a sole proprietorship or corporation, consider all the factors, including the advantages and disadvantages, before making your final decision.

FAQs

Is it better to be a sole proprietor or a corporation?

When deciding to incorporate or form a sole proprietorship, you’ll need to determine which structure offers the most benefits. For example, incorporation provides greater liability protection than sole proprietorships or general partnerships.

What advantages does a sole proprietorship have over a corporation?

One of the advantages that a sole proprietorship has over a corporation is the low start-up costs as well as maximum privacy. Additionally, the forming and running of your business is much simpler as you’re the only person involved in the decision-making process.

What are the disadvantages of being a sole proprietorship?

The disadvantages of a sole proprietorship include unlimited liability for the company’s obligations and debts, as there’s no legal distinction between the sole proprietor and the business. Additionally, keeping on high-caliber employees can tend to be a challenge.

What are the disadvantages of a corporation?

Some of the disadvantages of incorporation include double taxation, the tedious and time-consuming formation process, and the rigid protocols and formalities that corporations need to follow.

What are the differences between a sole proprietorship and a corporation?

A sole proprietorship is owned by one individual that is 100% liable for the company’s debts and obligations. A partnership is formed by a minimum of two people combining their resources and sharing losses and profits. On the other hand, a corporation is a separate legal entity with shareholders, and they enjoy more liability protection than the first two business structures.

The post Sole Proprietorship vs Corporation: What’s the difference? first appeared on Chamber of Commerce.

What is the Difference Between an LLC and LLP?

Chamber of Commerce Team — Tue, 31 Jan 2023 10:35:58 +0000

The first step in starting a new business is deciding on the most suitable business structure. Before deciding to start an LLC (limited liability company) or LLP (limited liability partnership), you must note that each type of business comes with its own benefits and drawbacks.

Before making your choice, you should always look at the potential limited liability, tax advantages, and ownership structure. Whether you start an LLP or LLC will depend on your business goals, the size of your business, and the flexibility you’re looking for when running your business.

Entity type	Liability	Taxation	Maintenance
Limited liability company	A pass-through tax structure combined with limited liability protection.	According to the IRS, LLCs may choose whether they want to be taxed as corporations or partnerships.	LLCs must hold annual meetings, record minutes of meetings, issue stocks to shareholders, and file individual state and federal income tax returns to remain compliant.
Limited liability partnership	Although LLPs offer limited liability protection, some states may vary on their definition and the regulations surrounding the liability protection afforded to LLPs.	LLPs are considered pass-through entities, and the company itself pays no taxes, while profits and losses are reflected on the partner’s personal income tax returns.	LLPs must file annual returns, financial statements, as well as income tax returns to remain in good standing.

What is an LLP?

An LLP is a general partnership formed by a minimum of two people referred to as the owners or partners. Much like an LLC, an LLP combines a partnership and a corporation where the partners enjoy some limited personal liability. Professional businesses are usually formed as LLPs.

LLP benefits

Straightforward formation process: While forming a limited liability partnership requires paperwork and filing fees, it’s a fairly straightforward process. An LLP owner must complete the documentation required by the Secretary of State’s office. Some documentation includes a Certificate of limited liability partnership and the filing fee that varies from state to state. Annual reporting may also be required and varies from one state to the next. However, it usually includes basic reporting such as your business address, registered agent’s name, and the number and names of partners in your company.
Taxation: Since limited liability partnerships are taxed as pass-through entities, LLP members must include profits and losses from the business on their personal tax returns.
Limited protection: In a limited liability partnership, each partner’s liabilities are limited to their investment or the amount of money they’ve put into the business.
Flexibility to evolve: As long as the partnership agreement allows for new partners to join and long-term members to move on, there should be no disruption to the business itself.

LLP drawbacks

Not allowed in every state: Some of the reasons why limited liability partnerships are not allowed in every state are due to the complex nature of tax filings with this business structure and the fact that it’s not regarded as a legal entity in many states. The states that allow LLP formations have restrictions on what type of professionals may set up an LLP and may impose heavy tax limits on them both during formation and throughout their operations.
Less credibility: LLPs have less credibility than other types of business entities. This is one of the reasons many entrepreneurs choose to form actual corporations as opposed to LLPs.
Partners don’t have to consult each other: Another drawback of a limited liability partnership is that the individual partners do not have to consult each other when conducting certain business activities.
Disclosure of financial records: One of the mandatory requirements is that financial records must be submitted for public record.

Read more about LLPs.

What is an LLC?

An LLC is a business entity that limits the liability of its owners, also known as members. While any business is allowed to create an LLC, you cannot have an LLC for professionals who require a license to operate.

A limited liability company is considered a hybrid business entity as it combines the characteristics of a corporation with that of a sole proprietorship or partnership. While both limited liability companies and corporations enjoy similar liability protections, the availability of flow-through taxation, also known as pass-through taxation to LLC members, is a feature that comes with partnerships rather than LLCs.

LLC benefits

Pass-through taxation: LLCs are not liable for taxes at the corporate level. Both profits and losses due are passed-through to the members for them to report on their personal income tax returns. Therefore, all taxes due are paid at the individual level.
Management structure: The management structure with LLCs is quite flexible. LLCs may choose to have the members manage the business, called a member-managed LLC. Alternatively, they can elect a manager from outside of the company to manage the business, called a manager-managed LLC.
Increased credibility: As opposed to forming a partnership or sole proprietorship, an LLC carries far more weight with clients, lenders, and suppliers. This is because LLCs are considered a formal business structure.
Flexible membership: Members of an LLC may be partnerships, individuals, corporations, or trusts, and there’s also no restriction on the number of members.
Limited liability: Members of an LLC are not held personally liable for the negligence of the company or other members. Therefore, the personal assets of LLC members are off-limits to creditors in case of business debts, malpractice, or lawsuits.
Limited compliance requirements: In terms of ongoing maintenance and compliance, LLCs must adhere to fewer state-imposed compliance requirements and ongoing filings compared to other business entities.

LLC drawbacks

Transfer of ownership: Transfer of ownership with corporations is often an easier process compared to LLCs. So unless the operating agreement allows it, all LLC members must consent or approve the addition of new members and any changes in the ownership percentages of existing members.
High costs: Unlike forming a general partnership or sole proprietorship, LLCs tend to cost more to create and maintain. Aside from the initial formation fee, LLCs are subjected to ongoing maintenance fees such as franchise tax and annual reporting fees.

At a glance: How is an LLC different from an LLP?

Let’s take a look at the key differences between Limited liability companies and limited liability partnerships:

In some states, limited liability partners are shielded from liability if another partner faces negligence or malpractice claims.
Regarding taxation, LLCs are afforded more options than LLPs, such as electing to be taxed as an S corp.
When forming a limited liability partnership, only individuals are allowed to be partners compared to creating an LLC, where other partnerships or trusts can also be members of the company.
While LLCs are allowed to have a single owner, LLPs must have a minimum of two owners. Hence, it is referred to as a “partnership.”

LLC vs. LLP: Taxes

One of the biggest advantages or disadvantages of any business is how the different structures are taxed. For example, when it comes to paying taxes on an LLC and LLP, it’s different with both entity types. So let’s take a closer look at LLC taxes vs. LLP taxes.

LLC taxes

LLCs may be taxed as partnerships, sole proprietorships, C corporations, and S corporations.
Single-member LLCs are taxed as sole proprietorships.
One of the best structures to elect is the S corp status, which allows you to maintain pass-through taxation. (However, you’ll greatly reduce self-employment taxes.)
Many people choose to elect the S Corp status because members of an S Corp are only liable for Medicare and Social Security taxes on the income taken as salaries.
Dividends or any income taken as distributions are not liable for self-employment taxes.

LLP taxes

Regarding tax purposes, the Internal Revenue Service (IRS) sees LLPs as pass-through entities.
Ultimately, this means that the profits and losses of LLPs are reflected on the business partners’ personal income tax returns.
So the limited liability partnership itself is not liable to pay corporate taxes.
LLPs must also file annual information returns to report their operations’ gains, losses, income, deductions, etc.

Read more about LLC types.

LLC vs. LLP: Formal requirements

The formation requirements for both LLCs and LLPs have similarities as well as differences:

Formal requirements for LLCs

When forming an LLC, the Articles of Organization, often called the Certificate of Organization, must be filed with the state along with payment of the relevant filing fees.
Additionally, LLCs should have an operating agreement at their place of business.
While this is not compulsory, it will come in handy in resolving disputes between members somewhere down the line.
Therefore, the operating agreement, if one is drawn up, does not need to be filed with the Secretary of State’s office. However, it must be kept on record for reference, as and when needed.
Some states may also require that LLCs publish a newspaper notice to inform the public of the limited liability company’s formation and ownership.

Formal requirements for LLPs

When forming an LLP, partners of the LLP must file the required business registration documents and pay the relevant filing fees with the state agencies.
LLPs should preferably have a written partnership agreement.
As with the operating agreement for LLCs, the partnership agreement does not need to be filed with the Secretary of State’s office. However, it must be kept at the LLP’s place of business.
Some states might also require that LLPs publish a copy of their registration or the notice of formation in newspapers.

Ongoing compliance

Regarding other business structures such as corporations, LLCs and LLPs have minimal ongoing business compliance requirements. Once again, this may vary from one state to the next and may also be based on the LLC’s operating agreement or the LLP’s partnership agreement.

However, some ongoing compliance requirements for LLCs and LLPs may include filing annual reports with the state, maintaining the operating and partnership agreements at the desired address, maintaining a registered agent, reporting and paying estimated income taxes, and renewing licenses and permits.

LLC vs. LLP: Management

LLCs and LLPs are fairly easy to manage, with the majority of flexibility stemming from the operating agreement and partnership agreement:

Management flexibility for LLCs

Owners of a limited liability company are considered members. Additionally, LLCs may be manager-managed or member-managed.
How the decision-making process, as well as the management process, is structured comes with a great deal of flexibility.
It’s important to create an operating agreement so that the management structure, as well as the rights and responsibilities of the members, may be detailed and put on file.

Management flexibility for LLPs

Owners of a limited liability partnership are known as partners.
LLPs come with great flexibility regarding how the business is managed.
Additionally, the profit-sharing, rights, and duties, as well as the operation structure itself, are all outlined and contained in the partnership agreement.

LLC vs. LLP: Ownership structure

The ownership criteria for both LLCs and LLPs differ, and state laws play a huge role in the restrictions and limitations on what type of business structure you may form:

Ownership structure of LLCs

An LLC is allowed to have one (single-member LLC) or more owners (multi-member LLC).
These members may be individuals, corporations, other LLCs, or foreign entities. However, depending on the state laws or requirements, certain types of businesses may be restricted from forming an LLC.
In most cases, when certain types of companies and certain types of licensed professionals are not allowed to start LLCs in a specific state, they usually allow you to start a PLLC or professional limited liability company instead. PLLCs are for professionals who require a license to operate, such as architects, accountants, and lawyers.
The LLC operating agreement ultimately ensures that the percentage of ownership and the responsibilities and roles of all members are documented.

Ownership structure of LLPs

Limited liability partnerships are allowed to have at least two or more partners.
The business management is ultimately left to all the company’s partners.
Likewise, all of the partners experience limited personal liability.
In certain states, such as California, only certain licensed professionals, such as architects, lawyers, and accountants, may form an LLP.
A partnership agreement is crucial to documenting the responsibilities, goals, and ownership percentage.

Summary

Selecting the correct legal structure for your business is one of the more important decisions you will make at the onset. Remember to always compare the advantages and disadvantages of asset protection, ownership, and control, as well as costs and taxation.

You may also find that you’re limited to your choice of a legal entity based on the type of industry you’re in and the state laws you are required to comply with. Ultimately, note that each business structure or entity type has benefits and drawbacks, and there are better choices than one entity type.

FAQs

Should I start an LLC or LLP?

When deciding on an LLC or LLP business structure, you must consider some factors, including liability, taxes, ownership, and management. You also need to keep your business goals in mind and ensure that the structure will work for you in the long run.

Where can I find my state's specific filing requirements?

While limited liability companies and limited liability partnerships are two common structures, and they may sound very similar, their differences exist. The best way to find out your state’s specific legal and filing requirements is to check on the Small Business Administration’s website (SBA).

What's the difference between a general partnership and a limited partnership?

The owners of a limited partnership (limited partners) have less liability and are not involved in the day-to-day activities or operations of the company. General partnerships (general partners), on the other hand, have full operational control of the business as well as unlimited liability.

What is double taxation?

Double taxation is when a company is taxed on the corporate level as well as on the individual level. For example, C corporations are subject to taxation on their corporate income, and the owners are also liable for submitting tax on their personal tax returns.

What is a silent partner in a business?

Silent partners have the opportunity to invest money into a business. However, they cannot fulfill or take an active role in the company’s day-to-day operations or management decisions. Therefore, a silent partner’s only contribution is their funding to the business.

What is the definition of a Sole proprietor?

A sole proprietor is an individual who owns and controls a business with no partners involved. A sole proprietor is not a separate legal entity from the business itself and therefore is liable for all the profits and losses from the company.

The post What is the Difference Between an LLC and LLP? first appeared on Chamber of Commerce.