Corporations: A Small Number with a Large Impact
Corporations, despite representing a minority of businesses, play a significant role in the economy. In the United States, corporations account for 18% of all businesses but generate almost 82% of the revenues [3]. Similarly, in Hawaii, C corporations make up only 7.9% of all business entities but contribute 58.9% of total business receipts [2].
Pass-Through Entities
Pass-through entities, such as S corporations and partnerships, constitute a larger proportion of businesses but earn a smaller share of total revenues compared to corporations. In the United States, pass-through entities represent nearly 95% of all firms [1].
Revenue Generation
Despite earning less in total gross receipts than corporations, pass-through entities earned more net income in 2011 [1]. This suggests that while corporations generate more revenue, pass-through entities may be more profitable on a per-business basis.
Conclusion
Corporations, though a small number of businesses, have a substantial impact on the economy. They generate a significant portion of total revenues and contribute to economic growth. Pass-through entities, while more numerous, earn a smaller share of total revenues but may be more profitable on a per-business basis. Understanding the different types of business entities and their contributions to the economy is crucial for policymakers and business leaders alike.
Sources
[1] Tax Foundation: Corporations Make Up 5 Percent of Businesses but Earn 62 Percent of Revenues
[2] Hawaii Department of Taxation: C corporations represent the smallest number of businesses yet produce most of the State’s business receipts
[3] Coursesidekick: Reading: Corporations
FAQs
What percentage of businesses are corporations in the United States?
In the United States, corporations account for 18% of all businesses.
What percentage of businesses are corporations in Hawaii?
In Hawaii, C corporations make up only 7.9% of all business entities.
What percentage of total revenues do corporations generate in the United States?
Corporations generate almost 82% of the revenues in the United States.
What percentage of total business receipts do C corporations contribute in Hawaii?
C corporations contribute 58.9% of total business receipts in Hawaii.
What are pass-through entities?
Pass-through entities are businesses that do not pay taxes at the entity level. Instead, profits and liabilities are passed through directly to the owners of the businesses.
What percentage of businesses are pass-through entities in the United States?
Pass-through entities make up nearly 95% of all firms in the United States.
Do pass-through entities earn more or less net income than corporations?
Pass-through entities earned more net income than corporations in 2011, despite earning less in total gross receipts.
What is the difference between a corporation and a pass-through entity?
Corporations are separate legal entities from their owners, while pass-through entities are not. This means that corporations have limited liability, while pass-through entities do not. Additionally, corporations are taxed at the entity level, while pass-through entities are not.