How long businesses last
About 78% of new US establishments reach their first year and about half reach five. The federal table those figures come from, and the fact that it never measured failure.
Category
Starting
out.
Your first year brings a rush of decisions and plenty of confident advice. These are the choices worth taking time to understand.
What is actually being decided
Three early choices can be difficult to change later: your business structure, the name you trade under, and the records you keep from the start. Your logo, colours, and website copy are much easier to update.
New owners often worry more about the visible choices because they feel like progress and attract the most sales pitches. But the less visible choices are usually where costly mistakes happen.
Why the pages below are shorter than the advice elsewhere
A lot of what circulates about starting a business is written to be reassuring rather than correct. The single most repeated statistic in the field, that half of businesses fail within five years, comes from a federal table that never measured failure, and the page below shows the table and the definition it actually uses.
The same pattern runs through the rest of it. Forming a limited liability company is widely sold as a tax decision; the IRS states on its own website that federally it is not a tax classification at all. Registering a business name is widely assumed to secure it; trademark rights in the United States come from using a name in commerce, and the rights you get by using it are narrower than most owners expect.
This information is not hidden. The relevant agencies publish it for free; it is simply easy to overlook.
What is deliberately not here
There is no page on how to form a company, because formation is a state process and the filing office, the fee, the annual report, the franchise tax and the registered-agent rules all differ. A single national walkthrough would be wrong for most readers, and wrong in the way that costs a missed deadline. The honest version is: look up your own Secretary of State, and bring the questions below with you. What a registered agent does, and how to choose one, is on its own page.
There is no page on what a limited liability company protects you from, either. That is state law, it turns on the facts of how a business is run, and the circumstances in which the protection fails are exactly the ones a reader would want described. What is publishable is that the tax question and the liability question are separate questions, and that the second one is worth paying somebody for.
The 4 pages in starting out
Choosing a structure
The SBA’s own one-line summary of each structure, what it leaves out, and why converting later is harder than choosing now.
Naming and trademarks
Trademark rights come from using a name, not from filing for one, and the rights you get by using it are smaller than most owners assume.
Registered agents
What a registered agent is, who needs one and where, being your own agent versus using a service, how to appoint or change one, and the official-looking mail to ignore.
Shorter answers
- Does forming a company lower my tax?
- Not by itself, federally. The IRS classifies a single-member LLC as an entity disregarded as separate from its owner unless it files Form 8832, which means the default tax outcome is the one you already had. What forming a company changes.
- Should I pay a service to get my EIN?
- The IRS’s own words are “Beware of websites that charge for an EIN. You never have to pay a fee for an EIN.” Applied for online it is issued immediately, and the session times out after fifteen minutes of inactivity, so do it in one sitting.
- Can I register the company myself?
- Usually, but the process is run by your state rather than nationally. The office, fee, annual report, and registered-agent rules all vary. Start with your own Secretary of State rather than a generic eight-step list. Registered agents.
- Is an LLC the safe option?
- The SBA’s comparison table says “Owners are not personally liable” for an LLC. That is a one-line summary of a question governed by state law and by how the business is actually run, and the situations where the protection fails are the ones worth asking a professional about. Choosing a structure.
- What is an S-corp, exactly?
- It is a tax election rather than a type of company, and it applies to an entity you have already formed. Whether it saves money depends on earnings, reasonable compensation, payroll costs, and state treatment. No web page can answer that without your numbers.
- Do I own my business name once I register it?
- Registering to do business and owning a trademark are different things. The USPTO describes trademark rights as arising from use: you own one “as soon as you start using your trademark with your goods or services”, but those rights “only apply to the geographic area in which you’re providing your goods or services”. Naming and trademarks.
- What are the actual odds of making it?
- Of US private-sector establishments that opened in the year to March 2025, 77.9% were still there a year later. The five-year figure is about half, and the series counts an establishment as gone when employment reporting stops, which is not the same as failing. How long businesses last.
Next: tax and records.
What arrives after the first year, when it arrives, and what you are expected to have kept.
Tax and records