There are more than 3 million Black-owned businesses operating in the United States. And each year, thousands of entrepreneurs make the foray into ownership. The process of registering as a business takes, on average, two months. But Block Advisors by H&R Block announced this week, that they have created a tool to streamline the process.
“Paperwork deadlines, complex filing forms, and various state requirements can make business formation bumpy.” Jamil Khan, H&R Block’s Chief Strategy and Small Business Officer, explains, “Business formation should be a seamless process, but small companies often don’t know how to accomplish this.”
The new business formation tool will cut down on the time and energy needed to register a business entity while also connecting small business owners with the expertise that H&R Block brings. The U.S.-based tax preparation company notes that business formation can benefit entrepreneurs in a number of ways, but first and foremost, it signals to the market a specific intent, which can help to boost a company’s credibility. It can also be an important step in managing risk as a company grows, as formation allows business owners to separate business assets from owner assets. Protecting personal assets means keeping them away from business debts, losses, and lawsuits.
Another notable perk of business formation is that it can be used as a starting point to potentially change a business owner’s tax burden. For Black businesses, this could make all the difference. A 2021 Small Business Credit Survey (SBCS) report found that following the initial economic fallout from COVID-19, approximately 77 percent of Black-owned firms reported that their financial condition was poor or fair, while only 54 percent of white-owned firms reported similar conditions. Nearly 75 percent of Black firms reported difficulties paying their operating expenses, compared to 63 percent of white-owned firms. Black small business owners were also the most likely to experience difficulty accessing credit (53 percent).
Block Advisors reports that its business formation service allows small business owners to get started in minutes and form their businesses with confidence. Customers have access to information that is specific to each type of entity—S Corp, C Corp, LLC, or Non-Profit—so there is a level of confidence in the process.
“Small business owners just follow the self-service prompts on our website,” says Khan. “Existing tax customers can collaborate with their Block Advisors Small Business Certified Tax Pro to make sure they take advantage of potential tax savings they qualify for after forming their businesses. For some businesses, these savings could amount to thousands of dollars that can be invested back into the business.” Khan notes that even if entrepreneurs don’t see pass-through tax savings, they will still benefit from potential reductions in personal risk and simplification of their business registration experience.
“Entrepreneurs and small businesses form the backbone of America’s economy,” Khan says. “Block Advisors empowers these visionaries with the tools and confidence they need to ensure their businesses flourish.”