Small Business Startup Services

Key Takeaways

• 78% of women have experienced gender bias or discrimination in the past year.
• 62% of women have reported a male co-worker to HR for harassment.
• 74% of women are afraid of being laid off amid all the tech layoffs.

Understanding the Tech Environment for Women

Although there are many women in the technology industry today, they have been historically underrepresented in the field. In 2018, we analyzed the climate for women in tech to better understand the problems they faced. But how have things changed in the last four years? To find out, we decided to do it again in 2022.

We wanted to know if women still face the same challenges as before, so we dug into their education, current jobs, and reasons for entering their respective tech fields. As the country recovers from the pandemic and faces a potential recession, we also wanted to understand how women were affected by recent layoffs. To do so, surveyed 1,000 American women in the technology industry. Here's what they had to say.

Getting Started in Tech

With so many barriers to entry for women in the technology industry, including a lack of support for women pursuing education in STEM, we first wanted to know what their reasons were for choosing a career in tech.

Despite the stigma women might face for pursuing technology-related careers, an interest in or passion for computers and technology was the top reason survey respondents entered the industry (25%). This finding is similar to the top motivator in our 2018 survey: a love for computers and tech. Almost as many women (23%) said job stability was their main reason for joining the industry in 2022.

Considering tech positions are in high demand, it makes sense that so many women would see the job market as stable. But the benefits and salaries are another matter, with only 5% of women citing competitive pay as the biggest draw for female tech workers. Of course, this varies based on location — for example, 18% of those who named pay as their primary reasoning in 2022 were in New York City. And in 2018, California Bay Area women were three times as likely to cite high pay than those living in other places. The importance of high earnings in areas with high living costs hasn't changed much.

Having a tech-related degree may seem like an obvious motivation to seek a career in tech, but only 11% claimed this as their top reason for working in the industry. While the degrees earned by most women we surveyed (over 60%) were in information technology (IT), many other respondents' tech skills were self-taught. Among them, the most common professional position was data analyst, while for those with a tech degree, it was software developer.

Women's Struggles in the Tech Industry

Although women get into the tech industry for many different reasons, many have something in common: the challenges they experience in the workplace. Next, we asked women about their experiences and feelings about being a woman working in a tech field.

The challenge most commonly faced by women in the tech industry was a lack of promotion, as cited by 43% of respondents. With no way to move up in the ranks, 34% felt like there was also a lack of a growth path for them within their company. Feeling like an outsider was also prevalent, with nearly a third saying they've felt out of place at work.

A few years ago, being underestimated or not taken seriously by peers was the greatest opposition women faced — 67% of respondents reported this in 2018. Although this issue still landed among the top five most common challenges in 2022, there has been a significant decrease: Only 28% of women said their peers underestimated them or didn't take them seriously.

The prevalence of issues like these varied depending on geographic location. In San Francisco, women felt the wage gap more, with 29% of women saying they weren't paid as much as their male co-workers. And at 37% in Los Angeles, women felt the lack of growth opportunities more than those in any other city.

Think our modern era is the picture of gender equality? Think again. More than 1 in 4 of the women we surveyed said they've heard jokes in the office about women doing household chores. And the prejudice wasn't limited to the workplace: 78% reported experiencing gender bias or discrimination in the past year, whether in their personal or work lives.

Gender-based workplace discrimination varied by tech sector. For instance, nearly all women in the marketing technology sector (martech) have experienced gender bias (90%). More than 80% of those working in financial technology, energy, blockchain, and software have as well. The lowest instances of gender discrimination were reported by women in media-related tech jobs, but it was still reported by nearly half (47%).

Coping With and Overcoming Inequalities

As more women enter the tech workforce and are honest about the challenges they face, the more they can work together to overcome discrimination and bias in the workplace. To conclude our survey, we asked women about steps they've taken to protect themselves or their colleagues at work. They also shared their career outlooks.

Many women have had to take action against inappropriate behavior in the workplace: 62% said they reported a male co-worker to HR for harassment and 60% for gender bias. Women seem to be reporting these incidents more frequently now than in 2018 when only 19% of our survey respondents reported co-workers for bias or discrimination, and 21% spoke up about harassment.

The burden of bias against women in the tech industry is heavy enough to make many want to change careers (62%). Many we surveyed were even planning to act on it soon: 57% said they plan to leave the industry in the next six months. This shows an increase from the 2018 average when only 24% of women said they had considered changing fields for this reason.

The threat of layoffs and the anticipation of a recession have compounded these problems for women in tech. Even giant tech company Meta recently let much of their staff go in a push to reduce costs. Nearly three-quarters of our respondents (74%) said they were afraid of being laid off. Many of them already had, with 84% of respondents from New York City saying they had been laid off recently.

But of women who had recently been let go, 96% went on to another tech industry job where they made even more than they had previously: an average increase of $10,660. We saw even bigger increases in some places, especially San Francisco, where they earned over $38K more on average at their new job. Most women said it took between two and five months to find a new job, but it was worth the wait.

Moving Forward

Women in the technology industry still face a myriad of challenges in the workplace, from lesser pay to being undervalued and even harassment. But by far, their biggest challenges were a lack of growth potential at their workplaces and worries about potential layoffs. However, fewer cited workplace challenges in 2022 compared to 2018, and they have since been more likely to report co-workers for gender bias, discrimination, or harassment.

Still more, though, are considering leaving it due to gender-based pressures, pointing to a need for further support. Tech companies must do more to bridge these gaps for women in the workplace and give them the same opportunities and respect as their male counterparts.

Methodology

Paychex surveyed 1,000 American women in the technology sector about their experiences. The average age was 32, and their locations were as follows: 42% lived in New York City, 12% in Los Angeles, 7% in San Francisco, 7% in Chicago, and 32% in other U.S. cities.

About Paychex

Paychex provides payroll, human resources, and benefits outsourcing services for small to medium-sized businesses. Our tools make hiring, managing, and retaining employees easy.

Fair Use Statement

If you enjoyed our findings, feel free to share them for noncommercial purposes. Please be sure to link back to our original article as a credit to our Paychex research team.

Ohio established four grant programs and allocated $155 million to help businesses that opened in 2020 that were impacted by the COVID-19 pandemic. The bulk of the funds — $100 million — has been set aside for food and beverage businesses, while specific grants also exist for entertainment venues, lodging and new small businesses.

The programs, which began accepting applications June 29, 2021, is administered by the Ohio Development Services Agency and will award all grants on a first-come, first-served basis.

The state has indicated that funds are aimed at helping Ohio-owned small businesses, and three of four grants will determine amounts to recipients based on revenue losses in 2020. The fourth grant — the New Small Business Grant — requires that a business must have opened between Jan. 1, 2020 and Dec. 31, 2020 to be eligible.

Similar to the Paycheck Protection Program and state grant programs such as the one in New York, the funds are meant to help businesses cover the costs of hiring new people, retaining their employees. improving facilities and purchasing equipment.

The following is a summary of available grants:

Food and Beverage Establishment Grant

Food and drink operations such as bars, restaurants and even food trucks have an opportunity to get grants in three increments — $10,000, $20,000 and $30,000 — based on loss of revenue in 2020. More than $100 million has been allocated to the program.

Entertainment Venue Grant

Venues for sports and music, as well as museums, theaters and any facility that provides entertainment will be eligible to apply for grants of $10,000, $20,000 or $30,000, with amounts based on revenue losses from 2020. A total of $20 million has been allocated to the program.

Lodging Grant

Similar to the Food and Beverage Grant, as well as the Entertainment Venue Grant, funding amounts for businesses that provide lodging such as hotels, motels and even bed and breakfast establishments will be determined by 2020 revenue losses. These operations can get grants for $10,000, $20,000 or $30,000. Total funding for the grant program is $25 million.

New Small Business Grant

Among the main qualifications for this grant, businesses must have opened between Jan. 1, 2020 and Dec. 31, 2020. The state set aside $10 million, and each grant will be $10,000.

What Businesses Need to Know

Each of the grants has its own requirements, such as documentation needed when applying, terms and conditions, and guidelines. For more information, as well as FAQs and to apply for a specific grant, check out the website BusinessHelp.Ohip.gov.

Although the funds are considered grants, businesses are required to keep records of all related expenses for which the funds are used for five years. Failure to do so may result in the businesses having to repay the grant.

Every business is required to establish a legal structure, whether there's one employee or 10,000. A legal structure is a recognized category of organization from a legal perspective that influences how your business will operate regarding taxation, recordkeeping. Designating a legal structure for your company can also reduce the risk exposure of your personal assets.

Choosing the best legal structure for your business

Choosing a legal structure is one of the first decisions you'll make as a business owner. Although you may be chomping at the bit to get started with the fun stuff like marketing and sales, you should not rush this important first step. Take the time to weigh your options and consider the proper way to set up your business's most fundamental component.

Factors to consider when choosing a legal structure

Situations and business needs vary among entrepreneurs. Choosing the best legal structure for your new business early on can save time, money, and headaches down the road. There are four key considerations to factor into your decision:

The industry your business is in

When it comes to choosing one of the small business legal structures for your startup, the nature of your business is an important factor. Some industries are associated with a higher amount of risk and, consequently, are more vulnerable to lawsuits. A graphic designer working as a freelancer will have a different level of risk than a group of attorneys opening a firm together, and both parties will have different legal needs than an equipment manufacturer arranging complicated contracts with large suppliers and vendors. The inherent risk within your industry will influence which legal structure is the best fit for you.

The amount of protection you want for your personal assets

On the same thread as risk, you need to figure out how vulnerable your personal assets might be should you get sued. Lawsuits can come from customers, vendors, employees, and even landlords. Each legal business structure comes with varying levels of personal asset protection.

The tax implications of each legal structure

Each business structure carries its own taxation responsibilities. Variables include whether the business is considered a separate entity from the ownership, the schedule for paying taxes, and how the tax liability is calculated. There are also different forms required by the IRS when taxes are filed.

Your firm's growth plans

You can change your business's legal structure down the road, but you should put some thought into both the scale and pace of your future growth. You might be the sole employee of a freelance business now, but do you envision expanding into a larger organization with employees and more services? Or maybe you're a single shop with plans for rapid growth and franchising. What happens when you're ready to leave the business? Would you like to have a business legacy to pass along, or are you okay if the doors are shuttered when you're no longer involved? Your answers to questions like these can help determine which business legal structure is ideal for you.

The different types of business legal structures

There are different types of business legal structures, and selecting the right one can give you the proper balance of cost, legal protections, and benefits. Each comes with its own set of advantages and disadvantages.

What are sole proprietorships?

More than 27 million sole proprietorships filed with the IRS in the 2018 tax year (the most recent data available). There's also a growing independent workforce emerging. Also referred to as individual entrepreneurship or simply proprietorship, sole proprietorship is the simplest form of a business legal structure and a natural choice for independent workers. If you become a sole proprietor, prepare to include your business and income expenses on your personal tax return.

Advantages of a sole proprietorship

• This legal structure is simple to set up, with minimal costs.
• Sole proprietorships have low organizational and operating costs (you retain complete control over decision-making power for your business).
• You can use business losses and expenditures to offset income.
• Filing taxes is simpler: You don't have to file a separate tax return for the business, as profits and losses are passed through to the sole owner.
• There are few formal legal requirements.
• You may be able to deduct 20% of your business income with the 20% pass-through deduction under the Tax Cuts and Jobs Act.

Disadvantages of a sole proprietorship

• Personal assets have unlimited exposure (you may consider an umbrella policy to help protect yourself).
• You are personally responsible for the debt and financial obligations of the business.
• Getting a business loan or attracting support from investors may be difficult.

What are Partnerships?

If you're working with others on your startup, you may want to consider either a general or limited partnership. Each member of a general partnership shares liability. Limited partnerships are characterized by including a general partner with unlimited liability, and partners with maximum liabilities that match their investment in the business.

Advantages of a partnership

• Partnerships are relatively easy to set up.
• A larger breadth of leadership expertise can be found than with just one person.
• Financial burdens are shared, and having more people equates to a greater ability to raise funds and access cash.
• The business isn't taxed as a separate entity. Rather, each partner files profits and losses on a personal tax return.
• Partners may be able to deduct 20% of their business income with the 20% pass-through deduction under the Tax Cuts and Jobs Act.

Disadvantages of a partnership

• In addition to your own exposure, creditors can go after one or all partners, meaning you may also be liable for the activities of one of the partners.
• You must share decision-making control with others.
• You'll have to create a formal exit strategy to avoid potential complications should you sell the business in the future.

What are Limited Liability Companies (LLCs)?

Another popular structure among startups is the limited liability company (LLC) because it works like a hybrid of a sole proprietorship and a corporation. Like corporations, an LLC limits the personal liability of the owners. That said, it's important to note that some of the liability benefits of LLCs have been overridden by the courts in cases of fraud or misrepresentation.

Advantages of an LLC

• An LLC is a separate entity from the owners. You can lose the money invested in the company, but your personal assets are mostly protected from debts and lawsuits.
• You are the sole representative of an LLC, meaning you get to make your own decisions and are not beholden to any external shareholders or Board of Directors.
• You may be able to deduct 20% of your business income with the 20% pass-through deduction under the Tax Cuts and Jobs Act.
• There are relatively affordable startup fees ranging from $40 to $500, depending on your state.
• Profit sharing is at the discretion of the owner(s).

Disadvantages of an LLC

• Profits may be subjected to self-employment tax.
• Unlike a sole proprietorship or partnership, you have to pay annual fees to keep the LLC in good standing.
• Because the LLC is a separate business entity from the owner, careful attention must be paid to keep personal and business funds separate and well documented.
• Owners may have to pay individual unemployment compensation.

What is incorporation and what is an incorporated Business?

There are two different types of corporations: C corporations and S corporations. Owners are called stockholders or shareholders. The corporation's activities — marketing, sales, revenues, expenses, assets, and liabilities — are legally separated from the owners (shareholders). Regardless of which is best for you, incorporating a business shares some common advantages and disadvantages.

How to incorporate a small business

Incorporating a business is the process of separating the company from your personal assets and forming a new legal entity, known as a corporation. For-profit business ventures or nonprofit organizations can be incorporated, but sole proprietorships cannot. The newly formed corporation will exist independently for legal, tax, and insurance purposes. If you'd like to learn how to incorporate a business, here are the basic steps to follow:

Research state laws on incorporation

If you want to know where to go to incorporate your business, an online search of registration forms for your state will provide a starting point. State of incorporation may be based on a number of factors, including primary business location, tax laws, or local business regulations. To find out how much it costs to incorporate, check with your state for filing fees. Additionally, due to the more complex structure of corporations compared to other business structures, you may want to pay a professional to assist you with the process.

Name the corporation

Check the state register to determine if your company's name is available. If another corporation has already registered that name, you'll need to come up with something new.

Choose the structure

Corporations can be structured as a C-Corp or an S-Corp. Large corporations generally opt for C-Corp status, but you should understand the relative advantages of both, as outlined below. Important differences include how these types of corporations are taxed and the number of permissible shareholders.

Draft Articles of Incorporation and Bylaws

Each corporation must have written articles of incorporation and corporate bylaws. The articles of incorporation must be filed with the state and they provide the information required to register the corporation, such as the name of the business, the type of business, and the legal address. The more detailed corporate bylaws list out legal procedures companies and their directors must follow, including the requirement for an annual shareholders' meeting.

Select Board of Directors and Officers

Corporations must form an independent board of directors and name their corporate officers. The board of directors is responsible for overseeing the business's activity from a high level. The board may also provide guidance to small businesses when needed. The corporate officers are the executive management of the company, responsible for running the business.

Prepare accounting / funding

Set up an accounting system to record the initial funding of your new corporation. You should also open a bank account in the name of the corporation to separate assets. Going forward, corporate cash flows should go through this account.

Apply for Tax ID and file necessary state paperwork

Once your corporation is set up, you'll be able to file for a Federal Employer Identification Number (EIN), which is used as a tax ID. You will also need to register your corporation with the state where you chose to incorporate and pay the required filing fees.

Advantages of a corporation

• Being an independent legal entity, corporations are separate from you, the owner, eliminating the risk to your own personal assets that legal proceedings or credit issues could bring.
• You can issue shares to raise funds.
• Transfer of ownership is simplified.
• If something happens to the founder, the corporation continues to operate as before, providing longevity to the business.
• Incorporating adds legitimacy to your company.

Disadvantages of a corporation

• Expect to pay legal fees to set up a corporation and for annual statements and resolutions.
• Corporations are typically more expensive to start than other business legal structures. There are startup fees and annual fees.
• You must adhere to a corporate structure, with a board of directors and corporate officers.
• A corporation is more complex to manage. It must provide annual reports, and careful accounting records must be maintained.

What is a C-corp?

Corporations set up as C-corps have their own tax brackets. This means they are taxed separately from the owners. When you think of large U.S. companies, most are generally C-corps.

Advantages of a C-corp

• There are no shareholder limits, and shareholders can come from anywhere in the world.
• Current tax brackets for C Corporations are generally lower than individual income tax brackets.

Disadvantages of a C-corp

• Double taxation is often cited as one of the biggest disadvantages of a C-corp. Shareholders must declare dividends received from the corporation as income on their personal tax returns even though the C-corp has already paid taxes on that profit before the distribution.
• Reporting can be cumbersome, as annual reports along with minutes of board member and shareholder meetings must be recorded and provided.

What is an S-corp?

S-corps are named for Subchapter S of the IRS Code, under which they're taxed. This involves setting up a C-corp and then having all shareholders file a Form 2553 to the IRS within two months and 15 days of the setup.

Advantages of an S-corp

• Income is allowed to "pass through" to shareholders, and shareholders only pay taxes on their allocated income on their personal tax returns.
• Tax credits, losses, and deductions also pass through to the shareholders.
• S-corps avoid the double taxation penalty
• Shareholders of S Corporations may be able to deduct 20% of their business income with the 20% pass-through deduction under the Tax Cuts and Jobs Act

Disadvantages of an S-corp

• S-corps are limited to 100 shareholders.
• Owners (shareholders) must be individuals and residents of the United States.
• The company must be a U.S.-based organization.

As you explore the array of business legal structure and their relative benefits, you may want to seek the expertise of business incorporation services. Incorporation services providers can help you file the correct paperwork, obtain your federal and state ID numbers, and adhere to the necessary legal requirements — all to get you started on your exciting and rewarding entrepreneurial path.