Running a small business in the United States

6 factors that shape how a small business operates here — tax and e-invoicing, payments, labour and licensing — each with its source and the date it was checked.

1. E-invoicing & Tax Compliance

   45 states plus DC with sales tax and economic nexus rules

   Detail: The US has no federal VAT, but 45 states and DC levy sales tax (state rates 2.9%-7.25% plus local rates); since South Dakota v. Wayfair (2018), states use economic nexus thresholds typically of USD 100,000 or 200 transactions, and increasingly tax digital products and SaaS.

   Why it makes work harder: SMBs selling online or across state lines must track nexus and apply thousands of local rates; service taxability varies by state.

   Most affected: E-commerce, Home services, RetailIn Nassima: Online store, Invoicing, AccountingAs of 2026-09PwC Worldwide Tax Summaries - United States other taxes

2. Late Payment & Credit

   Uneven cash flow affects half of small employers

   Detail: In the Fed's 2025 Small Business Credit Survey (27 March 2025), 51% of employer firms cited uneven cash flows as a financial challenge and 56% struggled to pay operating expenses; 75% cited rising costs of goods, services or wages.

   Why it makes work harder: Slow or irregular customer payment directly threatens payroll and supplier bills, raising the value of deposits, online payment links and automated reminders.

   Most affected: Trades, Professional services, RetailIn Nassima: Invoicing, Payments, Quotes (deposits)As of 2025-03Federal Reserve Banks - Small Business Credit Survey 2025

3. Late Payment & Credit

   No general private-sector late-payment law; Prompt Payment Act covers federal only

   Detail: The Prompt Payment Act (1982) requires federal agencies to pay vendors on time or pay interest (4.75% for 1 July-31 December 2026); there is no equivalent general statutory payment term for private B2B transactions in the US.

   Why it makes work harder: Outside government contracts, SMBs rely on their own terms and chasing, so collections discipline sits entirely with the business.

   Most affected: Trades & contracting, B2B servicesIn Nassima: Invoicing (terms, late fees), Payments, Campaigns (reminders)As of 2026-07U.S. Treasury Bureau of the Fiscal Service

4. Market Size

   36.2 million small businesses (99.9% of firms)

   Detail: SBA Office of Advocacy's 2026 FAQ (3 February 2026) counts 36,207,130 small businesses, 99.9% of all businesses, employing 62.3 million people (45.9% of private-sector workers) and generating 43.5% of GDP.

   Why it makes work harder: Largest addressable SMB market; also the most crowded with point solutions, so tool sprawl is itself a pain.

   Most affected: All sectorsIn Nassima: All-in-oneAs of 2026-02U.S. SBA Office of Advocacy

5. Other

   Reaching customers is the top operational challenge; rising costs and tariffs top financial

   Detail: The Fed's 2026 Small Business Credit Survey (3 March 2026) finds reaching customers and growing sales was the most common operational challenge, followed by hiring/retaining staff; 77% cited rising costs and/or other financial challenges and over 40% cited tariff-related costs (69% in retail). 46% of firms already use AI, mostly for writing/marketing (83%).

   Why it makes work harder: SMBs need low-cost lead capture and marketing plus cost control; high AI adoption means buyers expect AI features such as receptionists and campaign drafting.

   Most affected: Retail, Home services, ManufacturingIn Nassima: Campaigns, CRM, AI receptionist, ReviewsAs of 2026-03Federal Reserve Banks - Small Business Credit Survey 2026

6. Payments & Cash

   Form 1099-K threshold: over USD 20,000 and 200 transactions

   Detail: The IRS states payment platforms (third-party settlement organisations) report on Form 1099-K when payments for goods or services exceed USD 20,000 in more than 200 transactions.

   Why it makes work harder: SMBs paid via apps and marketplaces must reconcile platform-reported gross receipts with their books, a bookkeeping burden when payments are split across many apps.

   Most affected: Home services, Freelancers, E-commerceIn Nassima: Payments, AccountingAs of 2026-09Internal Revenue Service