ArcaMax

At his final press conference as Fed chair, Jerome Powell said that the labor market was essentially stuck in neutral. “There’s effectively no new net job creation” because companies aren’t adding a lot of new positions and fewer people are quitting. As a result, those out of work and others who are nervous about their current jobs are increasingly turning to gig work or considering launching their own businesses to survive in the current climate.

Just in time for Small Business Week, Americans are jumping on the small business bandwagon. According to analysis by Torsten Slok, chief economist at Apollo, technology is helping in a big way. “The surge in new U.S. business formation is being fueled by AI and large language models that are dramatically reducing the cost and complexity of launching a company.”

If the so-so labor market is getting you down, just know that we have been here before. One catalyst for writing my book, "The Great Money Reset," was talking to podcast listeners about their ideas for making money while they were sidelined during COVID. “Times of personal difficulty often are just what we need to get our entrepreneurial juices flowing.”

But where should you start? Before you plow through your savings or raid your retirement account, consider smaller steps, perhaps a side hustle to test the concept and see if it gains traction. You can continue to cobble together part-time work to pay the bills, or if you still have a full-time job with benefits, it’s great to see how you feel about the business and whether it is financially viable before assuming the risk of going solo.

Before you get freaked out about operating a business, consider morphing what you already do into a consulting practice. This is particularly appealing to those nearing retirement. Working as a freelancer might allow you to transition from the intensity of your professional career, without the pressures and time commitment that come with full-time employment. If you are younger, the flexibility and autonomy of working for yourself may be appealing but there are some downsides, primarily losing healthcare benefits and an easily accessible retirement plan, which may have a matching component.

Additionally, you need to think about taxes, which also brings up the question of your business structure. According to the Small Business Administration, the answer “affects how much you pay in taxes, your ability to raise money, the paperwork you need to file, including registering your business and getting a tax ID number, and your personal liability”.

The most common small business structures include:

You're automatically considered a sole proprietorship if you conduct business without registering as another business type. All income passes through to your personal return. The downside is that business and personal assets and liabilities are not separate, meaning you can be held personally liable for business debts and obligations.

An "S Corp" allows profits, and some losses, to pass through directly to your personal income without corporate tax rates. Electing S Corp taxation can significantly cut self-employment tax if your business income exceeds a reasonable salary for your work. S Corps are also a pass-through structure, keeping you eligible for the Qualified Business Income deduction.

An LLC protects you from personal liability in most instances — assets like your vehicle, house and savings accounts won't be at risk if your LLC faces bankruptcy or lawsuits. Profits and losses can pass through to your personal income, but as an LLC member you are considered self-employed and must pay self-employment taxes toward Medicare and Social Security.

_____

_____

========

(Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com. Check her website at www.jillonmoney.com)

©2026 Tribune Content Agency, LLC