By Pacific Island Times News Staff
The number of new Guam businesses filed as limited liability corporations, or LLC, nearly doubled from 174 in 2020 to 345 in 2021, Sen. James Moylan said, attributing the trend to a huge cut in the LLC filing fee.
"As a matter of fact, the 2021 numbers were a 50 percent increase from the 2019 filings, which were at 230, and this was prior to the lockdowns," Moylan said. "The numbers would have likely increased more had it not been for the pandemic in 2021, and contrary to the governor’s veto message, P.L. 35-123 did not severely impact DRT’s collections. In essence, it resulted in increasing the tax base."
Moylan authored P.L. 35-123, which reduced the filing fees for LLCs by 75 percent, from $1,000 to $250.
The senator said the measure was designed to create a commerce-friendly policy and encourage small business entrepreneurship. This would also mirror the average cost of fees in other jurisdictions, he added.
"While there are surely other scenarios that have led to these numbers, we are certain that the reduced costs to file the Articles of Incorporation for an LLC played a substantial role," Moylan said.
The LLC is a preferred business structure by most individuals, especially smaller entities, thus it was paramount to make sure that Guam was competitive in attracting investors to enhance economic activity.
Moylan also said the increase in new business filings indicated optimism while the island and the world, for that matter, struggle to emerge from the economic disaster brought about by the coronavirus pandemic.
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"New business entities would result in the creation of jobs, spending within the local economy, and an increase to our tax collections (which BBMR recently noted was the case with first-quarter FY22 collections)," Moylan said.
"In some cases, it would create financial independence opportunities for residents who are seeking to supplement their income by converting their talents into small businesses. P.L. 35-123 was and is about encouraging more individuals to 'be your own boss,'" he added.
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