How Many Businesses Are in the United States? A State-by-State Breakdown

Whether you are writing a business plan, sizing a market, planning a sales territory, or simply curious about the American economy, one of the first questions you need answered is: how many businesses actually operate in the United States?

The answer depends on how you count. The SBA counts 36.2 million small businesses. The Census Bureau tracks 5.5 million employer firms. And over 5.6 million new business applications were filed in 2025 alone. This guide breaks down the numbers from every angle — nationally, by state, by industry, and by size — using the most current federal data available.

1. The Headline Numbers

According to the SBA Office of Advocacy's 2026 Frequently Asked Questions report, there are 36,207,130 small businesses in the United States. Small businesses are defined as companies with fewer than 500 employees — and they represent 99.9% of all US businesses.

Here is what those 36.2 million businesses contribute to the American economy:

• Employment: 62.3 million workers — 45.9% of all private sector employees
• GDP contribution: 43.5% of total US gross domestic product
• Job creation: Small businesses created approximately 9 out of every 10 net new jobs between March 2023 and March 2024
• Payroll: Small businesses pay 38.7% of total private sector payroll
• New establishments: 1.1 million new establishments opened in the most recent year on record

These numbers make one thing clear: the American economy is fundamentally a small business economy. Nearly every business you pass while driving through any town in America — the dentist's office, the plumbing company, the accounting firm, the restaurant, the auto repair shop — is a small business by the federal definition.

Small businesses account for 99.9% of all businesses in the United States and employ nearly half the private workforce.

2. Types of Businesses: Employer vs. Nonemployer

The 36.2 million number includes two very different categories of business:

Employer Firms — 5.52 Million

These are businesses with at least one paid employee on payroll. According to the Census Bureau's Business Dynamics Statistics, there were approximately 5.52 million employer firms in 2022 (the most recent year with complete data), up from 5.38 million in 2021. Employer firms are what most people picture when they think of a "business" — a company with a physical location, employees, and regular operations.

Of these 5.52 million employer firms, 55.7% have fewer than five employees. Businesses with under 20 employees account for the vast majority. Large corporations with 500+ employees represent only about 20,000 firms — less than 0.4% of all employer businesses.

Nonemployer Businesses — ~29.8 Million

The much larger category is nonemployer businesses — sole proprietorships, freelancers, independent contractors, gig workers, and single-owner LLCs with no paid employees. There were approximately 29.8 million nonemployer businesses in the US. These include everyone from Uber drivers and Etsy sellers to independent consultants and real estate agents operating as one-person businesses.

This is why the "number of businesses in the US" can vary dramatically depending on the source. If someone says there are 5.5 million businesses, they are counting employer firms. If someone says 36 million, they are including nonemployers. Both numbers are correct — they are just counting different things.

3. Business Counts by State (All 50 States + DC)

Business density varies enormously by state. Population is the strongest predictor — larger states have more businesses — but factors like economic climate, tax policy, cost of living, and industry concentration all play a role.

According to the SBA's 2025 Small Business Profiles, California leads with 4.34 million small businesses, followed by Texas at 3.52 million and Florida at 3.49 million. These three states alone account for roughly one-third of all small businesses in America.

The following table shows all 50 states and DC, ranked by total small business count:

Source: SBA Office of Advocacy, 2025 Small Business Profiles. Figures rounded to nearest 10,000.

4. The 10 States With the Most Businesses

The top 10 states by small business count account for roughly 60% of all US businesses. Here is a closer look at what drives business density in each:

California — 4.34 million small businesses. The nation's largest economy and most populous state. Strong in technology, professional services, entertainment, agriculture, and real estate. Home to Silicon Valley, the largest tech corridor in the world, and Los Angeles, the second-largest metro area in the US.

Texas — 3.52 million small businesses. No state income tax, low cost of living relative to coastal states, and booming growth in energy, construction, healthcare, and technology. Houston, Dallas-Fort Worth, Austin, and San Antonio are all major business hubs.

Florida — 3.49 million small businesses. Another no-income-tax state with rapid population growth. Strong in tourism, real estate, healthcare, and retail. Miami is a major gateway for Latin American business.

New York — 2.53 million small businesses. The financial capital of the world. Dominant in finance and insurance, professional services, media, and real estate. New York City alone contains more businesses than most states.

Illinois, Georgia, Pennsylvania, Ohio, New Jersey, and North Carolina round out the top 10 — each with over a million small businesses. These states combine large populations with diverse economies spanning manufacturing, healthcare, technology, transportation, and food services.

5. Businesses by Industry

Not all industries are created equal when it comes to business count. Service-oriented industries dominate, which makes sense in an economy where over 80% of activity is in the services sector.

According to the SBA's data, the industries with the highest number of small businesses are:

• Professional, Scientific & Technical Services — 4.88 million small businesses. This includes law firms, accounting practices, consulting companies, engineering firms, advertising agencies, and IT services. The largest single industry category by business count.
• Transportation & Warehousing — 4.09 million. Driven by the explosion of independent truckers, delivery drivers, and logistics companies. E-commerce growth has fueled massive expansion in this sector.
• Other Services — 3.86 million. Includes repair shops, personal care services (barbers, salons), religious organizations, civic organizations, laundry services, and pet care.
• Construction — 3.66 million. General contractors, specialty trade contractors (electricians, plumbers, HVAC), and home builders. Construction has one of the highest rates of self-employment of any sector.
• Real Estate — Large numbers of independent agents, brokers, and property managers. Real estate is heavily populated by sole proprietors and small brokerages.
• Retail Trade — Stores, online retailers, and direct sellers. While big-box retailers get the headlines, small retailers still make up the vast majority of the sector by count.
• Health Care & Social Assistance — Physician practices, dental offices, home health agencies, outpatient clinics, and social services organizations.
• Administrative & Support Services — Staffing agencies, janitorial companies, security firms, and office support businesses.

For a detailed breakdown of how industries are classified using SIC and NAICS codes — and how to filter a business database by industry — see our complete guide to SIC and NAICS codes.

Professional services, transportation, and construction are among the industries with the most businesses in the US.

6. New Business Formations — Record Growth

One of the most striking trends in recent years is the surge in new business formations. According to the Census Bureau's Business Formation Statistics, 5.62 million new business applications were filed in 2025 — up from 5.48 million in 2024 and well above the pre-pandemic annual average of roughly 3.5 million.

To put that in perspective: in 2019, before the pandemic, about 3.5 million applications were filed for the entire year. In 2025, the US was averaging roughly 470,000 new applications per month. The first two months of 2026 have seen over 1 million applications, up 25.5% compared to the same period in 2025.

What Is Driving the Surge?

Several factors are fueling this record-breaking wave of business formation:

• Remote work. The shift to remote and hybrid work has made it easier to start a business without the overhead of office space, a commute, or geographic constraints.
• E-commerce. Online selling platforms (Shopify, Amazon, Etsy) have dramatically lowered the barriers to starting a retail business. Over 51% of all business in the US is now conducted online.
• Gig economy. More Americans are registering as independent contractors, freelancers, and sole proprietors. Each EIN application counts as a new business formation.
• Dissatisfaction with traditional employment. Post-pandemic, many workers chose self-employment over returning to traditional jobs — a phenomenon economists have called "The Great Resignation turning into The Great Reinvention."
• Low barriers to entry. In many states, forming an LLC or sole proprietorship takes under an hour online and costs less than $200.

But How Many Actually Survive?

Not all business applications become operating businesses. The Census Bureau estimates that only about 10% of applications result in a business with employees within 12 months. Many applications are filed speculatively, for future side projects, or for entities that never generate revenue. The gap between "business applications filed" and "businesses actually operating" is significant.

7. Business Survival Rates

Starting a business is the easy part. Keeping it alive is the challenge. According to the Bureau of Labor Statistics, the survival rates for new businesses in the United States follow a predictable pattern:

• Year 1: Approximately 80% of new businesses survive their first year
• Year 5: About 50% are still operating after five years
• Year 10: Roughly 35% survive to the decade mark
• Year 20: Only about 20% make it to 20 years

These rates have remained remarkably consistent over decades, even through economic booms and recessions. The industries with the highest failure rates tend to be restaurants, retail, and construction — sectors with high competition, thin margins, and heavy dependence on local economic conditions. The industries with the best survival rates are healthcare, finance, and professional services — sectors where specialized expertise creates stronger barriers to entry.

Cash flow is consistently cited as the primary reason businesses fail. A study found that 82% of business failures involve cash flow problems — not a lack of demand, but an inability to manage the timing of money coming in and going out.

Sources: SBA Office of Advocacy — Frequently Asked Questions About Small Business (2026), 2025 Small Business Profiles; US Census Bureau — Business Formation Statistics, Statistics of US Businesses, Business Dynamics Statistics; Bureau of Labor Statistics — Business Employment Dynamics.