Quick answer
The headline small business statistics come from the SBA Office of Advocacy's February 2026 report: 36,207,130 small businesses, which make up 99.9% of all US firms and employ 62.3 million people, or 45.9% of private sector workers. Most have no employees at all.
Small business statistics in the US rest on a few federal sources, and the most quoted figure comes from the U.S. Small Business Administration's Office of Advocacy. Its Frequently Asked Questions About Small Business, published February 3, 2026, counts 36,207,130 small businesses using Census Bureau data for 2022. Advocacy defines a small business for research as an independent business with fewer than 500 employees. The newer numbers come from the Census Bureau's monthly Business Formation Statistics (October 2026 data, released November 12, 2026) and the Bureau of Labor Statistics (BLS) Business Employment Dynamics survival table, which runs through March 2026. Each figure below links to its original release.
Number of small businesses in the US
The count of small businesses always mixes two very different groups: one-person businesses with no payroll, and employers. The figures below are from the SBA Office of Advocacy's February 2026 report, which draws on the Census Bureau's 2022 Statistics of U.S. Businesses (SUSB) and 2022 Nonemployer Statistics.
- There are 36,207,130 small businesses in the US, and small businesses make up 99.9% of all firms.
- 29,811,495 firms, or 82.3%, have no employees. Most of these nonemployer firms (86.7%) are sole proprietorships.
- Advocacy reports 6,395,635 firms with paid employees (17.7%) and 21,041 large businesses. Small firms make up 99.7% of firms with paid employees.
- The number of nonemployer firms nearly doubled, from 15.4 million in 1997 to 29.8 million in 2022. The number of small employer firms has increased every year since 2011.
- Small firms account for 97.2% of exporters (270,014 businesses) and 33.0% of known export value ($588.4 billion).
- Women owned 14 million businesses in 2022, 40.4% of all classifiable businesses. Veterans owned 1.7 million (4.8%), of which 273,523 were employer firms. About one in four employer firms (26.1%) was family-owned.
A note on the two counts. The 6,395,635 figure is the total of all employer firms in Census SUSB for 2022, including the large ones. The SUSB table itself puts employer firms with fewer than 500 employees at 6,374,594. The 21,041 difference is the large-firm count, so for "how many small employers are there" the precise answer is about 6.37 million.
What this means for employers: If you have even one employee, you are in a much smaller group than the 36.2 million headline suggests: roughly one in six small businesses runs a payroll. Hiring your first worker brings the obligations that nonemployers never face, from new hire paperwork to withholding and employer payroll taxes.
Small business employment statistics
Small businesses employ close to half of the private workforce but account for a smaller share of pay and sales. From the SBA Office of Advocacy (2022 data unless noted):
- Small businesses employ 62.3 million people, 45.9% of private sector employees.
- They pay 38.7% of private sector payroll ($3.5 trillion) and take in 35.0% of private sector receipts ($17.8 trillion).
- Small business economic activity makes up 43.5% of GDP. That figure comes from Advocacy's Small Business GDP study covering 1998 to 2014, so it is older than the rest of the list.
- From January 1995 to December 2024, small businesses created 20.7 million net new jobs and large businesses 13.2 million. Small businesses accounted for 61% of net new job creation since 1995 (the report's infographic rounds this to 60%).
- In the pandemic, more than 15 million jobs were lost between Q1 and Q2 2020, of which 9.1 million were small business jobs. Small business employment recovered those jobs by Q3 2022 and added 1.6 million more.
- In rural areas, small businesses accounted for 56.6% of employment in 2022, versus 47.5% in metropolitan areas. There were 4.3 million rural small business establishments.
Why can small firms create 61% of net new jobs but hold under half of employment? Advocacy explains that a firm which grows past 500 employees moves into the large-firm category, so its later job gains count as large-firm growth.
What this means for employers: Small employers compete for the same workers as large ones, and they do it with a smaller share of payroll per job. Getting the basics of pay right every cycle, including how to process payroll on time and accurately, is part of keeping people.
How small most employers really are
"Fewer than 500 employees" covers a 10-person cafe and a 450-person manufacturer. The Census Bureau's Statistics of U.S. Businesses for 2022 breaks employer firms down by size. Shares below are Workzenly calculations from the SUSB 2022 detailed size table.
| Firm size (employees) | Employer firms | Share of employer firms | Employees | Share of employees |
|---|---|---|---|---|
| Fewer than 5 | 4,029,041 | 63.0% | 6,295,615 | 4.6% |
| Fewer than 20 | 5,720,093 | 89.4% | 21,950,184 | 16.2% |
| Fewer than 500 | 6,374,594 | 99.7% | 62,250,556 | 45.9% |
| 5,000 or more | 2,262 | 0.04% | 49,310,128 | 36.3% |
| All employer firms | 6,395,635 | 100% | 135,748,407 | 100% |
Source: U.S. Census Bureau, Statistics of U.S. Businesses 2022, US and state by detailed employment size. Employment is for the week of March 12, 2022. Shares are Workzenly calculations.
- 63.0% of employer firms have fewer than 5 employees, but they employ only 4.6% of private workers.
- 89.4% of employer firms have fewer than 20 employees; together they employ 16.2% of workers.
- At the other end, 2,262 firms with 5,000 or more employees employ 36.3% of all private workers.
What this means for employers: The typical US employer has a handful of people and no HR department. Tools and processes should match that: a simple HR system built for small teams usually beats an enterprise suite. Payroll, time tracking and paperwork are often done by the owner.
Small business share of jobs by industry
How much an industry depends on small employers varies widely. The chart shows the share of each sector's employees who work at firms with fewer than 500 employees, a Workzenly calculation from Census SUSB 2022. Firm size is measured across the whole firm, not the single location.
- Construction had 782,487 employer firms and 7,361,847 employees in 2022; small firms employed 5,942,593 of them (80.7%).
- Accommodation and food services had 13,793,478 employees, and 8,657,489 (62.8%) worked for firms with fewer than 500 employees.
- Health care and social assistance is the largest sector by employment (21,171,232), with 9,260,938 (43.7%) at small firms. That is the most small business jobs of any sector.
- Retail trade employed 15,922,438 people, but only 34.2% at small firms, because national chains dominate store employment.
- Management of companies had the lowest share, 10.3%, followed by utilities at 18.8%.
What this means for employers: In construction, restaurants and personal services, small employers set the local labor market. If you run a crew or a kitchen, your real competition for workers is other small firms, so pay accuracy, predictable schedules and fast onboarding matter. See how this plays out for construction companies and restaurants.
Small business employment by state
Small firms' share of private employment ranges from under 40% to about two-thirds depending on the state. The table shows the states at both ends and the largest states, from Census SUSB 2022. Shares are Workzenly calculations; firm size is national, so a store of a national chain counts as a large firm in every state.
| State | Private employees (2022) | At firms under 500 employees | Small business share |
|---|---|---|---|
| Montana | 398,871 | 264,567 | 66.3% |
| Wyoming | 208,024 | 135,636 | 65.2% |
| Vermont | 254,471 | 157,959 | 62.1% |
| South Dakota | 373,863 | 216,705 | 58.0% |
| North Dakota | 342,345 | 197,212 | 57.6% |
| California | 16,032,440 | 7,595,688 | 47.4% |
| New York | 8,429,776 | 3,932,389 | 46.6% |
| Texas | 11,507,642 | 5,108,008 | 44.4% |
| Arizona | 2,787,701 | 1,186,389 | 42.6% |
| Georgia | 4,249,362 | 1,806,632 | 42.5% |
| Tennessee | 2,846,881 | 1,182,437 | 41.5% |
| Florida | 9,628,867 | 3,813,075 | 39.6% |
Source: U.S. Census Bureau, Statistics of U.S. Businesses 2022. Shares are Workzenly calculations.
- Montana (66.3%), Wyoming (65.2%) and Vermont (62.1%) have the highest small business shares of private employment.
- Florida (39.6%) is the only state where small firms employ less than 40% of private workers, followed by Tennessee (41.5%).
- California has the most people working for small firms, 7,595,688, followed by Texas with 5,108,008.
What this means for employers: Rural and less populated states lean hardest on small employers, which matches Advocacy's finding that small firms hold 56.6% of rural jobs. Wherever you operate, state rules on pay frequency, overtime and leave apply to you as a small employer just as they do to a chain.
New business applications in 2026
The Census Bureau's Business Formation Statistics count applications for an Employer Identification Number (EIN) on IRS Form SS-4. An application is an intention to start, not an open business. The latest release, published November 12, 2026, covers October 2026 (seasonally adjusted):
- 501,609 business applications in October 2026, down 6.0% from September.
- 144,314 high-propensity applications (those most likely to become employers), down 2.0%.
- 34,131 applications with planned wages, down 4.5%.
- Census projects 27,867 new employer businesses within four quarters from October's applications, down 1.8%.
- By region, the South had the most applications (213,915), then the West (127,168), the Midwest (86,059) and the Northeast (74,467).
- The next release, for November 2026, is scheduled for December 11, 2026.
For the longer trend, Workzenly summed the unadjusted monthly totals in the Census BFS data file. Applications rose from 3,498,990 in 2019 to 5,696,742 in 2025, an increase of 62.8%. From January to October 2026 there were 5,360,944 applications, 10.9% more than the 4,832,972 in the same months of 2025. Applications with planned wages moved the other way: 365,953 in January to October 2026, 16.5% fewer than a year earlier (Workzenly calculations).
By industry, October 2026 applications were highest in retail trade (89,511, down 22.0% from September), professional services (79,178) and construction (46,163). Accommodation and food services had 24,746 and health care and social assistance 31,118. Retail applications include many online sellers, so a large monthly swing there does not mean storefront openings fell by a fifth.
What this means for employers: More people are filing to start a business than before 2020, but fewer of the 2026 filings plan to pay wages. The new firms that do hire add competition for workers in construction, food service and professional services. If you are one of them, plan your first payroll before your first hire.
Small business failure rate and survival
The best federal measure of how long new businesses last is the BLS Business Employment Dynamics establishment age data. It tracks each year's new private sector establishments (locations with employees, not firms), counted each March. Table 7 now runs through March 2026.
- Of 976,437 establishments opened in March 2025, 770,720 (78.9%) were still operating in March 2026. That is a first-year failure rate of about 21%.
- Of 988,310 establishments opened in March 2024, 66.6% survived two years.
- The March 2021 group shows 47.2% still open after five years; the March 2020 group, which opened at the start of the pandemic, had 51.3% after five years.
- Of establishments opened in March 2016, 34.2% survived to March 2026. For the 2015 group, ten-year survival was 34.6%.
- Averaged over 1994 to 2022, the SBA Office of Advocacy reports survival of 67.7% after two years, 49.2% after five, 33.9% after ten and 25.5% after fifteen.
- Survival improves with age: 69.5% of establishments that reach five years also reach ten, and 76.1% of those that reach ten reach fifteen (SBA Advocacy).
- In 2023, 1.3 million establishments opened for the first time and about 1.2 million closed permanently. Startups were 14.2% of establishments in 2023, up from 12.5% in 2019.
The single-cohort figures from BLS and Advocacy's long-run averages are close but not identical because one follows a specific year's openings and the other averages every cohort since 1994. Neither counts nonemployer businesses, and a closed location is not always a failed business: some are sold, merged or relocated.
What this means for employers: Roughly half of new employer locations close within five years. Cash flow and labor cost are where many run into trouble, so know your real cost per employee, including taxes and benefits (see our employee benefits statistics), and track hours closely from the first week.
Costs, financing and outlook
The Federal Reserve Banks' 2026 Report on Employer Firms, published March 2026, covers the 2025 Small Business Credit Survey. It was fielded September 3 to November 14, 2025 and drew 6,525 responses from a convenience sample of employer firms with 1 to 499 employees, so it is not a random sample.
- 77% of firms experienced challenges from rising costs in the prior 12 months, either increased costs of goods, services or wages, or tariff-related costs, or both.
- More than four in ten firms cited tariff-related costs as a financial challenge. It was most common in retail (69%) and manufacturing (62%).
- Reaching customers and growing sales was the most common operational challenge, followed by hiring or retaining qualified staff.
- Just under half of firms (47%) were operating at a profit at the end of 2024.
- 60% applied for financing in the prior 12 months; the most common reasons were meeting operating expenses (56%) and expansion (46%). 42% of applicants received the full amount they sought.
- The employment expectations index fell from 26 to 23 and the revenue expectations index from 39 to 33, both the lowest since the 2020 survey.
- Separately, the SBA Office of Advocacy estimates federal paperwork cost small businesses over $81 billion in 2025, with more than 80% of that burden from the IRS.
What this means for employers: Rising wages and costs are the most common financial squeeze, and much of the IRS paperwork burden is payroll and tax forms. Cutting the hours spent on each pay run is one of the few cost savings fully under an owner's control. Compare options in our guide to payroll services for small business.
About this data
These small business statistics come from five sources. The SBA Office of Advocacy FAQ is updated about once a year; the 2026 edition uses Census data for 2022. Census Statistics of U.S. Businesses is annual, with a lag of about three years; 2022 is the latest year used here. Census Business Formation Statistics is monthly. BLS Business Employment Dynamics establishment age tables update once a year and now run through March 2026. The Federal Reserve's Small Business Credit Survey is annual.
Definitions matter. "Small business" here means fewer than 500 employees, Advocacy's research definition. SUSB counts firms (all locations under one owner) by March employment; BLS survival data counts establishments (single locations). Business applications are EIN filings, not business openings. Where Workzenly added, divided or compared published figures, the text labels it as a Workzenly calculation.
We review this page when new releases come out. Journalists, students and bloggers are welcome to cite it with a link to this page.
More workforce statistics: Hiring statistics · Employer health insurance statistics · Gig economy statistics · Layoffs statistics.
Sources
- U.S. Small Business Administration, Office of Advocacy, Frequently Asked Questions About Small Business 2026, published February 3, 2026 (2022 Census data). advocacy.sba.gov
- U.S. Census Bureau, Statistics of U.S. Businesses 2022, US and state by NAICS sector and detailed employment size. census.gov/programs-surveys/susb.html
- U.S. Census Bureau, Business Formation Statistics, October 2026, release CB26-184, November 12, 2026. census.gov/econ/bfs/current
- U.S. Census Bureau, Business Formation Statistics monthly data file (bfs_monthly.csv), accessed November 13, 2026. census.gov/econ/bfs
- U.S. Bureau of Labor Statistics, Business Employment Dynamics, Table 7: Survival of private sector establishments by opening year, data through March 2026. bls.gov/bdm/us_age_naics_00_table7.txt
- Federal Reserve Banks, 2026 Report on Employer Firms: Findings from the 2025 Small Business Credit Survey, published March 2026. fedsmallbusiness.org
Frequently asked questions
How many small businesses are there in the US?
The SBA Office of Advocacy counts 36,207,130 small businesses in its February 2026 Frequently Asked Questions report, based on Census data for 2022. Of these, 29,811,495 (82.3%) have no employees. Census Statistics of U.S. Businesses puts employer firms with fewer than 500 employees at 6,374,594 in 2022.
What percent of US workers work for a small business?
Small businesses employed 62.3 million people in 2022, or 45.9% of private sector employees, according to the SBA Office of Advocacy's February 2026 report, which uses Census Statistics of U.S. Businesses. The same firms paid 38.7% of private sector payroll, about $3.5 trillion.
What is the small business failure rate?
BLS Business Employment Dynamics data show that 78.9% of private establishments opened in March 2025 were still operating a year later, so about 21% closed in year one. Of those opened in March 2016, 34.2% survived to March 2026, meaning about two in three closed within ten years.
How many new businesses are started each year?
Americans filed 5,696,742 business applications in 2025, a Workzenly sum of unadjusted monthly Census Business Formation Statistics. Applications are requests for an employer ID number, not open businesses. In October 2026 there were 501,609 applications, seasonally adjusted, down 6.0% from September, per the November 12, 2026 release.
What counts as a small business in the US?
For research, the SBA Office of Advocacy defines a small business as an independent business with fewer than 500 employees. For government programs and federal contracting, the SBA instead uses industry-level size standards, published in its table of size standards, so a firm may count as small for research but not for a given program.
Which industries rely most on small businesses?
In 2022, firms with fewer than 500 employees held 85.0% of jobs in other services, 80.7% in construction and 62.8% in accommodation and food services, a Workzenly calculation from Census Statistics of U.S. Businesses. In retail trade the share was 34.2%, and in finance and insurance 27.5%.