REPORT: States With the Most (and Least) Small Businesses

1. California (tie)

Though California’s economic growth rate was down in 2019 compared to 2018, the state grew slightly faster than the overall U.S. economy. This growth happened despite California ranking as the second-worst state when comparing business tax rates. The Golden state saw a net increase of 214,569 small businesses jobs in 2019, primarily among businesses with fewer than 20 employees. The biggest industries for small businesses in California were accommodation and food services, healthcare and social assistance services, and professional, scientific and technical services. The industries with the lowest small business employment rates were utilities, mining, quarrying and oil and gas extraction, and agriculture, forestry, fishing and hunting.

1. Florida (tie)

Florida’s economic growth rate of 2.6 percent was slightly stronger than the overall U.S. economy in 2019. The Sunshine state saw a net increase of 133,441 small businesses jobs in 2019, primarily among businesses with fewer than 20 employees. A majority of growth in self-employment rates in 2018 were focused in South Florida. The biggest industries for small businesses in Florida were accommodation and food services, healthcare and social assistance services, and construction. The industries with the lowest small business employment rates were mining, quarrying and oil and gas extraction, as well as utilities and agriculture, forestry, fishing and hunting.

1. New York (tie)

New York’s economic growth rate of 1.8 percent was slower than the overall U.S. economy in 2019, but up from the state’s 2018 growth rate. The Empire state saw a net increase of 69,042 small businesses jobs in 2019, primarily among businesses with fewer than 20 employees. The biggest industries for small businesses in New York were healthcare and social assistance, accommodation and food services, and retail trade. The industries with the lowest small business employment rates were utilities, mining, quarrying and oil and gas extraction, and agriculture, forestry, fishing and hunting.

1. Texas (tie)

Texas’s robust economic growth rate of 4.4 percent was significantly stronger than the overall U.S. economy in 2019, and up from the state’s 2018 growth rate. The Lone Star state also saw an impressive net increase of 227,487 small businesses jobs in 2019, primarily among businesses with 20 to 99 employees. A majority of growth in self-employment rates in 2018 was focused in Central Texas. The biggest industries for small businesses in Texas were healthcare and social assistance, accommodation and food services, and construction. The industries with the lowest small business employment rates were agriculture, forestry, fishing and hunting, utilities, and management of companies and enterprises.

5. Georgia (tie)

Georgia’s economic growth rate of 2.0 percent was just below the overall U.S. economic growth rate of 2.1 percent in 2019, and down from the state’s 2018 growth rate. The Peach state saw a net increase of 64,905 small businesses jobs in 2019, primarily among businesses with 20 to 99 employees. A majority of growth in self-employment rates in 2018 was focused in North Georgia and the Atlanta metro area. The biggest industries for small businesses in Georgia were accommodation and food services, healthcare and social assistance, and professional, scientific, and technical services. The industries with the lowest small business employment rates were mining, quarrying and oil and gas extraction, utilities, and agriculture, forestry, fishing and hunting.

5. Illinois (tie)

With an economic growth rate of 1.6 percent, Illinois grew slightly slower than the overall U.S. economy in 2019, which was also down from the state’s 2018 growth rate. The Land of Lincoln saw a net increase of 20,410 small businesses jobs in 2019, primarily among businesses with 20 to 99 employees. A majority of growth in self-employment rates in 2018 was focused in Western and Southeastern Illinois. The biggest industries for small businesses in the state were healthcare and social assistance, accommodation and food services, and manufacturing. The industries with the lowest small business employment rates were agriculture, forestry, fishing and hunting, utilities, and mining, quarrying and oil and gas extraction.

5. Michigan (tie)

Michigan’s economic growth rate of 0.7 percent was significantly less than the overall U.S. economic growth rate of 2.1 percent in 2019, and a big drop from the state’s 2018 growth rate. Nevertheless, the Wolverine state saw a net increase of 26,199 small businesses jobs in 2019, primarily among businesses with 20 to 99 employees. A majority of growth in self-employment rates in 2018 was focused in Northern Michigan. The biggest industries for small businesses in the state were healthcare and social assistance, manufacturing, and accommodation and food services. The industries with the lowest small business employment rates were utilities, mining, quarrying and oil and gas extraction, and agriculture, forestry, fishing and hunting.

5. New Jersey (tie)

Despite the fact that New Jersey consistently ranks as the state with among the highest business taxes in the country, the state saw an economic growth rate of 1.5 percent in 2019. The Garden state saw a net increase of 48,114 small businesses jobs in 2019, primarily among businesses with fewer than 20 employees. A majority of growth in self-employment rates in 2018 was focused in the northern part of the state. The biggest industries for small businesses in New Jersey were healthcare and social assistance services, accommodation and food services, and professional, scientific and technical services. The industries with the lowest small business employment rates were mining, quarrying and oil and gas extraction, agriculture, forestry, fishing and hunting, and utilities.

5. North Carolina (tie)

With an overall economic growth rate of 2.3 percent, North Carolina grew slightly faster than the overall U.S. economy in 2019. The Tarheel state saw a net increase of 62,614 small businesses jobs in 2019, primarily among businesses with 20 to 99 employees. A majority of growth in self-employment rates in 2018 was focused along the state’s western and eastern borders. The biggest industries for small businesses in North Carolina were accommodation and food services, healthcare and social assistance, and construction. The industries with the lowest small business employment rates were mining, quarrying and oil and gas extraction, utilities, and agriculture, forestry, fishing and hunting.

5. Ohio (tie)

Ohio’s economic growth rate of 1.7 percent was just under the overall U.S. economic growth rate of 2.1 percent in 2019, and slightly down from the state’s 2018 growth rate. Nevertheless, the Buckeye state saw a net increase of 44,523 small businesses jobs in 2019, primarily among businesses with 20 to 99 employees. The biggest industries for small businesses in Ohio were healthcare and social assistance, manufacturing, and accommodation and food services. The industries with the lowest small business employment rates were agriculture, forestry, fishing and hunting, utilities, and mining, quarrying and oil and gas extraction.

5. Pennsylvania (tie)

Pennsylvania’s economic growth rate of 2.3 percent was right around the overall U.S. economy in 2019, but slightly down from the state’s 2018 growth rate. The Keystone state saw a net increase of 57,377 small businesses jobs in 2019, primarily among businesses with 20 to 99 employees. A majority of growth in self-employment rates in 2018 was focused on the northern and southern state borders. The biggest industries for small businesses in Pennsylvania were healthcare and social assistance, accommodation and food services, and manufacturing. The industries with the lowest small business employment rates were utilities, agriculture, forestry, fishing and hunting, and mining, quarrying and oil and gas extraction.

42. New Hampshire (tie)

New Hampshire saw an overall economic growth rate of 2.7 percent in 2019, which was higher than the state’s 2018 growth rate. The Granite state saw a net increase of 7,216 small businesses jobs in 2019, primarily among businesses with 20 to 99 employees. A majority of growth in self-employment rates in 2018 was focused on the northern counties. The biggest industries for small businesses in New Hampshire were healthcare and social assistance, accommodation and food services, and retail trade. The industries with the lowest small business employment rates were mining, quarrying and oil and gas extraction, agriculture, forestry, fishing and hunting, and utilities.

42. New Mexico (tie)

Despite ranking towards the bottom of the pack in terms of the state’s percentage of small businesses, New Mexico had a relatively good year in 2019 with an overall growth rate of 3.7 percent, well above the national average. Our nation’s 47th state saw a net increase of 7,058 small businesses jobs in 2019, primarily among businesses with fewer than 20 employees. A majority of growth in self-employment rates in 2018 was focused around Albuquerque, Sante Fe and Taos. The biggest industries for small businesses in New Mexico were healthcare and social assistance, accommodation and food services, and construction. The industries with the lowest small business employment rates were agriculture, forestry, fishing and hunting, utilities, and management of companies and enterprises.

42. South Dakota (tie)

With an overall economic growth rate of 0.7 percent, South Dakota fell far short of the overall U.S. economic growth rate in 2019. The Mount Rushmore state saw a net increase of 2,082 small businesses jobs in 2019, primarily among businesses with fewer than 20 employees. Of the growth that did occur in 2018, most happened in the north and northwest counties. The biggest industries for small businesses in South Dakota were healthcare and social assistance, accommodation and food services, and retail trade. The industries with the lowest small business employment rates were agriculture, forestry, fishing and hunting, mining, quarrying and oil and gas extraction, and utilities.

42. Vermont (tie)

Vermont saw a decent overall economic growth rate of 2.5 percent in 2019, which was up from the year before and above the national average. The Green Mountain state saw a net increase of 1,635 small businesses jobs in 2019, primarily among businesses with fewer than 20 employees. A majority of growth in self-employment rates in 2018 was focused in the state’s 2 southernmost counties. The biggest industries for small businesses in Vermont were healthcare and social assistance, accommodation and food services, and retail trade. The industries with the lowest small business employment rates were mining, quarrying and oil and gas extraction, utilities, and agriculture, forestry, fishing and hunting.

46. Rhode Island (tie)

Boasting an economic growth rate above the national average at 2.7 percent, Rhode Island grew slightly faster than the year before. Little Rhody also saw a net increase of 3,186 small businesses jobs in 2019, primarily among businesses with fewer than 20 employees. Despite these facts, the state ranked among the worst states for attracting small businesses. A majority of growth in self-employment rates in 2018 were focused in South and Southeastern Rhode Island. The biggest industries for small businesses in the state were healthcare and social assistance, accommodation and food services, and manufacturing. The industries with the lowest small business employment rates were mining, quarrying and oil and gas extraction, utilities, and agriculture, forestry, fishing and hunting.

46. West Virginia (tie)

With a fourth-quarter 2019 growth rate of -0.1 percent and an overall growth rate of just 1.0 percent, it’s no wonder that West Virginia placed towards the bottom of the pack. Nevertheless, the Mountain state saw a net increase of 4,270 small businesses jobs in 2019, primarily among businesses with fewer than 20 employees. A majority of growth in self-employment rates in 2018 was focused in the western and central regions of the state. The biggest industries for small businesses in West Virginia were healthcare and social assistance, accommodation and food services, and retail trade. The industries with the lowest small business employment rates were agriculture, forestry, fishing and hunting, utilities, and management of companies and enterprises.

46. Wyoming (tie)

Despite ranking as one of the worst states for attracting small businesses, Wyoming had a relatively good year in 2019 with an overall growth rate of 3.3 percent, beating out the national average. The Cowboy state saw a net increase of 5,762 small businesses jobs in 2019, primarily among businesses with fewer than 20 employees. A majority of growth in self-employment rates in 2018 was focused around central and western Wyoming. The biggest industries for small businesses in the state were accommodation and food services, healthcare and social assistance, and construction. The industries with the lowest small business employment rates were agriculture, forestry, fishing and hunting, management of companies and enterprises, and utilities.

49. North Dakota

North Dakota saw an overall economic growth rate of 2.3 percent in 2019, which was down from the year before. The Flickertail state saw a net increase of 4,857 small businesses jobs in 2019, primarily among businesses with fewer than 20 employees. The biggest industries for small businesses in North Dakota were accommodation and food services, healthcare and social assistance, and retail trade. The industries with the lowest small business employment rates were agriculture, forestry, fishing and hunting, management of companies and enterprises, and utilities.

50. Delaware

Considering that Delaware is known as one of the best places to incorporate due to various corporate tax benefits, it’s not too surprising that it ranked as the state with the worst small business rate. In 2019, the Diamond state saw a growth rate of just 0.8 percent, which was up from the previous year’s rate of less than 0.1 percent but well below the national average. Delaware saw a net increase of 4,776 small businesses jobs in 2019, primarily among businesses with 20 to 99 employees. The biggest industries for small businesses in Delaware were healthcare and social assistance, accommodation and food services, and construction. The industries with the lowest small business employment rates were mining, quarrying and oil and gas extraction, agriculture, forestry, fishing and hunting, and utilities.

51. District of Columbia

With an overall growth rate of 1.6 percent, D.C grew more slowly than the rest of the country in 2019. While not technically a state, our nation’s capital was noteworthy in that it saw a net increase of 5,480 small businesses jobs in 2019, primarily among businesses with 100 to 499 employees (the biggest category of small businesses). The biggest industries for small businesses in West Virginia were other services (except public administration), professional, scientific and technical services, and accommodation and food services. The industries with the lowest small business employment rates were utilities, management of companies and enterprises, and manufacturing.