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The Latest US Startup Data: New Business Registrations Remain Strong

Published by linker 5

Posted on February 10, 2021

4 min read

Last updated: January 21, 2026

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There were 1,115,984 business applications in the fourth quarter of 2020 as reported by the U.S. Census Bureau.
In 2020, the US was home to 31.7 million small businesses.
California, Texas, Florida, New York, and Illinois are the five states with the highest number of small businesses.

According to the U.S. Census Bureau, in the fourth quarter of 2020, there were a total of 1,115,984 business applications. This is down 28.5% from the third quarter. The Northeast accounts for 184,256 business applications, down 17.3% from the third quarter; the Midwest had 186,645 applications, down 34.1%; the South had 513,524 applications, down 30.3%; and finally, the West had 231,559 applications, down 26.9% from the third quarter.

The U.S. Small Business Administration reports that in 2020 there were 31.7 million small businesses in the US – this accounts for 99.9% of US businesses. These businesses have allowed for the employment of 60.6 million small business employees which amounts to 47.1% of United States employees.

Which states are the most popular with new small businesses?

According to the Center for American Entrepreneurship, San Francisco, San Jose, and Los Angeles all form part of the top ten list of cities which venture capitalists favor, and California stands out as being the state with the most small businesses.

Currently, there are 4.1 million small businesses in the state, almost double how many there are in Texas, the state with the second-highest number of small businesses. Texas has 2.8 million small businesses, followed by 2.7 million in Florida, 2.2 million in New York, and 1.2 million in Illinois.

Why start a new business?

Guidant Financial estimates that 78% of US small businesses are presently making money. The same source speculates that the number of people who want to start their own small business because they are unhappy with corporate America increased by 27% from 2019 to 2020.

However, 55% of small business owners in the US started their own business so that they could be their own boss and not be accountable to anyone else. Furthermore, 39% who formed their own business did so because they wanted space to follow their dreams.

The third biggest driver of small businesses is being discontent with corporate America, and 25% of small business owners cite that this is the reason they started their own company.

What business structure is most popular?

Forming a limited liability company (LLC) is a business structure which provides personal liability protection and pass-through taxation. It remains one of the easiest ways of forming your business so that your personal assets are protected in case of legal troubles. Being protected from lawsuits is a big benefit to the LLC formation structure, as well as the decreased amount of paperwork which needs to be completed in relation to corporations and other legal entities. Furthermore, not only does the company avoid double-taxation, the structure also adds credibility to your business so that clients and creditors view you as a legitimate enterprise.

Consumer Trends to look out for in 2021

The pandemic has highlighted a growing trend among consumers – online shopping. Lockdowns around the world have spurred an exponential increase of e-commerce activities. In fact, the third annual Digital Consumer Study reports that almost 50% of consumers state that they did shopping-related activities on their mobile phones within the past three months.

There has also been a rise in influencer, peer-to-peer (P2P), and direct-to-consumer (D2C) marketing. New strategies are required to attract the modern consumer and to keep them interested in one brand even when there are countless others vying for their attention.

Suggested Video on LLC Formation in Delaware, US:

Final take

Starting a new business is an exciting endeavor to anyone and LLC formation is daily easy. However, starting the business is, for the most part, the easy bit; maintaining the business is another matter and is of the utmost importance. In order to ensure the success of any business, it is necessary to consider the most prevalent consumer trends and apply them to your business model.

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