California Small Business Statistics

California is called the Golden State for a reason. A number one US economy, with a $3.2 trillion GDP, it confidently out-competes Texas, with a $1.9 trillion GDP. If the state were an independent country, it would take the 5th position in a world GDP rating.

The Golden State’s economic supremacy is largely driven by small businesses. Proximity to Silicon Valley and Hollywood makes it the land of huge entrepreneurial opportunities. A distinctive peculiarity of the state is a luxurious market and private companies serve it.

Though thriving and growing, California’s economic environment is not the easiest to launch a new venture since the state imposes quite a number of regulations on enterprises. Check the latest small business stats for the state to better understand your options.

Key California Small Business Stats

• With 4.2 million micro-companies, California leads the small business pool in the US followed by Texas, Florida, and New York;
• The state accommodates 14% of the nation’s micro business market;
• The share of privately owned entities in the state is 99.8%;
• SBA reports that this sector employs as many as 7.3 million workers or 48.2% of the workforce across the state;
• Private firms hold a 96% share of the Golden State’s exporters and generate over 41% of the export income;
• Despite the COVID-19 economic stagnation, the number of California small businesses increased by 2.5% in 2021 as compared to 2020;
• Companies employing less than 20 individuals represent 88% of CA firms and 18% of CA jobs accordingly while employers with less than 100 workers make up 97% of CA firms and 34% of jobs accordingly;
• Private companies bring over 1 million new jobs to the state employment market annually;
• According to Statista, the median household income in the state is $81.575 for 2021 while an average income of a self-employed entity owner is $64.523;
• The minimum wage in a CA small business sector is $15 per hour while an average hourly rate hits $54;
• Professional, scientific, and technical services are the most active industry for the micro-enterprises counting over 700.000 firms;
• The utility sector is the least popular for private firm owners, with only 1700 companies in it;
• The “Leading Employer” title goes to food and accommodation services employing over 1 million out of the total workforce engaged in small business.

Top 10 Small Business Industries in CA

Who Is Behind Small Businesses in CA

• California hugely attracts businessmen from abroad: immigrant entrepreneurs count up to 38% of the total self-employed workforce in the state; 
• Women own 43% of CA private companies;
• 46% of CA workers are females;
• Veterans represent a 4.6% share in the small business sector and 3.5% of the CA workforce;
• Hispanics control over 23% of privately owned entities and make up 37% of employees in the state;
• Females and immigrants as well as racial minorities tend to possess smaller ventures employing less than 50 workers:
  • Women possess as many as 22% of micro-enterprises against only 7% of larger ones;
  • Asians hold 23% of mini firms against only 10% of bigger entities;
  • Latino Americans have an 11% share in small companies against a tiny 2% share in big business.

CA Small Business Formation Stats

• California is the 1st state when it comes to technology, innovation, and access to capital;
• In the meantime, it ranks only 26th taking into account the high cost of doing business;
• U.S. Census Bureau announced that as of September 2022, there were made over 425.000 business formation applications in CA;
• To open a California LLC and keep it compliant afterward, you are required to assign a California registered agent with a real street address in the jurisdiction to timely receive and process your official mail;
• An LLC filing fee in California hits the midground at $85;
• To run your company under a name different from the registered LLC name, you should file a DBA (Doing Business As) and pay a $40 state fee;
• All CA LLCs are exposed to an $800 franchise tax;
• To make commercial transactions in CA, be it retail or wholesale, you’ll have to get a sales permit and pay a 7.25% state sales tax. Most counties will increase that rate by a local tax rate ranging from 0.1% to 1%.

LLCs making a gross income over $250.000 are additionally taxed:

• $250.000 to $499.000 - $900 tax;
• $500.000 to $999.000 - $2.500  tax;
• $1.000.000 to 4.999.999 - $6.000 tax;
• $5.000.000 and more - $11.790 tax. 

References

1. Small Biz Trends
2. US Chamber of Commerce
3. California Small Business Profile 2021
4. California State Assembly Report