California Small Business Statistics

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Last updated November 21, 2022
Written by Dmytro Kondratiev
Editor, lawyer
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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

Industry Company Count
Professional, scientific, and technical services713.315
Other services (excluding public administration)449.039
Transportation and warehousing427.382
Real estate, rental, and leasing385.783
Healthcare and social services371.357
Administrative, support, and waste management334.404
Construction315.384
Retail trade314.289
Entertainment and recreation258.526
Accommodation and food services126.890

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