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Most people working in Vermont are in the service sector, as it accounts for most of the employment in the state. However, recent years have also witnessed growth in the manufacturing and agricultural sectors, further boosting the state’s economy.
Many manufacturers have focused on plastics, defense, precision instruments, and natural resources. On the other hand, those in the agricultural sectors have leaned on dairy farming for the most part, with many focusing on cheese production. This culmination of industries has helped the state boost its revenue growth in the past decade.
Interestingly, much of this growth has stemmed from cottage industries in the state, otherwise known as small businesses (SMEs). Many people run companies from their homes, garages, or small shops.
Some of these shops take on a small to moderate scale, while others expand so much that they grow as household names. We look at the small business statistics in the state and what they could spell for aspiring entrepreneurs:
Vermont, the Green Mountain State, is a haven for cottage industries. As such, the following statistics do not come as a shock:
99% of all businesses operating in Vermont are SMEs. According to a 2021 Statistics of U.S. Businesses census, 79,189 small businesses operate in Vermont;
Per the SBA standards, SMEs have fewer than 500 people in employment and generate less than $7.5 million annually;
According to the 2021 census, Vermont had 1,304 SME applications per every 100,000 residents in the state. It ranked 17th among other states regarding small business applications;
The state’s GDP as of 2019 was 48,855 in chained 2012 U.S. dollars. It’s been on a steady growth rate from 2000 when it stood at 37,765 in chained 2012 U.S. dollars;
According to a report by Statista, the 2019 rate was the highest the state had achieved since 2000;
2,040 small businesses were opened between 2019 and 2020, accounting for 4,534 of the expansions during the period. At the same time, the employment levels expanded by 4,632;
Small businesses in the state account for most of the employment in Vermont. Between 2019 and 2020, the new small businesses generated 19,459 job opportunities. Additionally, the expanding small businesses accounted for an additional 13,103 jobs in the state;
Access to loans in Vermont for the cottage industries is on the rise. In 2019 alone, banks issued loans worth $468.3 million to SMEs, which needed $1 million or less;
They also allocated $172.7 million in loans to SMEs that required $100,000 or less. Cottage industries generating $1 million or less received $170.8 million in debt;
The per capita disposable income in the state stands at $54,173, while the per capita consumption expenditure is at $49,950;
A whopping 62,027 of the 79,189 SMEs operating in Vermont do not hire employees. 15,305 others have 1-19 employees, while 1,857 have 20-499 employees;
Small businesses in the state account for 60.6% (158,228 people) of the total employment in the state;
Most of these employees gain meaningful work in the construction, retail trade, professional, healthcare, accommodation, and administrative sectors;
The minimum wage in the state stands at $12.55, having been revised in 2021 owing to an increment of $0.80;
Business owners running incorporated businesses make a median income of $45,819, which is $22,884 higher than what those running unincorporated firms generate;
Tax rates on personal income range between 3.55% and 8.95%.
Which Industries Have the Most Cottage Businesses?
Of the 79,189 SMEs operating in Vermont, professional, scientific, and technical services have the largest share. There are 11,523 businesses of this nature, while construction comes second with 11,491 businesses;
The other 8 industries in the top 10 rankings are as follows:
Retail trade - 7,194;
Other services (save for public administration) - 7,169;
The export sector in the state accounted for 951 (86.2%) of the 1,0103 firms exporting goods from the state in 2019. They generated $515 million, accounting for 18% of the value of the exports in that year;
Management companies account for 36 of SMEs in the state, while mining, quarrying, and related industries account for 77.
Running an LLC (limited liability company) aids business owners in bypassing the income tax to the state and federal governments. They share the profits of the business and pay taxes from these amounts;
Companies can also choose to be treated as corporations, thus subjecting them to corporate income taxes;
All business owners who want to open an LLC must file Articles of Organization with the Secretary of State. Doing so costs a non-refundable filing fee of $125. By relying on a business formation company, you can avoid filing the paperwork again;
Businesses in the state are subject to a business entity tax of $250;
Those opening LLCs should designate a registered agent to aid communication between the state and the business. Hiring a reputable agent ensures that business owners do not miss out on tax or any legal deadlines that could result in fines and penalties;
Registered agents must have a physical address in the state, be available during office hours, and be at least 18 years old, or be companies incorporated in the state.