The United States has always been regarded as the land of opportunity. Small businesses have been the backbone of the U.S. economy for many years. Most businesses that are started begin with someone’s dream, a lifelong ambition, which then turns into a small business.

California is certainly no stranger to small businesses; in fact, it ranks 1st in the U.S. for the most number of small businesses in the state by a country mile.

The Golden State is considered to be America’s economic foundation. Over the past several years, it has been consistently voted as one of the top states for business due to the government’s pro-business approach, the largest civilian workforce in the country, high quality of life, and lofty salaries, especially when compared with the metrics throughout the rest of the U.S.

Number of Small Businesses in California

So, how many small businesses are there in California? There are 4,131,508  (4.1 million) small businesses in California, according to the latest figures (2020) from the SBA.

It is not just Americans and Californians starting small businesses in California; the state is a huge draw for international entrepreneurs. In 2018, there were 936,795 immigrant entrepreneurs in California that account for 38% of all self-employed California residents.

The following bar graph shows the number of small businesses in California in 2016, 2017, 2018, 2019, and 2020.

How many small businesses in California

Of the 4,131,508 small businesses in California in 2020, there is a wide array of different enterprises from small, one-person sole proprietorships or LLCs to much larger businesses with several hundred employees. If you want to join the 4.1 million-plus small businesses in California, it is fairly easy to register a business in California.

To be a small business in California, you have to qualify as one. Classification for a small business in California is a company with less than 500 employees.

Let’s take a deeper dive into the number of small businesses in California by looking at the top industry employers, the number of jobs added, how many export businesses there are, and more!

Small Businesses in California 2020 overview

  • Small businesses equate to over 99.8% of all businesses in California.
  • There are 7,224,945 small business employees in California, which is 48.5% of the states’ employees.
  • In 2019, Small Businesses in California added 214,569 new jobs!
  • Small businesses employing fewer than 20 employees created the most job gains!
  • There are over 1.2 million self-employed minorities in California demonstrating the diversity in the state.
  • International trade is huge for many businesses, and there are 68,022 small business exporters in California.
  • There are more professional, scientific & technical services small businesses in California than any other type – 681,977.
  • Transportation and Warehousing firms make up the 2nd largest number of small businesses in California – 379,360.

Top 5 small business industries in California

How Many Small Businesses in California?

Over 4.1 million is a lot of small businesses to be registered in any one state, however, California is by far the largest, boasting an economy larger than the entire United Kingdom! When compared with the rest of the U.S., the total number of small businesses in California represents 13% of all U.S. businesses. There are a total of 31.7 million small businesses in the U.S.

The number of small businesses in California has been growing over the past several years. In 2017 there were 3,836,149 small businesses, which increased to 3,941,201 in 2018, representing a 2.73% increase. In 2019 there were 4,023,206 small businesses in California, 82,005 more than the state had in 2018, representing a 2.08% increase.

From 2019 to 2020, the number of small businesses in California rose again, to 4,131,508. This is the third-largest increase in percentage terms over the past five years (2.69%) and highlights why California is the world’s 5th largest economy.

We hope this information is useful for those that may be interested in starting a company in California, marketing your company to other small businesses in the Golden State, or expanding your business in the state.

There is so much California has to offer employers and employees alike, with an abundance of resources and help for companies and entrepreneurs to either kick start or help develop and expand small businesses. So many people move to California every year due to its brilliant infrastructure, access to some of the biggest consumer markets in the world, international access by land, sea, and air, a good import/export market, and access to many skilled and highly educated workers.

If you would like to download the latest 2020 Small Business Profile on California from the U.S. Small Business Administration, Office of Advocacy, the Profile can be downloaded here.

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