New business applications reached a 15-year high in 2020, according to data from the Census Bureau. Online retailers made up almost a quarter of all new business applications in 2020, nearly tripling in amount. But only 30% of new retailers were considered likely to succeed and create jobs. Other industries such as food service and health care had the highest rates of potential success at 99%.


What types of new businesses are applying?

Of the 500,000 new business applications, about 10% were from a corporation, which the IRS designates as a business with shareholders. The Census Bureau considered the other 90% of new businesses to be a small business. The definition of a small business varies among government agencies and industries. The Census uses the IRS definition, which generally includes any business with less than $10 million in assets.


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New business applications are also categorized by potential earnings and planned wages. About one-third of June applications were considered “high propensity.” High propensity means that the business is likely to have a payroll, according to the Bureau of Labor Statistics. Payroll is a sign the business is likely to succeed and create jobs.

How do new business applications affect employment?

While retail had the largest amount of total business applications, about 30% of those were designated as “high propensity,” meaning they were likely to succeed and create new jobs. Ninety percent of all online retail businesses were non-employers, according to a 2018 Census Bureau report. Accommodations and food service had the largest amount of high propensity applications, with 99% designated as likely to succeed and create jobs. Food service also had the highest percentage of open jobs last month, according to the BLS job openings survey.


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Page sources and methodology

All of the data on the page was sourced directly from government agencies. The analysis and final review was performed by USAFacts.

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