Small Business Statistics (2026)

A data analysis of how many US small businesses exist, how long they last, how they use software and AI, and where their time and money leak, built from SBA, Census, BLS, Federal Reserve, and vendor research.

There are 36,207,130 small businesses in the United States, 99.9% of all firms, according to the SBA Office of Advocacy, using 2022 Census data. They employ 62.3 million people, or 45.9% of the private workforce. Yet only 49.2% of new establishments survive five years, per the same Advocacy analysis of BLS data. Below are the base numbers first, then how small firms actually use software, AI, and security tools. To compare the tools we rate for lean teams, browse the tools8020 directory.

Key takeaways

• 36.2 million small businesses operate in the US, 99.9% of all firms, and 82.3% of them have no employees, per the SBA Office of Advocacy
• Small businesses employ 45.9% of private-sector workers (62.3 million people) and created 61% of net new jobs from 1995 to 2024 (SBA Advocacy)
• 531,728 business applications were filed in August 2026 alone, seasonally adjusted, per the Census Bureau
• About half of new establishments reach year five: 49.2% on average from 1994 to 2022 (SBA Advocacy) and 51.4% for the cohort born in the year to March 2020 (BLS)
• AI adoption ranges from 18% to 77% depending on who asks and how, from the Census Bureau at the low end to Intuit QuickBooks at the high end
• Only 7% of AI-using employer firms have fully integrated AI, while 49% are still experimenting, per the Federal Reserve Banks
• Firms using 2 to 3 technologies reported sales growth most often (86%), ahead of firms using 6 or more (82%), per the U.S. Chamber of Commerce
• Ransomware featured in 88% of SMB breaches, versus 39% at larger organizations, in Verizon’s 2025 DBIR
• Federal paperwork cost small businesses over $81 billion in 2025, and more than 80% of that burden came from the IRS (SBA Advocacy)

How many small businesses are there in the US?

The US has 36,207,130 small businesses, defined as independent firms with fewer than 500 employees, per the SBA Office of Advocacy’s February 2026 FAQ. That is 99.9% of all firms, against just 21,041 large businesses. The count draws on 2022 Census data, the latest the agency had available.

1. 82.3% of small businesses, or 29,811,495 firms, have no employees, per SBA Advocacy. The other 17.7% (6,395,635 firms) carry payroll. The typical American small business has no payroll at all, which is why tools built for solopreneurs matter more than enterprise seat packs.
2. Nonemployer firms nearly doubled, from 15.4 million in 1997 to 29.8 million in 2022 (SBA Advocacy). Most of the growth in the business count comes from self-employment.
3. Among small employers, 5,720,093 firms have 1 to 19 employees and 654,501 have 20 to 499, per Advocacy’s 2025 Small Business Profile for the United States.
4. Professional, scientific, and technical services is the largest small-business sector, with 4,881,738 firms (SBA Advocacy profile).
5. Women owned 14 million businesses in 2022, 40.4% of all classifiable businesses (SBA Advocacy). Minority-owned businesses totaled 13 million.
6. Veterans owned 1.7 million businesses in 2022, 4.8% of the total (SBA Advocacy).
7. 26.1% of employer firms were family-owned in 2022 (SBA Advocacy). Family-owned firms averaged 15 employees, against 11 for other firms.

Which industries have the most small businesses?

Source: SBA Office of Advocacy, 2025 Small Business Profile: United States, from Census Nonemployer Statistics and Statistics of U.S. Businesses, 2022 data. The profile’s all-industry total differs slightly from the FAQ’s 36,207,130; each is shown as published.

How much of the US economy do small businesses account for?

Small businesses employ 62.3 million people, 45.9% of private-sector workers, per the SBA Office of Advocacy. They also created 61% of net new jobs between 1995 and 2024. The two shares differ because a firm that grows past 500 employees is reclassified as large, and its later gains count as large-firm jobs.

8. Small businesses created 20.7 million net new jobs from January 1995 to December 2024, versus 13.2 million at large businesses (SBA Advocacy).
9. Small firms account for 38.7% of private-sector payroll ($3.5 trillion) and 35.0% of private-sector receipts ($17.8 trillion) (SBA Advocacy). They employ 45.9% of the workforce but take in 35.0% of receipts, so software priced for big-company budgets weighs heavier on them.
10. Small businesses produce 43.5% of US GDP, per SBA Advocacy. The FAQ sources it to Advocacy’s 1998-2014 small business GDP series, so treat it as dated.
11. 97.2% of US exporters are small (270,014 firms), and they ship 33.0% of known export value, or $588.4 billion (SBA Advocacy).
12. From March 2023 to March 2024, small businesses added a net 1.2 million jobs, 88.9% of the national net gain (SBA Advocacy profile, BLS data).
13. Over 15 million jobs were lost between Q1 and Q2 2020, and 9.1 million of them were at small businesses (SBA Advocacy). Small employers recovered those jobs by Q3 2022 and added 1.6 million more.
14. Rural areas hold 4.3 million small business establishments, which account for 56.6% of rural employment, versus 47.5% in metropolitan areas (SBA Advocacy, 2022 data).

How many new businesses start each year?

Americans filed 531,728 business applications in August 2026, seasonally adjusted, per the Census Bureau’s Business Formation Statistics, down 7.8% from July. On the establishment side, about 1.3 million establishments opened for the first time in 2023 while about 1.2 million closed permanently, per the SBA Office of Advocacy.

15. 145,387 of August’s applications were “high-propensity,” and 34,263 listed planned wages (Census). High-propensity applications are the ones Census expects to turn into payroll businesses.
16. Census projects 28,501 new employer businesses will form within four quarters from August 2026 applications (Census). The gap between 531,728 applications and 28,501 projected employers shows how few filings turn into payroll businesses within a year.
17. Retail trade led all sectors with 104,087 applications in August 2026, followed by professional services at 80,691 (Census). Retail filings also swung the most, down 26.0% from July.
18. Startups made up 14.2% of business establishments in 2023, up from 12.5% in 2019 (SBA Advocacy).
19. 1,049,106 new private-sector establishments opened in the year to March 2023, and 988,310 in the year to March 2024, per BLS Business Employment Dynamics. These counts cover all private establishments, so they include new locations of larger firms.

If you are in this cohort, our guide for founders and startup stacks cover the short list of tools a new business needs on day one.

What is the small business survival rate?

About half of new US establishments survive five years. The SBA Office of Advocacy puts the 1994-2022 average five-year survival rate at 49.2%, and BLS data show 51.4% of establishments born in the year to March 2020 still operating in March 2025. By year ten, about a third remain.

20. 77.9% of establishments born in the year to March 2024 survived their first year (BLS). The cohort born in the year to March 2021 posted 79.1%. In every recent cohort, year one is the steepest drop.
21. The average two-year survival rate was 67.7% from 1994 to 2022 (SBA Advocacy). The cohort born in the year to March 2023 came in at 65.9% (BLS).
22. 33.9% of new establishments survive ten years on average (SBA Advocacy), and 34.7% of the cohort born in the year to March 2015 were still open in March 2025 (BLS).
23. 25.5% of new establishments reach fifteen years (1994-2022 average, SBA Advocacy).
24. Survival odds rise with age: 69.5% of establishments that reach year five also reach year ten, and 76.1% of ten-year survivors reach year fifteen (SBA Advocacy). The hard part is the start.
25. The pandemic-era cohort held up: 52.4% of establishments born in the year to March 2021 were still open four years later (BLS).

Sources: SBA Office of Advocacy FAQ, February 2026 (BLS Business Employment Dynamics); BLS Business Employment Dynamics, Table 7. Both measure private establishments, not only small firms.

The failure rate is front-loaded. A business that clears its first two years has far better odds than one that just opened, so the decisions that matter most, including which tools to pay for, happen when cash is tightest.

How do small businesses use technology and software?

99% of small businesses use at least one technology platform, up from 93% in 2022, according to the U.S. Chamber of Commerce’s 2025 Empowering Small Business report, a Teneo survey of 3,870 firms with fewer than 250 employees. 58% use four or more platforms, and nearly a third run six or more.

26. Search engines (46%), generative AI chatbots (44%), and social media (42%) are the most-used technologies at work (Chamber). Generative AI ranked fifth a year earlier.
27. 35% use financial management tools such as QuickBooks, and 30% use recruiting tools (Chamber). For the market behind that number, see our accounting software statistics.
28. Firms using 2 to 3 technologies reported sales growth most often: 86%, versus 84% for 4 to 5 technologies and 82% for 6 or more (Chamber). Low adopters using 0 to 1 technologies trailed at 77%. The Chamber reads this as proof that tech adopters outperform, and the jump from none to a few tools is real. The data do not show that more tools keep adding growth.
29. 75% say their business would struggle to survive without technology platforms (Chamber).
30. 84% plan to increase their use of technology platforms (Chamber). Intent is high, which makes choosing well more important than choosing more.
31. 29% of employer firms named “utilizing technology” as an operational challenge, a category covering e-commerce, cybersecurity, social media, and website issues, per the Federal Reserve Banks’ Small Business Credit Survey. Only reaching customers (57%), hiring (46%), and supply chains (30%) ranked higher. Our website builder statistics cover the website side of that problem.

How many small businesses use AI?

Between 18% and 77% of small businesses use AI, depending on the survey. The Census Bureau finds 18% of firms with 1 to 4 employees used AI in a business function over two weeks. The Federal Reserve Banks put employer firms at 46%, and Intuit QuickBooks reports 77% regular use.

32. The national Census AI use rate was 19.8% as of May 3, 2026, and 20% to 23% of businesses expected to use AI within six months (Census). This is the Business Trends and Outlook Survey (BTOS), a biweekly, nationally representative sample.
33. 37% of firms with 250 or more employees used AI, while less than 20% of firms with four or fewer employees did (Census). From December 2025 to May 2026, use rose at firms with 20 or more employees but did not change significantly below that size.
34. The smallest firms expect little growth: 1 to 4 employee firms project about 21% use in six months versus 18% now, while firms with 250 or more employees project 40% versus 31% (Census working paper, November 2025 to January 2026). The size gap is set to widen.
35. Measured the old way, adoption looked far lower: 7.6% of businesses used AI between September 2024 and August 2025 (SBA Advocacy), including 8.2% of firms with fewer than five employees and 11.4% of firms with more than 250. In November 2025, Census changed the question from AI use “in producing goods or services” to use “in any business function” (Census).
36. 58% of small businesses say they use generative AI, up from 40% in 2024 and 23% in 2023 (Chamber).
37. 46% of employer firms say the business or its employees use AI, 15% plan to start within 12 months, and 33% have no plans (Federal Reserve Banks).
38. Regular AI use among Intuit’s US respondents climbed from 48% in July 2024 to 77% by January 2026 (Intuit QuickBooks). This is vendor research, and it counts monthly, weekly, or daily use of any AI, including features inside existing tools.

Sources: Census CES working paper 26-25; Federal Reserve Banks, 2026 Report on Employer Firms; U.S. Chamber of Commerce, 2025; Intuit QuickBooks 2026 AI Impact Report.

The gap is mostly about definitions. Census samples every kind of firm and asks about formal use over the past two weeks, while the Chamber and Intuit survey owners online and count casual chatbot use. Most small firms have tried AI, and a minority have built work around it. For the picture across company sizes, see our digital transformation statistics.

What do small businesses use AI for, and what holds them back?

Small firms use AI mostly for writing and marketing. Among AI-using employer firms, 83% use it for writing or marketing, 61% for individual productivity, and 51% for planning or analysis, per the Federal Reserve Banks. Only 7% have fully integrated AI into the business, and 49% are still experimenting.

39. 44% of AI users have partially integrated AI into some business processes (Federal Reserve Banks). Combined with the 49% still experimenting, full integration remains rare.
40. 71% of AI users say it raised productivity, 39% saw better quality, and 31% saw higher sales (Federal Reserve Banks). On labor costs, 77% saw no change (full report).
41. Accuracy (46%) and adapting tools to business needs (43%) are the top challenges for current users (Federal Reserve Banks). For firms planning to start, finding tools that fit (54%) and the time to implement or train staff (37%) lead the list.
42. “Not applicable to my business” is the top reason small firms skip AI: 56% of employer firms with no plans cite it (Federal Reserve Banks), and 65% of firms not planning near-term AI use say the same in the Census BTOS supplement. In the Fed survey, 30% simply prefer not to use it.
43. Privacy and security concerns (36%), limited knowledge of AI (28%), and fear of bias or errors (26%) are the top US barriers in Intuit’s January 2026 survey (Intuit QuickBooks). Cost ranks fourth.
44. 63% of AI-using small businesses rely mostly or entirely on AI tools built by other companies, and 8% build their own (Chamber). For small firms, AI is something you buy inside software, not something you build.
45. Marketing (45%), customer service (37%), and bookkeeping (35%) are the top AI tasks in Intuit’s latest US data (Intuit QuickBooks). Intuit attributes bookkeeping’s rise to AI already embedded in everyday tools.

How much do small businesses spend on software and AI?

We found no current government figure for small-business software spending, so payment data gives the clearest signal. 12% of US businesses on QuickBooks paid for a standalone AI subscription at least once between 2021 and 2025, per Intuit’s 2026 AI Impact Report. That compares with 77% of its US survey respondents reporting regular AI use.

46. 86% of US businesses that paid for AI tools in 2024 were still paying in 2025 (Intuit QuickBooks). Once a tool earns a budget line, it tends to keep it.
47. Cost is a secondary AI barrier: 21% of current AI users and 32% of firms planning to adopt cite it (Federal Reserve Banks). Among firms with no AI plans, 13% name cost.
48. About 50% of small firms using AI reported making no investment in it, versus 40% of large firms (SBA Advocacy, BTOS supplement data from late 2023 and early 2024). Small firms lag furthest on staff training.
49. 29% of US AI users say AI lowered their costs, versus 17% who say costs rose (Intuit QuickBooks, January 2026). The net effect is positive but not universal.

The pattern is clear even without a spending total: wide free use, narrow paid commitment, and sticky renewals. For per-employee SaaS budgets and waste across all company sizes, see our SaaS spend statistics.

How exposed are small businesses to cyberattacks?

Small firms are a prime ransomware target. In Verizon’s 2025 Data Breach Investigations Report, ransomware was part of 88% of breaches at small and medium-sized businesses, versus 39% at larger organizations. The 2026 edition logged 7,152 confirmed SMB breaches, all by external, financially motivated attackers.

50. Exploited vulnerabilities were the top way into SMBs (26% of breaches), ahead of credential abuse (13%) and phishing (9%) (Verizon 2026 DBIR). Unpatched software is now a wider door than stolen passwords.
51. 55% of SMB breaches involved a third party, and 45% involved a human element (Verizon). Every vendor and app with access to your data widens the attack surface, a direct cost of a sprawling stack.
52. Credentials were among the data compromised in 31% of SMB breaches (Verizon). A password manager and MFA remain the cheapest defenses.
53. In the worst 2.5% of cases, breach losses topped 7% of an SMB’s revenue (Verizon SMB infographic, from about 70,000 cyber insurance claims).
54. Business email compromise drew 24,768 FBI complaints and $3,046,598,558 in reported losses in 2025 (FBI IC3). BEC targets businesses that regularly pay suppliers by wire, and the figure covers all victims, not only small firms.
55. Only 25% of small businesses use virus detection and cybersecurity tools, and 24% use technology to manage cybersecurity (Chamber). Security tools trail search, AI chatbots, and social media by a wide margin.

For the full breach picture across company sizes, see our cybersecurity statistics.

How much time and money do small businesses lose to admin?

Federal paperwork alone cost small businesses over $81 billion in 2025, per the SBA Office of Advocacy, and more than 80% of that burden came from the IRS. For every $1 of paperwork cost, small businesses generate $265 in revenue, while large businesses generate $572.

56. IRS collections account for $66,037 million of the paperwork cost tracked for small firms (SBA Advocacy). Tax records are the single largest admin load, which is the strongest case for clean accounting software.
57. 25% of employer firms said complying with government regulations was an operational challenge (Federal Reserve Banks).
58. 50% of employer firms reported uneven cash flow, and 54% struggled to pay operating expenses (Federal Reserve Banks). 73% faced higher costs for goods, services, or wages.
59. 59% of small businesses have invoices overdue by 30 days or more, up from 47% a year earlier (Intuit QuickBooks). The money waiting to come in averages $17.7K per business.
60. 39% of owners say a single late payment made it hard to cover payroll or bills in the past year (Intuit QuickBooks). Invoicing and reminders are admin work with a direct cash payoff.
61. 27% of US AI users say AI shortened their workday, versus 8% who say it got longer (Intuit QuickBooks, January 2026). AI gives time back to about a quarter of users so far, not most.

What to do with this data

• Start with the work that eats the most hours. IRS requirements drive over 80% of the small-business paperwork burden (SBA Advocacy). Pick one system from our accounting category, such as QuickBooks, and run invoicing and bookkeeping through it.
• Stop at a small, well-chosen stack. In the Chamber’s data, sales growth peaked at 2 to 3 technologies (86%) and did not rise with 6 or more (Chamber). Add a tool only when a real job is going undone.
• Treat AI as a feature, not a project. Only 7% of AI users are fully integrated (Federal Reserve Banks), and 63% rely on tools built by others. Favor software you already pay for that has AI built in.
• Patch and lock down before you add. Vulnerabilities opened 26% of SMB breaches and credentials leaked in 31% (Verizon). Fewer apps means fewer things to patch and fewer vendors with access.
• Automate getting paid. With 59% of firms carrying invoices 30+ days overdue (Intuit QuickBooks), automatic reminders are the fastest admin win.

Compare our picks in the tools8020 directory, and see how we score tools before you buy.

Frequently asked questions

How many small businesses are there in the US?

There are 36,207,130 small businesses in the US, 99.9% of all firms, per the SBA Office of Advocacy, based on 2022 Census data. Of those, 82.3% (29,811,495) have no employees and 17.7% (6,395,635) have paid staff. Only 21,041 US firms count as large businesses.

What percentage of small businesses fail in the first year?

In the latest BLS data, 77.9% of new establishments survived their first year, and the rest closed. That covers establishments born in the year to March 2024 and measured in March 2025, per BLS Business Employment Dynamics. The prior cohorts measured the same way posted similar first-year results.

What is the five-year survival rate for small businesses?

About half. The SBA Office of Advocacy puts the 1994-2022 average at 49.2%, and BLS shows 51.4% of establishments born in the year to March 2020 still open in March 2025. The ten-year rate is 33.9% on average, and survival odds improve the longer a business lasts.

What percentage of the US workforce works for small businesses?

Small businesses employ 62.3 million people, 45.9% of private-sector employees, per the SBA Office of Advocacy. They also created 61% of net new jobs from 1995 to 2024, or 20.7 million jobs versus 13.2 million at large businesses, and they account for 38.7% of private-sector payroll.

How many small businesses use AI in 2026?

Estimates range from 18% to 77%. The Census Bureau finds 18% of the smallest firms used AI in a business function, the Federal Reserve Banks report 46% of employer firms, and Intuit QuickBooks reports 77% regular use among US respondents. The spread comes from different definitions of use.

What is the biggest cybersecurity threat to small businesses?

Ransomware. Verizon’s 2025 DBIR found ransomware in 88% of SMB breaches, versus 39% at larger organizations. In the 2026 DBIR, exploited vulnerabilities were the top entry point into SMBs at 26% of breaches, ahead of credential abuse at 13% and phishing at 9%.

How much does paperwork cost small businesses?

Federal paperwork cost small businesses over $81 billion in 2025, per the SBA Office of Advocacy, and over 80% of that burden came from the IRS. Small firms generate $265 in revenue per $1 of paperwork cost, against $572 for large businesses.

How we compiled these statistics

We drew on 15 primary sources: the SBA Office of Advocacy, the Census Bureau, the Bureau of Labor Statistics, the Federal Reserve Banks, the U.S. Chamber of Commerce, Verizon, the FBI, and Intuit QuickBooks, whose research we label as vendor research. Every figure was retrieved from the publisher’s own page or PDF in October 2026. We omitted figures we could not trace to a primary source, and where surveys disagree, as on AI adoption, we show the range and explain the definitions.

Sources

• SBA Office of Advocacy: Frequently Asked Questions About Small Business (2026)
• SBA Office of Advocacy: 2025 Small Business Profile, United States (2025)
• SBA Office of Advocacy: AI in Business, Small Firms Closing In (2025)
• U.S. Census Bureau: Business Formation Statistics, August 2026 release (2026)
• U.S. Census Bureau: Large Firms With at Least 20 Employees Biggest AI Users (2026)
• U.S. Census Bureau CES: The Microstructure of AI Diffusion, Working Paper 26-25 (2026)
• Bureau of Labor Statistics: Business Employment Dynamics, Survival of Private Sector Establishments by Opening Year (2025)
• Federal Reserve Banks: 2026 Report on Employer Firms, Small Business Credit Survey (2026)
• Federal Reserve Banks: 2026 Report on Employer Firms, full report PDF (2026)
• U.S. Chamber of Commerce C_TEC: Empowering Small Business, The Impact of Technology on U.S. Small Business (2025)
• Intuit QuickBooks: 2026 AI Impact Report (2026)
• Intuit QuickBooks: 2026 Small Business Late Payments Report (2026)
• Verizon: 2026 Data Breach Investigations Report, Executive Summary (2026)
• Verizon: Cybersecurity Insights for SMBs, 2026 DBIR and Breach Impact Study (2026)
• Verizon: 2025 Data Breach Investigations Report (2025)
• FBI Internet Crime Complaint Center: 2025 Internet Crime Report (2026)