According to the WalletHub “Best States to Live In” report, the Garden State has the best quality of life in America. From the gorgeous Jersey Shore to booming cities, New Jersey is the finest location to live because of its dynamic culture, sports, entertainment, culinary scene, and state parks. Furthermore, the best events, restaurants, and museums in New York City and Philadelphia are only a short train ride away.
There are plenty of reasons for entrepreneurs to establish a business in New Jersey, chief among them being the state’s rapid growth and unyielding support for start-ups (especially in the technology industry). Let’s have a look at the state’s small business landscape through the following statistics.
Quick New Jersey Small Business Statistics for Entrepreneurs
- Small businesses account for 99.6% of all businesses in New Jersey.
- Approximately 49.5% of all employees in New Jersey work for small businesses.
- Between March 2019 and March 2020, 32,044 new businesses opened in New Jersey, while 24,660 closed, for a net gain of 7,384.
- Military veterans make up 2.8% of workers and own 4.2% of businesses.
- Women own 39.6% of small businesses.
- The per capita disposable income in New Jersey is $68,236.
- In 2019, small firms exported goods worth $13.7 billion.
- Racial minorities make up 30.9% of workers and own 21.7% of businesses.
- New Jersey’s per capita consumption expenditure is $52,729.
- The 2021 CNBC “Top States for Business” report ranks New Jersey 26th out of 50 states.
New Jersey Small Business Statistics
1. What is considered a small business in New Jersey?
According to the Small Business Administration, a small business is one that is independently owned and controlled, has limited influence in its field, and has fewer than 1,500 workers and an annual turnover of less than $38.5 million.
There are currently 937,436 small businesses in New Jersey that represent 99.6% of all enterprises in the state. New Jersey accounted for 177,506 of all new business applications filed nationwide (roughly 5.8 million) from January 2021 to January 2022, ranking eighth among states. Adjusting for population, New Jersey had 1,998 applications per 100,000 residents, which was more than the national average and ranked 12th highest in new business applications.
Starting a business in New Jersey is a laborious process considering the amount of paperwork to get through. However, you can hire an LLC (limited liability company) formation service that will assist with processing and submitting your registration documents to the Secretary of State on your behalf, leaving you to concentrate on what’s important—your business. Read my review of the best LLC services in New Jersey to learn more.
2. How many people are employed by small businesses in New Jersey?
There are 1.9 million New Jerseyites currently working for small businesses statewide and they account for 49.5% of New Jersey’s paid workforce. New Jersey’s minimum wage increased to $13 per hour for most employees on January 1, 2022, which is $5.75 more than the current federal minimum wage.
High school or college students may be paid $9.35 per hour for part-time work (up to 20 hours per week), tipped employees must be paid $5.13 and total earnings must be greater than or equal to $13 per hour, including tips, and agricultural employees may be paid $10.30 per hour, or 70 cents less than the standard minimum wage.
3. New Jersey small business statistics by industry
The professional, scientific, and technical services sectors collectively account for the largest number of small businesses invested in a single industry, for a total of 149,802. Approximately 123,501 firms within these sectors are nonemployer businesses, 23,974 have 1–19 employees, and another 2,327 have between 20 and 499 employees.
There are only 110 small businesses invested in the mining, quarrying, and oil and gas extraction industries. They collectively form the smallest industry in the state.
4. New Jersey small business ownership by ethnicity
The state of New Jersey has a population of 9,267,130 residents. White/Caucasian Americans represent 71.9% of the population, followed by Hispanic/Latino Americans (20.9%), Black/African Americans (15.1%), Asians (10%), American Indians and Alaska Natives (0.6%), and Native Hawaiian and Other Pacific Islanders (0.1%).
Below is a breakdown of how small business ownership is distributed among these races:
- White/Caucasian — 685,291
- Hispanic/Latino — 120,938
- Asian — 103,125
- Black/African American — 82,136
- American Indian and Alaska Native — 1,500
- Native Hawaiian and Other Pacific Islander — 632
5. New Jersey small business ownership by gender
Women own 300,130 small businesses in Michigan. Around 266,000 of these firms are nonemployer businesses, while 34,130 have employees. Men own 528,705 small businesses, 405,000 of which are nonemployer businesses, while 123,705 have employees.
There are also 45,818 small businesses in the state that are owned by both men and women.
6. Business taxes in New Jersey
Standard LLCs in New Jersey are considered pass-through entities for tax purposes, which means they do not have to pay income taxes to the federal government or the state of New Jersey. Instead, corporate revenue is dispersed to individual LLC members, who pay federal and state taxes on the amount paid to them in wages.
However, you might choose to have your LLC designated as a corporation. In that instance, the LLC would be liable to the corporation business tax in New Jersey. The state’s top corporate income tax rate is 10.5%. The Tax Foundation’s State Business Tax Climate Index Ranking places New Jersey dead last at 50th out of 50 states.
New Jersey has very stringent tax regulations that attract hefty penalties when broken. However, you don’t have to worry about missing your tax filing dates. All you need to do is find a registered agent.
They’ll send constant notifications to remind you of your legal obligations to the Secretary of State’s office and will even assist with your tax filing process. To find out which company is best for you, read my review of the best registered agents in New Jersey.
7. Small business financing in New Jersey
The Community Reinvestment Act (CRA) is a federal law passed in 1977 that encourages banks and other depository institutions to assist in meeting the credit requirements of local communities, especially low- and moderate-income neighborhoods, while maintaining safe banking operations.
Many interactions between financial institutions and community development groups are guided by the CRA.
Large banks are required by the CRA to disclose new small business loans. In 2019, reporting banks paid out $2.6 billion in loans to New Jersey firms with $1 million or less in revenue. Total reported new lending to companies was $3.6 billion for loans of $100,000 or less, while total reported new lending to businesses for loans of $1 million or less was $8.4 billion.
8. How COVID-19 affected small businesses in New Jersey
Based on the percentage of employees in sectors with a high or medium-high degree of exposure to COVID-19, New Jersey has the 16th largest economic exposure to COVID-19 of all states in the US.
In New Jersey, 53% of all employees, or 2,574,634 people, work in industries with a high or medium-high degree of economic exposure to COVID-19. Also, 1% of all employees in New Jersey, or 44,899 people, work in industries with a low or medium-low degree of economic exposure to COVID-19.
9. New Jersey small business export statistics
In 2019, a total of 20,619 identified enterprises exported items totaling $32.3 billion from New Jersey. Small businesses accounted for 18,887 (or 91.6%) of those exporters, having shipped items worth $13.7 billion, representing 42.6% of all identified company exports.
The Final Word
New Jersey provides businesses with access to one of the world’s most concentrated and affluent consumer markets. With a population of 56.5 million people and $3.75 trillion in economic production, the state is positioned in the heart of the Boston–New York City–Washington, D.C. region.
Within a two-hour commute, a business in central New Jersey can reach more than 38 million customers. Within a day’s travel of any point in the state, you may reach 33% of the US population.
Sources
- US Small Business Administration
- Tax Foundation
- Nolo
- US Census Bureau
- Square Up
- The New Jersey Center Square
- US Chamber of Commerce
- WalletHub
- Nerd Wallet
- CNBC Top States for Business
- IbisWorld
- ChooseNJ