Ohio is home to dozens of big-name multinational corporations, skilled residents with a strong work ethic, and an environment that fosters innovation. Whether you are a start-up or an established business looking to expand, Ohio’s business incentives, tax credits, labor force, and stable economy make it the ideal location for your company to grow.
Here are a few small business statistics that shed light on the Buckeye State’s entrepreneurial landscape.
Quick Ohio Small Business Statistics for Entrepreneurs
- Small businesses represent 99.6% of all private enterprises in Ohio.
- Small business employees account for 44.6% of the entire state workforce.
- Military veterans make up 5.3% of workers and own 7.2% of businesses.
- Ohio ranks 10th in CNBC’s 2021 America’s “Top States for Business,” 2nd in cost of doing business, and 7th in access to capital.
- In 2019, small firms in Ohio exported goods worth $10.8 billion.
- Between March 2019 and March 2020, 23,172 Ohio businesses opened and 23,273 closed, resulting in a net loss of 101.
- The state’s per capita disposable income is $48,739.
- Ohio has the seventh largest economy in the United States, with a gross state product (GSP) of $675 billion in 2020, and ranks third in manufacturing gross domestic product (GDP).
- Racial minorities make up 15.7% of workers and own 12.4% of businesses.
- The average per capita consumption expenditure in Ohio is $40,852.
1. What is considered a small business in Ohio?
According to the Small Business Administration (SBA), the definition varies according to industry, number of employees, and total annual revenue. The general description of a small business is a privately owned corporation, partnership, or sole proprietorship that has fewer employees (between 500 and 1,500) and less annual revenue than a corporation or regular-sized business (less than $8 million).
There are currently 982,035 small businesses in Ohio that account for 99.6% of all private enterprises in the state. Ohio accounted for 166,938 of all new business applications filed nationwide between January 2021 and January 2022 (over 5.8 million). However, after adjusting for population, Ohio had 1,428 applications for every 100,000 people, which was lower than the national average and ranked 22nd among states.
Starting a business can be a daunting process, especially for first-time business owners who might not be aware of the regulations and processes involved in acquiring a business license. It is advisable to seek the services of an LLC (limited liability company) formation service. They will handle the business registration on your behalf and will also receive all official communication from the Secretary of State on behalf of your business.
To learn more about the services they offer, read my review of the best LLC services in Ohio.
2. How many people are employed by small businesses in Ohio?
There are 2.2 million Ohioans currently working for small businesses across the state. They represent 44.6% of the entire state workforce. Ohio’s minimum wage will rise to $9.30 per hour in 2022, up from the $8.80 for non-tipped employees. The minimum wage for tipped employees will increase from $4.40 to $4.65 per hour. Employees at businesses with annual gross receipts of more than $342,000 are eligible for the 2022 raise.
3. Ohio 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, a total of 123,879. Approximately 103,170 firms within these sectors are nonemployer businesses, 18,770 have 1–19 employees, and another 1,939 have 20–499 employees.
There are only 528 small businesses invested in the utilities industry. They collectively form the smallest industry in the state.
4. Ohio small business ownership by ethnicity
The state of Ohio has a population of 11,780,017 and an annual population growth of 0.1% over the five years to 2019, which ranks 34th out of all 50 US states. White/Caucasian Americans are the majority, representing 81.7% of the population. They are followed by Black/African Americans (13.1%), Hispanic/Latino Americans (4%), Asians (2.5%), American Indians and Alaska Natives (0.3%), and Native Hawaiians and Other Pacific Islanders (0.1%).
Here’s how small business ownership is distributed among these ethnic groups:
- White/Caucasian — 816,938
- Black/African American — 84,663
- Hispanic/Latino — 20,476
- Asian — 27,822
- American Indian and Alaska Native — 950
- Native Hawaiian and Other Pacific Islander — 300
5. Ohio small business ownership by gender
There are 347,268 small businesses owned by women in Ohio. Close to 315,000 of these firms have no employees, while 32,268 have employees. Men own 546,618 small businesses, 438,000 of which are nonemployer businesses and another 108,618 have employees on payroll.
However, there are 38,392 small businesses that are jointly owned by both men and women.
6. Business taxes in Ohio
LLCs in Ohio are considered pass-through tax entities, which means they do not have to pay federal income tax. However, LLCs must pay Ohio’s commercial activity tax on gross receipts, which is calculated using a small series of marginal rates. If your gross receipts are $150,000 or more, you must pay the tax. The basic minimum tax amount is $150.
Furthermore, an LLC’s net income is distributed to individual LLC members, who must then pay federal and state taxes on the amounts distributed to them.
In some cases, the owners of an LLC may choose to have their business taxed as a corporation. However, because Ohio’s commercial activity tax applies equally to corporations, partnerships, and disregarded entities, your choice in this regard will have no effect on how the state taxes your business.
The state of Ohio requires every business owner to file their tax returns on time. Failure to report your taxes attracts hefty penalties and you may end up losing your practicing license. However, you can set aside these worries simply by hiring a reputable registered agent. Read my review of the best registered agents in Ohio to find out how they can assist you with your tax situation.
7. How COVID-19 affected small businesses in Ohio
Based on the percentage of employees in sectors with a high or medium-high level of exposure to COVID-19, Ohio has the sixth highest economic exposure to COVID-19 (of all states in the US).
In Ohio, 59% of all employees, or 3,649,204 people, work in industries with a high or medium-high level of economic exposure to COVID-19. Also, 59% of all employees, or 3,649,204 people, work in industries with a high or medium-high level of economic exposure to COVID-19.
8. Small business financing in Ohio
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 needs of their communities, including low- and moderate-income neighborhoods, while maintaining safe and sound banking operations.
Large banks are required by the Community Reinvestment Act to report new small business loans. In 2019, reporting banks paid out $2.4 billion in loans to Ohio businesses with less than $1 million in revenue. Total reported new lending to businesses was $2.4 billion for loans of $100,000 or less, and $7.7 billion for loans of $1 million or less.
9. Ohio small business export statistics
In 2019, a total of 16,343 identified firms exported goods totaling $48.7 billion from Ohio. Approximately 14,410 (88.2%) of those exporters were small businesses that exported goods worth $10.8 billion, accounting for 22.1% of all identified firm exports.
The Final Word
Ohio’s low cost of living, limitless business potential, integrated transportation infrastructure, and world-class educational resources make it an ideal place to succeed. While there are numerous factors to consider when relocating your business, those who choose to establish footholds in this Midwestern state can rest assured that they will be met with open doors, professional support, and a plethora of expansive opportunities.
Sources
- IbisWorld
- The Jamestown Sun
- BusinessInsider
- CNBC – Top States for Business
- US Census Bureau
- The Washington Post
- Nolo
- US Small Business Administration
- Mindscope
- Business News Daily
- Patch