Pennsylvania is the sixth largest economy in the United States, with a GSP (gross state product) of $815 billion and home to 50 of the top 1,000 publicly traded corporations in terms of revenues.
Businesses in the Keystone State can take advantage of the highly talented and available workforce by partnering with top-tier schools such as Swarthmore, Haverford, and the University of Pennsylvania. In addition, the state’s good business climate and low cost of living have attracted a large number of entrepreneurs from neighboring states.
Pennsylvania is nestled between several of America’s most populous locations. Cities such as New York, Washington, DC, Baltimore, and Cleveland are all easily accessible, and customers from across these areas are able to easily travel to Pennsylvania, thereby benefiting small businesses throughout the state
Here are a few statistics that shed light on the Quaker State’s small business landscape.
Quick Pennsylvania Small Business Statistics for Entrepreneurs
- Small businesses account for 99.6% of all private enterprises in Pennsylvania.
- 46.3% of all Pennsylvania employees work for small businesses.
- Racial minorities make up 16.6% of workers and own 12.1% of businesses.
- Women in Pennsylvania own 39.4% of small businesses.
- Military veterans make up 4.9% of workers and own 6.3% of businesses.
- The per capita disposable income in Pennsylvania is $56,225.
- Between March 2019 and March 2020, 28,383 new businesses opened in Pennsylvania, while 31,609 closed, for a net decrease of 3,226.
- Small businesses exported goods worth $12.5 billion in 2019.
- Pennsylvania’s per capita consumption expenditure is $44,805.
- According to the 2021 CNBC “Top States for Business” report, Pennsylvania ranks 23rd out of the 50 states.
Pennsylvania Small Business Statistics
1. What is considered a small business in Pennsylvania?
According to the Small Business Administration, a small business is generally defined as a corporation, limited liability company, partnership, or other business entity with fewer than 500 employees and an annual revenue of less than $8 million. Currently, there are 355,596 small businesses in Pennsylvania that represent 99.4% of all private enterprises in the state.
Pennsylvania accounted for 170,934 of all new business applications submitted nationwide between January 2021 and January 2022 (5.8 million), ranking ninth among states. However, when adjusting for population, Pennsylvania had 1,335 applications per 100,000 residents, which was lower than the national average, and ranked 31st among states.
Hiring an LLC (limited liability company) formation service will take the hassle out of your business registration process. To find out which company is the best, read my review of the best LLC services in Pennsylvania.
2. How many people are employed by small businesses in Pennsylvania?
There are approximately 2.5 million Pennamites—yes, that’s really another way to say Pennsylvanian—employed by small businesses in the state. They represent 46.3% of all employees in the state.
Unless you work for the state, the minimum wage in Pennsylvania is $7.25, which is the same as the federally mandated minimum. The minimum wage hasn’t changed since 2009, when it was increased by $0.10 due to a federal increase.
Tipped employees who earn more than $30 in tips per month must be paid a minimum of $2.83 per hour, and this amount plus tips must equal at least the state minimum wage. Also, if they work 20 or fewer hours per week, full-time high school and college students can be paid 85% of the Pennsylvania minimum wage (and up to 40 hours during school vacation periods).
Pennsylvania’s unemployment rate is 5.1%, which is higher than the national rate of 3.8%. The state’s high unemployment rate can be attributed to its competitive labor market, which makes hiring skilled workers more expensive.
3. Pennsylvania small business statistics by industry
The professional, scientific, and technical services sectors account for 151,715 of the 1.1 million small businesses in Pennsylvania. Cumulatively, they are the largest sector in the state, followed by construction (120,543) and retail trade (106,468).
The utilities industry is the smallest acknowledged industry in the state, with only 742 small businesses operating within it.
4. Pennsylvania small business ownership by ethnicity
According to data from the 2019 census, Pennsylvania has a population of 12,964,056 people. White/Caucasian Americans account for 81.6% of the total number, followed by Black/African Americans (12%), Hispanic Americans (7.8%), Asian Americans (3.8%), American Indian/Alaska Native (0.4%), and Native Hawaiian and Other Pacific Islanders (0.1%).
The data below show how small business ownership is distributed among these ethnicities:
- White/Caucasian — 910,168
- Black/African American — 71,535
- Hispanic — 42,148
- Asian — 36,000
- American Indian and Alaska Native — 1,200
- Native Hawaiian and Other Pacific Islander — 561
5. Pennsylvania small business ownership by gender
In Pennsylvania, there are currently 326,000 women-owned small businesses with no employees and 38,121 women-owned small businesses with employees. There are 489,000 small businesses owned by men without employees and 138,766 more with employees.
6. How COVID-19 has affected small businesses across Pennsylvania
Based on the percentage of employees in sectors with a high or medium-high level of exposure to COVID-19, Pennsylvania has the 41st highest economic exposure to COVID-19 of all states in the US.
In Pennsylvania, 45% of all employees, or 3,088,495 people, work in industries with a high or medium-high level of economic exposure to COVID-19. Furthermore, 33% of all employees, or 2,251,821 people, work in industries with a low or medium-low level of economic exposure to COVID-19.
7. Pennsylvania small business financing
The Community Reinvestment Act (CRA) is a federal law in the United States that encourages commercial banks and savings institutions to assist borrowers in all parts of their communities, particularly low- and moderate-income areas.
Large banks are required by the Community Reinvestment Act to disclose new small business loans. In 2019, Pennsylvania firms with revenues of $1 million or less received $3.3 billion in loans from reporting banks. Total reported new lending to firms with loans of $100,000 or less was $3.2 billion, while total reported new lending to businesses with loans of $1 million or less was $9.3 billion.
8. Pennsylvania small business export numbers
In 2019, a total of 15,515 identified businesses exported goods worth $38.9 billion from Pennsylvania. Approximately 13,690 (88.2%) of those exporters were small firms that exported goods worth $12.5 billion, accounting for 32% of all identified firm exports.
9. Pennsylvania small business taxes
In Pennsylvania, standard LLCs are classified as pass-through tax entities, which means they are not required to pay income tax to either the federal government or the state. An individual LLC member, on the other hand, will be taxed on his or her share of the company’s income.
It is possible to classify your LLC as a corporation. In that case, the LLC would be subject to Pennsylvania’s corporate net income tax. The top corporate tax rate in Pennsylvania is 9.99%, the second highest in the US after New Jersey’s 11.5%.
As a small business owner, it is critical that you follow Pennsylvania’s tax laws. Failure to file your taxes on time can result in stiff penalties and the loss of your operating license. This is why having a registered agent is critical for your company.
A registered agent will keep you apprised of your tax situation by sending regular compliance notices to ensure that you do not miss important filing deadlines. They will also assist you with the filing process, giving you more time to focus on your business.
To find out which agent is best for you, read my review of the best registered agents in Pennsylvania.
The Final Word
According to World Population Review, Pennsylvania is the fifth most populous state in the United States. The Keystone State has plenty to offer, not the least of which is its welcoming environment for entrepreneurs and small businesses. If you’re thinking about relocating your small business or are just getting started, Pennsylvania may have the right mix of economic and quality-of-life attributes to help you thrive.
- Tax Foundation
- World Population Review
- US Census Bureau
- Fora Financial
- Business News Daily
- CNBC Top States for Business
- US Small Business Administration