Vermont is the smallest economy in the United States, with a GDP (gross domestic product) of $35 billion. The Green Mountain State has the fourth lowest five-year average unemployment rate among states, at 2.9%, but its business costs are 12% more than the national average. The state’s economic forecast is likewise bleak, with employment and income growth predicted to trail significantly behind the rest of the country over the next five years.
The following statistics highlight the plight of small businesses in Vermont.
Quick Vermont Small Business Statistics for Entrepreneurs
- Small businesses account for 99% of all businesses in Vermont.
- Approximately 60.6% of all employees in Vermont work for small businesses.
- Between March 2019 and March 2020, 2,040 new businesses opened in Vermont, while 2,287 closed, for a net decrease of 247.
- Military veterans make up 4.2% of workers and own 7.5% of businesses.
- Women own 41.8% of small businesses in Vermont.
- The per capita disposable income in Vermont is $54,173.
- In 2019, small firms exported goods worth $515 million.
- Racial minorities make up 4.9% of workers and own 2.4% of businesses.
- Vermont’s per capita consumption expenditure is $49,950.
- The 2021 CNBC “Top States for Business” report ranks Vermont 42nd out of 50 states.
Vermont Small Business Statistics
1. What is considered a small business in Vermont?
A small business, according to Small Business Administration (SBA) requirements, is one that is independently owned and operated, has minimal influence in its sector, employs fewer than 500 people, and has an annual turnover of less than $7.5 million.
There are currently 79,189 small businesses in Vermont that represent 99% of all enterprises in the state. Vermont accounted for 8,138 of all new business applications submitted countrywide from January 2021 to January 2022 (approximately 5.8 million), the fewest among states. Adjusting for population, Vermont had 1,304 applications per 100,000 residents, which was lower than the national average and ranked 17th among states.
Starting a business in Vermont is a time-consuming procedure due to the large amount of paperwork that must be completed. You may, however, pay an LLC (limited liability company) formation service to file and submit your registration forms to the Secretary of State on your behalf, allowing you to focus on what’s important—your business. To learn more, read my review of the best LLC services in Vermont.
2. How many people are employed by small businesses in Vermont?
There are 158,228 Vermonters currently working for small businesses statewide and they account for 60.6% of the state’s paid workforce. Vermont’s minimum wage rose to $12.55 in January 2022, an increase of $0.80 over 2021.
While several states have outlined plans to achieve a $15 minimum wage over the next decade, Vermont has failed to approve a measure proposing this same aim. Vermont enacted a wage law in 2019 that would result in wage increases in 2021 and 2022. Increases in the minimum wage will be connected to the Consumer Price Index after 2022.
Certain exclusions apply to Vermont’s minimum wage. For example, an employer must pay a new employee under the age of 20 a training wage of $4.25 per hour for the first 90 days of employment. Additionally, employees who earn a certain amount of tips per month may be paid a lower cash minimum wage, but must earn at least $12.55 per hour plus tips.
3. Vermont 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 11,523. Approximately 9,614 firms within these sectors are nonemployer businesses, 1,786 of them have 1–19 employees, and only 123 have between 20 and 499 employees.
There are only 36 small businesses invested in the management of companies and enterprises industry, the smallest industry in the state.
4. Vermont small business ownership by ethnicity
The state of Vermont has a population of 645,570 residents. White/Caucasian Americans represent 94.2% of the population, followed by Hispanic/Latino Americans (2%), Asian Americans (1.9%), Black/African Americans (1.4%), and American Indians and Alaska Natives (0.4%).
Below is a breakdown of how small business ownership is distributed among these races:
- White/Caucasian — 73,267
- Asian — 1,007
- Hispanic/Latino — 700
- Black/African American — 450
- American Indian and Alaska Native — 100
- Native Hawaiian and Other Pacific Islander — 20
5. Vermont small business ownership by gender
Women own 27,133 small businesses in Vermont. Around 24,500 of these firms are nonemployer businesses, while 2,633 have employees. Men own 43,737 small businesses, 34,500 of which are nonemployer businesses, while 9,237 have employees.
There are also 4,233 small businesses in the state that are owned by both men and women.
6. Business taxes in Vermont
Standard Vermont LLCs are pass-through entities that are not obliged to pay income tax to either the federal government or the state of Vermont. Vermont LLCs, on the other hand, must pay the state’s business entity tax, which is a flat annual tax of $250. Furthermore, business income is distributed to individual LLC members, who then pay federal and state taxes on the amount distributed to them.
However, you might choose to have your LLC classed as a corporation. In such an instance, the LLC would have to pay Vermont’s corporate income tax as well. Vermont’s top corporate income tax rate is 8.5%.
Vermont has exceptionally strict tax standards that, if breached, carry severe consequences. You do not, however, need to be concerned about missing your tax filing deadlines. You only need to find a registered agent!
They’ll send you alerts on a regular basis to remind you of your legal duties to the Secretary of State’s office, and they’ll even help you with your tax filing process. Read my review of the best registered agents in Vermont to determine which firm is ideal for you.
7. Small business financing in Vermont
Many interactions between financial institutions and community development groups are guided by the Community Reinvestment Act (CRA), a federal banking 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.
Large banks are required by the CRA to disclose new small business loans. In 2019, reporting banks paid out $170.8 million in loans to Vermont firms with $1 million or less in revenue. Total reported new lending to companies was $172.7 million for loans of $100,000 or less, while total reported new lending to businesses for loans of $1 million or less was $468.3 million.
8. How COVID-19 affected small businesses in Vermont
Based on the percentage of employees in sectors with a high or medium-high degree of exposure to COVID-19, Vermont has the 23rd largest economic exposure to COVID-19 of all states in the US.
In Vermont, 49% of all employees, or 187,479 people, work in industries with a high or medium-high degree of economic exposure to COVID-19. Also, 13% of all employees in Vermont, or 49,649 people, work in industries with a low or medium-low degree of economic exposure to COVID-19.
9. Vermont small business export statistics
In 2019, 1,103 recognized businesses exported items worth $2.9 billion from Vermont. Approximately 951 (or 86.2%) of those exporters were small businesses that shipped items totaling $515 million, accounting for 18% of all exports by recognized businesses.
The Final Word
According to Rich States, Poor States, Vermont is currently ranked 47th in the United States for its economic outlook. Despite this bleak economic outlook, Vermont boasts a unique combination of great outdoor environment, simple and traditional lifestyle, state-sponsored business incentives, and a thoughtful community. These factors alone make Vermont a good place to do business.
- Rich States, Poor States
- Burlington Free Press
- Census Bureau
- Tax Foundation
- CNBC – Top States for Business
- The Center Square
- US Small Business Administration