Virginia’s natural beauty and diversity are simply unrivaled. Virginians throughout the Commonwealth have a dynamic quality of life, thanks to access to a range of outdoor activities in cities and charming small towns, as well as booming metropolitan centers filled with arts and culture.
Virginia’s integrated transportation infrastructure of highways, trains, airports, and seaports, strategically placed on the United States’ East Coast and next to Washington DC, provides logistical benefits for entrepreneurs in every field.
Here are a few small business statistics from Virginia to help you understand the state’s business climate.
Quick Virginia Small Business Statistics for Entrepreneurs
- 99.5% of all Virginia businesses are small businesses.
- 46.6% of all employed people in Virginia work for small businesses.
- Military veterans make up 8.6% of employees and own 9.5% of small businesses.
- Racial minorities account for 29.6% of employees and own 25.2% of businesses.
- Virginia’s per capita disposable income is $57,799.
- In the 2021 CNBC “Best States for Business” report, Virginia ranks #1 out of all 50 states.
- Between March 2019 and March 2020, there were 27,388 new Virginia businesses and 27,095 closures, for a net increase of 293.
- In 2019, small businesses exported goods worth $4.4 billion.
- The state’s per capita consumption expenditure is $45,139.
- Virginia’s state sales tax rate is 5.30%.
Virginia Small Business Statistics
1. What is considered a small business in Virginia?
The Virginia SBA (Small Business Administration) defines a small business based on firm revenue (from $1 million to more than $40 million) and employment (from 100 to over 1,500 employees). There are currently 783,977 small businesses in Virginia that represent 99.5% of all businesses in the state.
Virginia accounted for 141,514 of all new business applications filed nationwide (approximately 5.8 million) from January 2021 to January 2022, ranking 12th among states. However, when adjusting for population, Virginia had 1,658 applications for every 100,000 residents, which was lower than the national average, and ranked 20th among states.
If you are interested in establishing a business in Virginia, it is highly advisable to seek the services of an LLC (limited liability company) formation service. They will not only process and file your Articles of Organization on your behalf, they’ll also receive official communication from the Secretary of State’s office on behalf of your business. Read my review of the best LLC services in Virginia to learn more.
2. How many people are employed by small businesses in Virginia?
There are approximately 1.6 million Virginians working for small businesses. They represent 46.6% of all Virginia employees.
Virginia’s new minimum wage rose to $9.50 per hour on May 1, 2021, up from $7.25 per hour the previous year. This amount is $2.25 more than the federal minimum wage. In contrast to other states, Virginia does not exclude tipped employees from the state-mandated minimum wage. As a result, tipped employees in Virginia will be paid the same $9.50 minimum wage as other employees, plus collected tips.
Some workers, however, are exempt from the state minimum wage. They include full-time students who work less than 20 hours per week while school is in session, babysitters who work fewer than 10 hours per week, and any other employee who is exempt from the minimum wage under the Fair Labor Standards Act.
3. Virginia small business statistics by industry
The professional, scientific, and technical services industry is the largest in terms of small business investment, with a total of 125,797 small businesses operating in this sector. A large share of these businesses, 99,788 to be exact, have no employees. Another 23,208 have between 1–19 employees, while 2,801 have 20–499 employees.
The utilities industry has the smallest share of small business investment, with only 324 small businesses working within the industry.
4. Virginia small business ownership by ethnicity
The current population of Virginia stands at 8,642,274 residents. White/Caucasian Virginians are the largest ethnic group in the state, representing 78.5% of the population. They are followed by Black/African Americans (19.9%), Hispanic/Latino Americans (9.8%), Asian Americans (6.9%), American Indians and Alaska Natives (0.5%), and Native Hawaiians and Other Pacific Islanders (0.1%).
The data below show how small business ownership is distributed among these ethnic groups:
- White/Caucasian — 553,813
- Black/African American — 104,666
- Asian — 79,656
- Hispanic/Latino — 58,638
- American Indian and Alaska Native — 1,650
- Native Hawaiian and Other Pacific Islander — 644
5. Virginia small business ownership by gender
Women own 296,057 small businesses in Virginia, which is 43.3% of all businesses in the state. Around 262,000 of these businesses have no employees, while another 34,057 have employees.
Men are the majority business owners, with 413,330 small businesses. Approximately 329,000 of these are nonemployer businesses, while another 84,330 have employees.
6. Business taxes in Virginia
In Virginia, a majority of LLCs are so-called pass-through tax organizations. In other words, the burden for paying federal income taxes is passed through the LLC to the individual LLC members. LLCs do not pay income taxes by default; only their members do.
In certain situations, the owners of an LLC elect to have their firm taxed as if it were a corporation. When an LLC is taxed as a corporation rather than as a pass-through entity, the firm must submit a separate tax return. The state of Virginia, like nearly every other state, levies a corporation income tax of 6% on net income.
It is critical that you pay your taxes on time as a Virginia business owner. Failure to file returns on time may result in penalties. The longer you wait to file, the higher the penalty, and you may lose your business license outright.
In this case, registered agents can provide assistance. They will not only help you with tax filing, but will also send you regular compliance notifications to remind you of future filing deadlines. Read my review of the best registered agents in Virginia to determine which agent will best fit your business’s needs.
7. Small business financing in Virginia
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 and sound banking operations.
Large banks are required by the Community Reinvestment Act to disclose new small business loans. In 2019, reporting banks gave out $2.2 billion in loans to Virginia firms with less than $1 million in revenue. Total reported new lending to firms with loans of $100,000 or less was $2.3 billion, while total reported new lending to businesses with loans of $1 million or less was $5.7 billion.
8. How COVID-19 affected small businesses in Virginia
Based on the percentage of employees in sectors with a high or medium-high degree of exposure to COVID-19, Virginia has the eighth greatest economic exposure to COVID-19 of all states in the US.
In Virginia, 58% of all employees, or 2,528,095 people, work in industries with a high or medium-high degree of economic exposure to COVID-19. A total of 634,779 employees work in industries with a low or medium-low degree of economic exposure to COVID-19, representing 15% of all employees in Virginia.
9. Virginia small business export statistics
In 2019, 7,192 firms exported goods worth $16.8 billion from Virginia. Small businesses accounted for 6,117 of the total exporters, or 85.1%. Small businesses shipped $4.4 billion in products, accounting for 26.1% of total exports by recognized businesses.
The Final Word
Virginia offers a premium talent pool, resulting in a world-class labor pool equipped to satisfy corporate demands across all essential personnel characteristics. Virginia’s workforce is one of the most productive and educated in the country, across multiple industries—about 40% of the population has a bachelor’s degree or above, making the Commonwealth the sixth-most educated state in the country and first in the South.
Sources
- CNBC – Top States for Business
- Forbes
- AP News
- Tax Foundation
- Patch
- Square Up
- Nolo
- IbisWorld
- US Small Business Administration
- Census Bureau