West Virginia is the East Coast’s best kept secret! But word is getting out, and the rest of the world is noticing how the Mountain State is one of the best places in America to live and work. Since the 2008 financial crisis, the state’s economy and business climate have greatly improved, and the state has now risen to the top of the pack!
According to the Business Facilities Magazine’s 2021 Business Climate report, West Virginia has the 10th best business climate in the United States.
Here are a few more statistics that demonstrate why West Virginia is so appealing to entrepreneurs.
Quick West Virginia Small Business Statistics for Entrepreneurs
- Small businesses account for 98.8% of all private enterprises in West Virginia.
- 49.1% of all West Virginia employees work for small businesses.
- Racial minorities make up 5.1% of employees and own 4.1% of businesses.
- Women in West Virginia own 43% of small businesses.
- Military veterans account for 6.2% of employees and own 8.9% of businesses.
- The per capita disposable income in West Virginia is $40,873.
- Opening and expanding West Virginia businesses added 51,745 jobs between March 2019 and March 2020, while closing and contracting businesses lost 66,579 jobs, for a net loss of 14,834 jobs.
- Small businesses exported goods worth $1.6 billion in 2019.
- West Virginia’s per capita consumption expenditure is $36,071.
- According to the annual CNBC “Top States for Business” report, West Virginia ranks 47th out of 50 states.
West Virginia Small Business Statistics
1. What is considered a small business in West Virginia?
The Small Business Administration (SBA) has led the way in defining what a small business is in the eyes of the federal government, and its definition is the most widely used.
This collection of definitions is known as “size standards,” and it is found in Title 13 of the Code of Federal Regulations (CFR), Part 121. A small business is defined by size guidelines for different types of business enterprises. The size is determined by the average annual revenue ($7.5 million or less) or the number of employees (fewer than 1,500).
There are currently 113,184 small businesses in West Virginia that represent 98.8% of all businesses in the state.
West Virginia accounted for 14,435 of all new business applications filed nationwide (over 5.8 million) from January 2021 to January 2022, ranking sixth among states. However, after adjusting for population, West Virginia had 805 applications for every 100,000 people, which was lower than the national average and the lowest among states.
Hiring an LLC (limited liability company) formation service can take the hassle out of your business registration process. Find out which company is the best by reading my review of the best LLC services in West Virginia.
2. How many people are employed by small businesses in West Virginia?
There are approximately 272,042 Nutmeggers employed by small businesses in the state. They represent 49.1% of all employees in West Virginia.
While many states raise the minimum wage in response to rising costs of living or inflation, West Virginia last increased its minimum wage in 2016, raising it from $8.00 to $8.75.
The West Virginia minimum wage is subject to a number of exceptions. Employers can pay tipped employees less than the minimum wage if the difference is made up by earned tips. Student workers, part-time employees, and workers under the age of 20 who work for an employer for less than 90 days may also be eligible for less than the minimum wage.
3. West Virginia small business statistics by industry
Retail trade accounts for 56,104 of the 355,596 small businesses in West Virginia. This is the largest industry in the state, followed by professional, scientific, and technical services (12,213), and construction (12,065).
The management of companies and enterprises sector is the smallest acknowledged industry in the state, with only 109 small businesses operating in it.
4. West Virginia small business ownership by ethnicity
According to data from the 2019 census, West Virginia has a population of 1,782,959 people. White/Caucasian Americans account for 93.5% of the total number, followed by Black/African Americans (3.6%), Hispanic Americans (1.7%), Asian Americans (0.8%), and American Indian/Alaska Native (0.3%).
The data below show how small business ownership is distributed among these ethnicities:
- White/Caucasian — 103,157
- Black/African American — 2,382
- Asian — 1,854
- Hispanic — 1,356
- American Indian and Alaska Native — 108
- Native Hawaiian and Other Pacific Islander — 30
5. West Virginia small business ownership by gender
In West Virginia, there are currently 36,500 women-owned small businesses with no employees and 3,878 women-owned small businesses with employees. There are 48,000 small businesses owned by men without employees and 13,506 more with employees.
6. How COVID-19 has affected small businesses across West Virginia
West Virginia has the 38th highest economic exposure to COVID-19 of all states in the US based on the percentage of employees working in industries with a high or medium-high level of exposure to COVID-19.
In West Virginia, 46% of all employees, or 341,447 people, work in industries with a high or medium-high level of economic exposure to COVID-19. Also, 34% of all employees, or 249,148 people, work in industries with a low or medium-low level of economic exposure to COVID-19.
7. West Virginia small business financing
The Community Reinvestment Act (CRA) is a federal law in the United States that encourages commercial banks and savings institutions to help borrowers from all walks of life, particularly those from low- and moderate-income neighborhoods.
Large banks are required by the Community Reinvestment Act to disclose new small business loans. In 2019, West Virginia firms with revenues of $1 million or less received $340.8 million in loans from reporting banks. Total reported new lending to firms with loans of $100,000 or less was $298.6 million, while total reported new lending to businesses with loans of $1 million or less was $967 million.
8. West Virginia small business export numbers
In 2019, 1,054 enterprises exported goods worth $5.4 billion from West Virginia. Around 816 (or 77.4%) of those exporters were small businesses that exported $1.6 billion worth of goods, accounting for 28.9% of all exports by identified enterprises.
9. West Virginia small business taxes
The majority of LLCs in West Virginia are pass-through tax entities. In other words, the burden for paying federal income taxes is passed through the LLC to the individual LLC members. LLCs do not pay federal income taxes by default, only its members do.
However, when an LLC is formed in West Virginia, it is subject to a business registration tax. The tax is $30 and must be paid to the State Tax Department before your LLC can start operating.
In certain situations, the owners of an LLC can elect to have their firm taxed as if it were a corporation. When an LLC elects to be taxed as a corporation rather than as a pass-through entity, the firm must submit a corporate tax return. In West Virginia, the corporate tax currently is computed at a flat rate of 6.5% of taxable income.
It is critical that you comply with West Virginia tax regulations as a small business owner. Failure to file your taxes on time can result in hefty fines and the loss of your business license. This is why you should hire a registered agent for your business.
A registered agent (or resident agent) will keep you informed about your tax situation by sending you compliance notices on a regular basis, ensuring that you don’t miss any important filing deadlines. They will also assist you with the filing process, allowing you to devote more time to your business.
Read my review of the best registered agents in West Virginia to find out which agent is best for you.
The Final Word
West Virginia has a strong infrastructure that benefits small- and medium-sized businesses as well as large enterprises throughout the state. It is the wide range of state incentive programs that provide a platform for a West Virginia start-up company to achieve greater growth. Your employees will benefit from living in West Virginia, as well, with a 12% lower cost of living than the national average.
Sources
- CNBC
- IbisWorld
- US Department of Treasury
- Census Bureau
- John City Press
- West Virginia Economic Development
- Nolo
- Square Up
- Business Facilities