Connecticut offers a favorable environment for business growth in a wide range of industries, including advanced manufacturing, bioscience, and insurance. The state welcomes enterprises of all sizes and industries, from fledgling entrepreneurs to Fortune 500 corporations.
The Constitution State is no stranger to small enterprises. In fact, when people examine Connecticut’s business climate, it is sometimes referred to as the “state of small business.” This is exemplified by the number of small enterprises that are now prospering in the state, and the number of them has been steadily expanding year after year.
Here are a few small business statistics from Connecticut that should help aspiring business owners understand the state’s business ecosystem.
Quick Connecticut Small Business Statistics for Entrepreneurs
- Small businesses account for 99.4% of all private enterprises in Connecticut.
- 48.4% of all Connecticut employees work for small businesses.
- Racial minorities make up 21.8% of workers and own 12.1% of businesses.
- Women in Connecticut own 40.7% of small businesses.
- Veterans make up 3.8% of workers and own 5.5% of businesses.
- The per capita disposable income in Connecticut is $76,456.
- Small businesses create $71.3 billion in annual wages and income. Between March 2019 and March 2020, 9,373 Connecticut businesses opened and 10,025 closed, resulting in a net loss of 652.
- Small businesses exported goods worth $7.1 billion in 2019.
- In 2018, small enterprises employed 48.4% of Connecticut residents.
- According to the annual CNBC “Top States for Business” report, Connecticut ranks 24th out of the 50 states.
Connecticut Small Business Statistics
1. What is considered a small business in Connecticut?
According to the Connecticut Department of Revenue, a qualified small business is defined as a corporation, limited liability company, partnership, or other business entity with at least two full-time equivalent employees who are Connecticut residents and whose sole responsibilities are not administrative, and conducts at least a portion of its operations in Connecticut.
Currently, 355,596 small businesses in Connecticut represent 99.4% of all businesses in the state.
Connecticut accounted for 51,217 of all new business applications submitted nationwide between January 2021 and January 2022 (5.8 million), ranking 20th among states. However, when adjusting for population, Connecticut had 1,437 applications per 100,000 residents, which was lower than the national average, and ranked 23rd among states.
If you want to take the hassle off your business registration process, you need to hire an LLC (limited liability company) formation service. Read my review of the best LLC services in Connecticut to find out which company is the best.
2. How many people are employed by small businesses in Connecticut?
There are approximately 739,870 Nutmeggers employed by small businesses in the state. They represent 48.4% of all employees in the state.
The minimum wage in Connecticut is $13 per hour, which is $5.75 more than the federal minimum wage of $7.25. The minimum wage will rise by a dollar on July 1, 2022, to $14 per hour, marking the state’s fourth consecutive year of wage increase as it strives to reach $15 per hour by June 2023.
This wage is applicable to all Connecticut employees. However, there are exceptions. Bar owners must pay a minimum cash wage of $8.23 to bartenders, with a maximum tip credit of 18.5% of the applicable minimum wage. Also, employers in the hotel and restaurant sector must pay a minimum cash wage of $6.38 to their employees, with a maximum tip credit of 36.8% of the applicable minimum wage.
3. Connecticut small business statistics by industry
The professional, scientific, and technical services sectors account for 56,104 of the 355,596 small businesses in Connecticut. They are the largest sectors in the state, followed by real estate, rental, and leasing (39,987), and construction (39,076).
Mining, quarrying, and oil and gas extraction are the smallest acknowledged industries in the state, with only 96 small businesses operating across these industries.
4. Connecticut small business ownership by ethnicity
According to data from the 2019 Census, Connecticut has a population of 3,605,597 people. White/Caucasian Americans account for 79.7% of the total number, followed by Hispanic Americans (16.9%), Black/African Americans (12.2%), Asian Americans (5%), American Indian/Alaska Native (0.6%), and Native Hawaiian and other Pacific Islander (0.1%).
The data below show how small business ownership is distributed among these ethnicities:
- White/Caucasian — 295,623
- Hispanic — 29,567
- Black/African American — 22,000
- Asian — 17,460
- American Indian and Alaska Native — 450
- Native Hawaiian and Other Pacific Islander — 218
5. Connecticut small business ownership by gender
In Connecticut, there are currently 111,000 women-owned small businesses with no employees and 11,409 women-owned small businesses with employees. There are 156,000 small businesses owned by men without employees and 43,797 more with employees.
6. How COVID-19 has affected small businesses across Connecticut
Connecticut has the 33rd highest economic exposure to COVID-19 in the US, based on the percentage of employees working in industries with a high or medium-high degree of exposure to COVID-19.
In Connecticut, 47% of all employees, or 953,443 people, work in industries with a high or medium-high degree of economic exposure to COVID-19. Also, 9% of all Connecticut employees, or 190,766 people, work in industries with a low or medium-low degree of economic exposure to COVID-19.
7. Connecticut 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, Connecticut firms with revenues of $1 million or less received $892 million in loans from reporting banks. Total reported new lending to firms with loans of $100,000 or less was $1.2 billion, while total reported new lending to businesses with loans of $1 million or less was $2.7 billion.
8. Connecticut small business export numbers
In 2019, Connecticut enterprises exported items totaling $15.3 billion. Approximately 4,968 (or 88.0%) of those exporters were small enterprises. These firms shipped items worth $7.1 billion, accounting for 46.4% of total exports by recorded businesses.
9. Connecticut small business taxes
The majority of LLCs in Connecticut 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.
In certain situations, however, 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 separate tax return.
Connecticut, like nearly every other state, taxes corporate revenue. This is referred to as a corporate business tax. Business tax is calculated in a variety of ways, including a flat 7.5% of net income and a minimum tax of $250.
As a small business owner, it is highly important that you comply with the tax regulations in Connecticut. Failure to file your taxes on time can attract hefty fines and you could risk losing your operating license. This is why hiring a registered agent is vital for your business.
A registered agent (or resident agent) will keep you up to date with your tax situation by sending constant compliance notices so that you don’t miss important filing deadlines. They will also provide assistance during the filing process so that you have more time for your business.
Read my review of the best registered agents in Connecticut to find out which agent is best for you.
The Final Word
So there you have it! These small business statistics from the Land of Steady Habits can help any aspiring business owner grasp the ins and outs of the state’s business ecosystem.
Entrepreneurs from all over the world continue to relocate to Connecticut due to its manageable taxation, access to large consumer markets, international access by land and air, world-class infrastructure, low cost of living in comparison to other metropolitan areas in the United States, strong and ever-growing economy, and widening labor market.
- US Small Business Administration
- Connecticut Business and Industry Association
- Daily Voice
- US Census Bureau
- CNBC Top States for Business
- Yankee Institute
- US News