Illinois Small Business Statistics (2022)

Illinois is a financial powerhouse. The Prairie State’s economy is the fifth largest in the United States (in terms of GDP) and one of the most diverse in the world.

Small enterprises are vital to the state’s economy. They employ about 20% of the state’s population. Not only are residents of the state establishing small enterprises in Illinois, the state also appeals to foreign investors and entrepreneurs.

Here are some more small business statistics from Illinois that should help any entrepreneur understand the state’s economic landscape.

Quick Illinois Small Business Statistics for Entrepreneurs

  • Small businesses represent 99.6% of all businesses in Illinois.
  • In 2019, small businesses in Idaho added 16,609 new jobs.
  • Illinois ranks second in the country for the fastest rate of business formation.
  • Veterans make up 3.7% of workers and own 4.7% of small businesses.
  • Racial minorities account for 25.2% of employees and own 20.2% of small businesses.
  • Between March 2019 and March 2020, 33,702 small businesses closed down.
  • Chicago ranks seventh among the nation’s 20 largest cities for small business growth.
  • Illinois’ disposable personal income (DPI) in 2018 was $56,839, which places it 14th out of all 50 US states.
  • Businesses owned by people of color are most highly concentrated in accommodation and food services (67%), construction (66%), professional, scientific and technical services (59%), and retail trade (55%).
  • In 2019, small businesses in Illinois exported goods worth $13.3 billion.
  • In 2018, there were 137,907 immigrant entrepreneurs in Illinois, accounting for 23% of all self-employed Illinois citizens.

Illinois Small Business Statistics

1. What is considered a small business in Illinois?

According to the US Small Business Administration (SBA), a small business is a business entity that employs fewer than 500 employees. This means that the corner bookstore that is owned and operated by one person and the local factory that employs 500 people are both classified as small businesses.

There are currently 1.2 million small businesses in the state of Illinois, making it one of the nation’s fastest-growing states for new business establishments.

According to the US Census Bureau’s Business Formation Statistics, Illinois entrepreneurs started 198,827 new businesses in 2021, an increase over the 170,400 new enterprises founded in 2020. Since the numbers were originally recorded in 2004, the 2021 start-up success reflects the largest number of new businesses on record.

2. How many Illinoisans are employed by small businesses?

Illinois has 2.5 million small business employees who represent 44.8% of all employed residents in the state.

According to data from the US Census Bureau’s Business Employment Dynamics, employment expanded at 64,146 and contracted at 70,044 between March 2019 and March 2020. Small businesses accounted for 29,384 job openings and 33,117 job closings.

3. Illinois small business statistics by industry

The professional, scientific, and technical services sectors are the largest industries in terms of small business investment. There are approximately 169,025 small businesses currently invested in these sectors. A large number of these businesses (133,515 to be exact), have no employees, another 32,886 have 1–19 employees, while 2,624 small businesses within these sectors have 20–499 employees.

The utilities industry has the smallest share of small business investment, with only 498 businesses currently working in this industry.

4. Illinois small business ownership by ethnicity

Illinois has a population of 12,671,821 people and has had yearly population growth of -0.3% over the last five years, placing it 49th out of 50 US states. According to US Census data, the racial composition of Illinois is 62.2% White American, 16.4% Hispanic American, 14.3% Black or African American, 5.1% Asian American, 0.26% Native American, and 0.04% Native Hawaiian and other Pacific Islander.

Small business ownership is distributed among these ethnic groups as follows:

  • White/Caucasian — 949,265
  • Hispanic — 336,213
  • Black/African American — 142,221
  • Asian — 95,192
  • American Indian and Alaska Native — 2,326
  • Native Hawaiian and Other Pacific Islander — 517

5. Illinois small business ownership by gender

Men own the majority of small businesses in Illinois. There are a total of 687,819 men-owned small businesses. Of this number, 532,000 are nonemployer businesses and another 155,819 have employees.

Women own 454,362 small businesses, 407,000 of these are nonemployer businesses while 47,362 have employees. 

There are 48,423 small businesses that are owned by both men and women.

6. Business taxes in Illinois

Illinois is notorious for its high business taxes, with a top corporate income tax rate of 9.5%. As a result, it is the 14th costliest state in terms of corporate income taxes. 

Furthermore, its state sales tax is 6.25%, above the US average. However, with the inclusion of municipal sales taxes in some regions, particularly around the Chicago metropolitan area, the entire sales tax burden might even be higher. Tax Freedom Day in Illinois is on April 24, which means that Illinoisans have to work longer than taxpayers in 44 other states to earn enough money to pay off their entire tax debt.

7. How Covid-19 affected small businesses in Illinois

The public health risks and business management complications associated with Covid-19 caused enormous economic disruptions in Illinois and elsewhere around the country. Within weeks of the virus’s spread, the national unemployment rate jumped from 3.5% to 14.7%, a historic high. Illinois, like the rest of the country, saw its unemployment rate rise by 13.3%.

According to data by JPMorgan Chase, revenues fell dramatically in the weeks after the declaration of a national emergency on March 13, 2020, when stay-at-home orders were issued. Small business revenues originally fell ahead of expenditures, but by the end of April 2020, expenses had fallen faster than revenues. This shows that enterprises were able to adjust and regulate their expenditures to match lower revenues over time.

To cut down on expenditures, small business owners in Illinois took on measures such as suspending or terminating the contracts of nonessential employees and embracing remote-work models, and some even closed down due to lack of foot traffic.

8. Small business challenges in Illinois

One major challenge that plagues businesses in Illinois is the state economy. Illinois is the fourth most indebted state in the US after Texas, New York, and California. A report by fiscal watchdog Truth in Accounting shows that Illinois has just over $36 billion in assets available to cover expenses totaling more than $272 billion, leaving the state with a $236 billion shortfall. 

Each Illinois taxpayer now bears a $57,000 portion of the state’s rising debt, nearly double what it was a decade ago in 2009. That implies that every Illinois taxpayer would have to pay that much money to the state government on top of what he or she now pays, just so the state could pay its bills.

Given the Illinois government’s budget shortfall, state officials have decided to make up for budget deficits with tax hikes. In 2017, lawmakers pushed through the greatest permanent income tax increase in state history, raising the corporate income tax rate from 5.25% to 7%. This figure now rests at 9.5%. 

Routine tax increases put small company owners to the test, and they end up either moving to another state or in trouble with the law due to tax compliance issues.

As a business owner in Illinois, tax compliance is very important if you wish to stay on the right side of the law. In order to keep on top of reporting dates, you need to hire a reliable registered agent service that will provide consistent notices to remind you of impending filing deadlines.

Read my review of the best registered agents in Illinois to find out which agent is best for your business.

9. Small business financing in Illinois

The Community Reinvestment Act compels local banks to report all new loans given to small businesses. In 2019, reporting banks made $3.3 billion in loans to Illinois firms with less than $1 billion in annual sales. Total reported new lending to companies was $3.5 billion for loans of $100,000 or less, while total reported new lending to businesses for loans of $1 million or less was $11 billion.

10. Illinois small business export statistics

Data from the US profile of importing and exporting companies (by the Census Bureau) indicates that in 2019, a total of 23,133 identified firms exported items totaling $54.7 billion from Illinois.

Small businesses accounted for 20,615 of the exporters, or 89.1%. Small businesses shipped items totaling $13.3 billion, accounting for 24.2% of all identified business exports.

The Final Word

With a GSP (gross state product) of $857 billion, the Illinois economy is the fifth best in the nation. Illinois has a lot to offer employers, employees, businesses, and entrepreneurs, which is why so many people continue to come to the state because of its outstanding business climate, which has created numerous options for the small business owner.

I hope these small business statistics from the Prairie State will help any entrepreneur understand the business landscape in the state.

Sources

Small Business Statistics By State

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