The Pelican State has a lot of traits that make it a fantastic destination for entrepreneurs to establish a business. Its diverse culture makes it a fascinating location to live and work. New Orleans, the state’s largest city, is one of the most unique in the United States, with a dizzying combination of food, music, and architecture.
Here are a few small business statistics from Louisiana that should help entrepreneurs understand what it takes to run a business in the state.
Quick Louisiana Small Business Statistics for Entrepreneurs
- 99.5% of all businesses in Louisiana are small businesses.
- Small businesses pay the bills for 53.6% of employees in the state.
- Military veterans make up 5.2% of workers and own 7.6% of small businesses.
- Racial minorities account for 34.1% of employees and 27.3% of business ownership.
- Between March 2019 and March 2020, 9,651 new businesses opened in Louisiana, while 9,988 closed, resulting in a net drop of 337.
- In the annual CNBC Top States for Business report, Louisiana ranks in position 44 out of 50 states.
- Louisiana accounted for 107,292 of all new business applications submitted nationwide from January 2021 to January 2022, ranking 16th among all states.
- Women account for 48.7% of workers and 45.8% of business owners.
- US News ranks Louisiana 15th in the cost of living and 23rd in housing availability out of 50 states.
- For products developed, manufactured, and transported out of state, the state effectively provides a 0% corporate income tax environment.
Louisiana Small Business Statistics
1. What is considered a small business in Louisiana?
A small business is defined by the Louisiana Small Business Administration based on firm revenue (varying from $1 million to more than $40 million) and employment (from 100 to over 1,500 employees).
There are 464,527 small businesses in Louisiana that represent 53.6% of all businesses in the state.
2. How many people are employed by small businesses in Louisiana?
There are 906,632 Louisianians currently working for small businesses. They account for 53.6% of all employees in the state. Louisiana’s minimum wage was last revised in 2008, when it was increased by $0.70 from $6.55 to $7.25 to match the current federal minimum wage.
The Louisiana state minimum wage has the same exclusions as the federal Fair Labor Standards Act (FLSA). Farm hands, seasonal employees, newspaper deliverers, “informal” workers, and even babysitters might make less than $7.25 per hour.
The tipped minimum wage, which is normally $2.13 per hour for waiters and waitresses and other tipped employees, is well below the federal minimum wage.
3. Louisiana small business statistics by industry
The professional, scientific, and technical services sectors have the highest number of small businesses operating in them compared to other industries in Louisiana—53,619. Approximately 42,673 small businesses in these sectors have no employees, 10,151 have 1–19 employees, and 795 have 20–499 employees.
The management of companies and enterprises sector is the smallest industry in terms of small business investment with only 303 firms currently operating in it.
4. Louisiana small business ownership by ethnicity
There are 4,624,047 residents in the state of Louisiana. White/Caucasian Americans are the majority ethnicity, and they represent 62.8% of the population. Black/African Americans are the second largest racial group at 32.8%, and they are followed by Hispanic/Latino Americans (5.3%), Asian Americans (1.8%), American Indian and Alaska Natives (0.8%), and Native Hawaiian and Other Pacific Islanders (0.1%).
The data below shows how small business ownership is distributed among these groups:
- White/Caucasian — 322,260
- Black or African American — 102,070
- Hispanic — 19,666
- Asian — 17,382
- American Indian and Alaska Native — 1,336
- Native Hawaiian and Other Pacific Islander — 150
5. Louisiana small business ownership by gender
Men own the majority of small businesses in Louisiana, a total of 194,000 firms. Women own 179,693 small businesses, and only 12,693 of these have employees on payroll. There are, however, 23,196 small businesses that men and women own together.
6. Business taxes in Louisiana
According to the Tax Foundation, Louisiana ranks 41st in the organization’s State Business Tax Climate Index report. The top corporate income tax rate is 8% and the sales tax is 4.45%.
Here are a few tax incentive programs that the state provides to small businesses:
- Corporate Jobs Tax Credit Program: This program offers up to $225 in credits for each new employee. The credits can be used to pay state corporate income taxes and are an alternative to the state’s Industrial Property Tax Exemption program and Enterprise Zone program benefits.
- Early Stage Angel Investment Incentives: This initiative incentivizes accredited Louisiana investors to make early-stage investments in Louisiana-based enterprises. It enables the investor to get a 50% tax credit, split into 10% increments over five years, on state income or corporate franchise tax obligations for early-stage investments in Louisiana enterprises.
- Louisiana Community Development Financial Institution (LCDFI): Provides a tax credit to qualified individuals/businesses who invest in a Certified LCDFI. LCDFIs must first get “accredited” by the Louisiana Office of Financial Institutions (OFI). The tax credit is equivalent to 75% of the investment eligible for an allocation of tax credits.
7. Small business financing in Louisiana
According to the Community Reinvestment Act (CRA), aggregate data by the Federal Financial Institutions Examination Council (FFIEC), in 2019, reporting banks paid out $1.3 billion in loans to Louisiana firms with less than $1 million in sales revenue. Total reported new lending to companies was $1.2 billion for loans of $100,000 or less, while total reported new lending to businesses for loans of $1 million or less was $4 billion.
8. Small business challenges in Louisiana
Like every other state, Louisiana’s small businesses also have their fair share of troubles. Here are a few of them:
- Labor Shortage: Any firm intending to start operations in a state must have a labor force that is educated and ready to work. Unfortunately, Louisiana has fewer residents with a degree than almost every other state, with only 23% having finished college study.
- Tax sales tax rate: According to recent midyear research by the Tax Foundation, Louisiana has one of the highest total sales tax rates in the country at 9.52%. Tennessee (9.547%) and Arkansas (9.48%) are its closest competitors. These high tax rates generate uncertainty among small business owners while simultaneously discouraging consumer spending.
It is critical to pay your taxes on time as a Louisiana business owner. Failure to submit returns and remit collected tax on time may result in fines and interest charges. The longer you delay filing, the higher the penalty and interest will be.
This is where registered agents come in handy. They’ll not only assist you with processing your taxes, but also send constant compliance alerts to remind you of impending filing dates. Read my review of the best registered agents in Louisiana to find out which agent will suit your company’s needs.
9. Louisiana small business export statistics
According to the US Census Bureau’s profile on importing and exporting business, in 2019, 3,808 enterprises exported items worth $56.4 billion from Louisiana. Small businesses accounted for 3,231 of the total exporters, or 84.8%. Small businesses shipped $18.1 billion in products, accounting for 32% of total exports by identified businesses.
The Final Word
While Louisiana has its share of problems, it also has a lot of advantages that make it an excellent area to conduct business for entrepreneurs. Louisiana has made a concerted effort to strengthen the economy and small business climate by offering assistance and guidance to small firms seeking to register and thrive in the state. Although there is still much work to be done, the state is on the right track.
Sources
- US Small Business Administration
- US News
- CNBC – Top States for Business
- Kilgore News Herald
- National Association of Manufacturers
- Dunlop Fiore Attorneys
- US Census Bureau
- Tax Foundation