The Big Sky Country has a strong entrepreneurial spirit. The state boasts the most entrepreneurs per capita of any state and a business survival rate (companies that survive their first five years) that ranks among the top ten. Every month, 3,400 Montanans establish a new business, and more than half of those businesses are still in operation five years later. Simply said, Montana is a national leader in entrepreneurship.
Let’s have a look at a few small business statistics from Montana that prove the state is the best place to establish your business.
Quick Montana Small Business Statistics for Entrepreneurs
- Close to 99.3% of private enterprises in Montana are small businesses.
- 67.2% of employees in Montana work for small businesses.
- Military veterans make up 7.7% of employees and own 9.3% of small businesses.
- Racial minorities own 2.4% of businesses.
- The per capita disposable income in Montana is $47,538.
- Small businesses in Montana exported goods worth $1 billion in 2019.
- Manufacturing employs around 20,400 people in Montana, accounting for 4.3% of the state’s nonfarm employment.
- Montana has a five-year business survival rate of 53.4%.
- Consumer expenditure increased 9.2% from $41.4 million in 2017 to $45.3 million in 2019.
- The 2021 CNBC “Top States for Business” report ranks Montana 34th out of the 50 states.
Montana Small Business Statistics
1. What is considered a small business in Montana?
In order to establish a small business, entrepreneurs must adhere to industry standards set by the Small Business Administration (SBA), which defines a small business either in terms of the average number of employees over the past 12 months (1–500) or average annual receipts over time ($16.5 million or less).
There are 126,219 small businesses in Montana that represent 99.4% of all private enterprises in the state. The state accounted for 20,761 of all new business applications submitted nationwide from January 2021 to January 2022 (5.8 million), the ninth-lowest number of new applications among all states. Adjusting for population, though, Montana had 1,942 applications per 100,000 residents, which was more than the national average and ranked 13th among states.
When you start a limited liability company (LLC) in Montana, the state business authority requires that you hire the services of an LLC formation service that will process and submit your registration paperwork to the Montana Secretary of State on behalf of your business. To find out which company is best for your business, read my review of the best LLC Services in Montana.
2. How many people are employed by small businesses in Montana?
There are 249,482 small business employees that account for 67.2% of Montana’s payrolled workforce, approximately 0.7 million employees.
Montanans voted in 2006 to raise the minimum wage and adjust it yearly for inflation. The current minimum wage is $9.20 per hour, an increase of $0.45 from $8.75 in 2021. This is more than the federal minimum wage of $7.25 per hour.
This minimum wage has a few exceptions. For example, employers may pay new employees aged 20 and younger a training wage of $4.25 per hour for the first 90 days on the job, and federal contractor employees must be paid a minimum wage of $10.60 beginning January 1, 2019.
3. Montana small business statistics by industry
The construction industry is the largest single industry in Montana in terms of small business investment, with a total 18,717 firms currently operating in it. There are 13,128 firms in this industry that have no employees, 5,392 with 1–19 employees, and only 197 have 20–499 employees.
The management of companies and enterprises is the smallest sector in Montana with just 66 firms operating in it.
4. Montana small business ownership by ethnicity
The Treasure State has a population of 1,104,271 residents. White/Caucasian Americans are the largest ethnic group in the state representing 88.9% of the population. They are followed by American Indians and Alaska Natives (6.7%), Hispanic/Latino Americans (4.1%), Asians (0.9%), Black/African Americans (0.6%), and Native Hawaiians and Other Pacific Islanders (0.1%)
The data below shows how small business ownership is distributed among these ethnic groups:
- White/Caucasian — 116,546
- Hispanic/Latino — 2,065
- Asian —1,244
- American Indian and Alaska Native — 1,053
- Black or African American — 274
- Native Hawaiian and Other Pacific Islander — 64
5. Montana small business ownership by gender
Women own 41,584 small businesses in Montana. Around 36,000 of them are nonemployer businesses and another 5,584 have employees. Men own 64,503 small businesses in the state, and 48,500 of them have no employees while 16,003 have employees on payroll.
There are also 12,909 small businesses that are owned by both men and women.
6. Business taxes in Montana
Standard LLCs are considered pass-through businesses, which means they do not have to pay income taxes to the federal government or the state of Montana. Instead, corporate revenue is dispersed to individual LLC members, who pay federal and state taxes on the amount they earn.
However, you might choose to have your LLC categorized as a corporation. The LLC would thereafter be subjected to Montana’s corporate income tax. Montana’s top corporate income tax rate is 6.75%.
It’s important to always file your tax returns on time or else your business might risk ending up in legal and/or financial trouble. Hiring a good registered agent will immensely lessen your tax filing burdens. Read my review of the best registered agents in Montana to find out how.
7. How COVID-19 affected small businesses in Montana
Montana has the fourth greatest 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 degree of exposure to COVID-19.
Approximately 369,709 Montana employees work in sectors with a high or medium-high level of economic exposure to COVID-19, accounting for 63% of all employees. Also, 13% of all Montana employees, or 78,459 people, work in industries with a low or medium-low degree of economic exposure to COVID-19.
8. Small business financing in Montana
The Community Reinvestment Act (CRA) is a federal statute passed in 1977 to encourage depository banks to address the credit requirements of the communities in which they are established, especially low- and moderate-income areas.
The CRA compels federal banking agencies to evaluate how effectively each institution meets its responsibilities to these areas. The authorities must consider these performance ratings when reviewing applications for future approval of bank mergers, charters, acquisitions, branch operations, and deposit facilities.
Large banks are required by the Community Reinvestment Act to disclose new small business loans. In 2019, reporting banks gave out $474.7 million in loans to Montana firms with less than $1 million in revenue. Total reported new lending to firms with loans of $100,000 or less was $411.9 million, while total reported new lending to businesses with loans of $1 million or less was $1.1 billion.
9. Montana small business export statistics
According to the Census Bureau’s profile on importing and exporting companies, a total of 1,426 recognized firms exported items worth $1.5 billion from Montana in 2019. Approximately 1,235 (or 86.6%) of the exporters were small businesses that shipped items worth $1 billion, accounting for 69.5% of total exports by all recognized businesses.
The Final Word
Montana attracts more people than other states because of its cheap taxes, low cost of living, pro-business environment, and good quality of life.
Other states may have tremendous career opportunities, but they lack social opportunities and chances to appreciate nature. Montana offers a wonderful blend of business and employment options, as well as fantastic outdoor recreational activities that will keep you busy throughout the year.
- US Small Business Administration
- Tax Foundation
- US Census Bureau
- Square Up
- Fairfield Sun Times
- CNBC Top States for Business
- Ibis World
- Montana Business Quarterly