How Many Businesses Are Started Each Year?
The United States Census Bureau tracks business applications as a way to measure how many new businesses are forming across the country. Every time someone files for a new Employer Identification Number (EIN) or submits certain tax forms, it gets counted as a business application.
But not all applications are equal. Some are more likely to turn into operating businesses with employees and payroll. The Census Bureau calls these “high-propensity business applications.” They include filings that show signs of serious intent, like planned wages, a corporate structure, or registration in a specific industry.
Using data from the Census Bureau, this post breaks down business application trends from 2005 through 2025, along with a look at which industries are attracting the most new business activity right now.
How Many New Businesses Were Started in 2025?
In 2025, the Census Bureau recorded 5,671,836 total business applications. That’s a new all-time high, beating the previous record set in 2023.
Of those, 1,708,842 were classified as high-propensity, meaning they showed stronger indicators of becoming real, payroll-generating businesses. That puts the high-propensity rate at roughly 30%, which has been fairly consistent over the past several years.
It’s worth noting that a business application doesn’t guarantee a business will actually open its doors. Many applications are filed for side projects, LLCs set up for tax purposes, or ventures that never get off the ground. Read our report on business failure statistics to see what percentage of businesses make it to the 1, 5, and 10-year milestones.
How Has Business Formation Changed Over the Past 20 Years?
From 2005 through 2019, business applications grew at a steady but unremarkable pace. The numbers hovered around 2.4 to 2.6 million through most of that stretch, dipped slightly during the 2008-2009 recession, and then gradually climbed through the 2010s as the economy recovered.
By 2019, total applications had reached about 3.5 million. Then 2020 happened.
Business applications jumped to 4.35 million in 2020, and then surged again to 5.39 million in 2021. That’s a 54% increase in just two years. Even more striking, applications have stayed in that elevated range ever since. The 2025 figure of 5.67 million is the highest on record.
High-propensity applications followed a similar pattern, though the jump was less dramatic. They went from about 1.3 million in 2019 to 1.84 million in 2021, a roughly 40% increase. They’ve held relatively steady in the 1.7 to 1.85 million range since then.
Here’s the full yearly breakdown:
| Year | Business Applications | High-Propensity Business Applications |
| 2005 | 2,485,100 | 1,471,866 |
| 2006 | 2,615,834 | 1,542,329 |
| 2007 | 2,633,956 | 1,489,333 |
| 2008 | 2,559,006 | 1,264,549 |
| 2009 | 2,406,259 | 1,154,092 |
| 2010 | 2,473,934 | 1,151,984 |
| 2011 | 2,550,495 | 1,177,903 |
| 2012 | 2,550,198 | 1,153,389 |
| 2013 | 2,591,539 | 1,157,485 |
| 2014 | 2,691,040 | 1,178,484 |
| 2015 | 2,795,897 | 1,204,860 |
| 2016 | 2,948,338 | 1,225,243 |
| 2017 | 3,182,674 | 1,259,781 |
| 2018 | 3,486,829 | 1,330,929 |
| 2019 | 3,498,990 | 1,316,191 |
| 2020 | 4,356,398 | 1,518,956 |
| 2021 | 5,390,816 | 1,841,954 |
| 2022 | 5,062,563 | 1,722,399 |
| 2023 | 5,469,302 | 1,848,540 |
| 2024 | 5,224,176 | 1,715,458 |
| 2025 | 5,671,836 | 1,708,842 |
Source: United States Census Bureau
What Caused the Spike in 2020 and 2021?
The pandemic reshaped how people thought about work and income. Millions of workers were laid off or furloughed, and many decided to start their own thing rather than wait for a callback. At the same time, stimulus checks and expanded unemployment benefits gave some people enough of a financial cushion to take the leap.
Consumer behavior shifted dramatically too. E-commerce spending accelerated by years in a matter of months. Demand for delivery services, home improvement, online education, and remote work tools all created new openings for small businesses.
One detail worth flagging in the data: the gap between total applications and high-propensity applications widened significantly during this period. In 2019, about 37% of applications were high-propensity. By 2021, that had dropped to 34%. In 2025, it’s down to 30%. That suggests a growing share of new filings are solo operations, side hustles, or informal ventures that may never hire employees.
Have Business Applications Stayed High After the Pandemic Boom?
Yes. There was a modest dip in 2022, when applications fell to about 5.06 million, and another small pullback in 2024 to 5.22 million. But both of those numbers would have been unthinkable before 2020.
The trend is clear: the pandemic didn’t create a temporary spike that faded once life returned to normal. Something fundamental shifted. The “new normal” for business applications in the U.S. appears to be north of 5 million per year, roughly double the pre-pandemic baseline.
Several factors are likely keeping the numbers elevated. Remote work has made it easier to run a business from anywhere. The gig economy and creator economy continue to grow. And the cultural shift toward entrepreneurship, especially among younger workers, shows no signs of slowing down.
Which Industries Attract the Most New Business Applications?
Looking at 2025 data by industry, Retail Trade leads by a wide margin with over 1.16 million applications. That’s more than any other sector, and it’s driven largely by online sellers. Setting up a retail business has never been easier thanks to platforms like Shopify, Amazon, and Etsy.
Professional Services comes in second at 764,007 applications. This category covers consulting, legal services, accounting, marketing, and similar fields where expertise is the product. Construction follows with 519,090 applications, and Other Services (a broad category that includes everything from repair shops to personal care) comes in at 483,258.
On the other end of the spectrum, Mining (5,642), Utilities (7,270), and Agriculture (47,012) had the fewest applications. These are capital-intensive industries with high barriers to entry, so low application numbers aren’t surprising.
Which Industries Have the Highest Rate of Serious Business Formation?
Total application counts only tell part of the story. The ratio of high-propensity to total applications reveals which industries tend to produce “real” businesses with employees and payroll versus solo or informal operations.
Accommodation and Food Services stands out with a remarkably high conversion rate. Out of 300,236 total applications, 278,436 were high-propensity. That’s about 93%. It makes sense when you think about it. Restaurants, hotels, and catering companies almost always need staff from day one.
Health Care and Social Assistance also has a high rate, with 247,553 high-propensity applications out of 352,046 total (about 70%). Medical practices, home health agencies, and childcare centers typically require licensed employees to operate.
Construction comes in around 51%, reflecting the fact that many contractors eventually hire crews as their workload grows.
Compare those numbers to Retail Trade, where only about 19% of applications are high-propensity. The vast majority of new retail filings are likely solo e-commerce sellers operating without employees. Real Estate is even lower at about 12%, since many agents and investors operate as independent one-person LLCs.
2025 Business Applications by Industry
| Industry | Business Applications | High-Propensity Business Applications |
| Agriculture | 47,012 | 7,361 |
| Mining | 5,642 | 1,183 |
| Utilities | 7,270 | 876 |
| Construction | 519,090 | 266,773 |
| Manufacturing | 84,445 | 31511 |
| Wholesale Trade | 114,740 | 30,276 |
| Retail Trade | 1,166,015 | 226,087 |
| Transportation and Warehousing | 366,727 | 76,846 |
| Information | 110,329 | 19,852 |
| Finance and Insurance | 232,425 | 63,581 |
| Real Estate | 271,556 | 32,698 |
| Professional Services | 764,007 | 191,504 |
| Management of Companies | 66,600 | 12,691 |
| Administrative and Support | 377,364 | 63,753 |
| Educational Services | 86,290 | 14,597 |
| Health Care and Social Assistance | 352,046 | 247,553 |
| Arts and Entertainment | 163,691 | 23,477 |
| Accommodation and Food Services | 300,236 | 278,436 |
| Other Services | 483,258 | 73,236 |
| No NAICS Assigned | 153,093 | 24,764 |
Source: United States Census Bureau
What Do These Numbers Mean for Entrepreneurs?
The headline takeaway is that more people are starting businesses than at any point in U.S. history, at least by the measure of applications filed. Competition for new businesses is higher than it was five or ten years ago, but so is the overall appetite for entrepreneurship.
At the same time, context matters. While 5.67 million applications sounds massive, a large portion of those won’t turn into operating businesses. The high-propensity number of about 1.7 million is probably a more realistic gauge of actual new businesses entering the market each year.
The industry data also offers a useful lens. If you’re starting a restaurant or healthcare practice, you’re entering a space where most new entrants are building real, staffed operations. If you’re launching an e-commerce brand or a consulting firm, you’re competing in a much more crowded field where the majority of new filings are solo operators.
None of that should discourage anyone from starting. But it’s worth understanding the landscape before you jump in.
