Americans filed 5.5 million new business applications in 2023, an all-time record, according to the US Census Bureau’s Business Formation Statistics program, which has tracked applications for an Employer Identification Number since 2004. That is up from roughly 3.5 million in 2019, and it marks the third year out of the last five that applications reached the 5 million mark. Not every application becomes a real, ongoing business, and the data below breaks down how many do.
Business formation surged after 2020 and never fully returned to its pre-pandemic baseline. The rest of this article separates the headline application count from the smaller, more meaningful subset likely to hire employees, compares US formation to other countries, and looks at how many of these new businesses are still open a year or five years later.
How many new businesses started in the US last year?
The Census Bureau counted 5.5 million total business applications in 2023, its most recent finalized annual total and an all-time high for the series. That total is a full population count of every Form SS-4 application for an Employer Identification Number, not a survey sample, so there is no margin of error to report the way a poll would carry one.
Applications did not climb in a straight line to get there. The count jumped from about 3.5 million in 2019 to 4.4 million in 2020, then to a then-record 5.4 million in 2021 as pandemic-era entrepreneurship accelerated. Applications eased slightly to about 5.0 million in 2022 before the 2023 count broke the 2021 record. Monthly data released through 2025 and into 2026 has continued to run at a comparable historically elevated pace, though the Census Bureau has not yet finalized a full annual total for those years at the time of writing, so treat any 2024-2026 figure you see quoted elsewhere as provisional until the annual release confirms it.
Figure 1: Total US business applications, 2019 to 2023. Source: US Census Bureau, Business Formation Statistics.
The headline number to remember is 5.5 million, and it is the highest annual application count the Census Bureau has ever recorded.
How many of those applications turn into real employer businesses?
Not every application is a serious attempt to start a hiring business. The Census Bureau flags a subset called high-propensity business applications (HBA), which its model identifies as likely to convert into a business with a payroll based on factors like entity type and stated wage plans. In 2023, about 1.6 million applications were classified as high-propensity, versus roughly 830,000 in 2019, so the high-propensity count nearly doubled in four years even as the headline application total rose by a smaller share.
The gap between the 5.5 million headline figure and the 1.6 million high-propensity figure matters for anyone quoting these numbers. A large share of the total, likely a majority, are applications from side businesses, single-member LLCs formed for tax or liability reasons, or ventures that never hire a single employee. If a claim about “how many businesses start each year” does not specify which of these two figures it means, treat it as imprecise.
Figure 2: High-propensity applications as a share of the 2023 total. Source: US Census Bureau, Business Formation Statistics, 2023 data.
If you are one of these new filers, the terms your customers agree to matter from day one. A terms and conditions generator lets a newly formed business publish a compliant agreement before its first sale rather than treating it as paperwork to fix later.
The count that best answers “how many real businesses started this year” is the 1.6 million high-propensity figure, not the 5.5 million headline total.
How does the current pace compare to before the pandemic?
Formation activity has stayed well above its pre-2020 baseline for five straight years, a pattern with no precedent in the Business Formation Statistics series’ history back to 2004. The 2019 total of about 3.5 million was itself a modest, steady figure typical of the preceding decade; every year since has come in at least 26% higher.
Figure 3: Key milestones in US business formation. Source: US Census Bureau, Business Formation Statistics, monthly and annual releases.
Some of this reflects one-time pandemic effects, like gig and e-commerce sellers formalizing existing side income into an LLC. Some of it looks structural: remote work broadened where founders can live, and online tools cut the cost of launching a store or service business. Whichever mix explains it, the elevated pace has now outlasted the pandemic itself by several years.
The 2019 baseline is no longer a useful benchmark for “normal” US business formation, since every year since has beaten it by at least a quarter.
How many businesses are started in other countries?
The US figures dwarf most other national counts, partly because of population and partly because of how each country’s registry defines a new filing. UK Companies House recorded about 800,000 new company incorporations in a recent annual period, a fraction of the 5.5 million US application total even before adjusting for the roughly five-to-one population gap between the two countries.
A commonly repeated claim that “305 million businesses start every year worldwide” traces back to older Global Entrepreneurship Monitor research describing the number of people running any kind of business globally, not a count of new formations in a single year. We could not verify a current, methodologically sound figure for global new business formations in a single year, and no major statistical agency publishes one on a comparable annual basis, so treat any such global total you see cited as unreliable until a primary source is attached to it.
Figure 4: US business applications versus UK company incorporations. Source: US Census Bureau BFS (2023); UK Companies House annual statistics.
International comparisons of “how many businesses start each year” are only meaningful when both the country and the exact metric, application versus incorporation versus employer registration, are specified.
How many businesses exist in total, and how many survive?
Beyond the flow of new applications, the US had an estimated 33.2 million small businesses operating as of 2023, according to the Small Business Administration’s Office of Advocacy, accounting for 99.9% of all US businesses and employing 61.7 million people. That stock figure puts the annual flow of 5.5 million applications in context: even the record 2023 filing total equals only about a sixth of the existing small business population in a single year, reflecting both new formation and the churn of businesses that close.
Survival past the first year is the harder test. Bureau of Labor Statistics establishment survival data shows roughly 80% of new establishments are still operating one year after opening, with the survival rate falling toward 50% by the five-year mark. That means for every ten businesses that open this year, about eight will still be operating in twelve months, but only around five will remain by year five.
Figure 5: The survival funnel for a new US business. Source: Bureau of Labor Statistics, Business Employment Dynamics.
| Metric | Figure | Source | Year |
|---|---|---|---|
| Total US business applications | 5.5 million | US Census Bureau BFS | 2023 |
| High-propensity applications | 1.6 million | US Census Bureau BFS | 2023 |
| Total US small businesses | 33.2 million | SBA Office of Advocacy | 2023 |
| New business survival, year one | ~80% | Bureau of Labor Statistics | Latest cohort |
A new business’s best odds of survival come in its first twelve months, and that is exactly when its foundational paperwork, including its published terms, does the most work.
The Bottom Line
The 5.5 million business applications the Census Bureau counted in 2023 is a real record, but it overstates how many businesses are actually starting in any meaningful sense. The 1.6 million high-propensity figure is the closer answer to “how many real, hiring-intent businesses launched,” and it has also grown sharply since 2019. Whichever number you cite, the pace of formation has stayed elevated for five straight years with no sign of reverting to pre-2020 levels. For anyone in that cohort, publishing clear terms and conditions before the first transaction is one of the cheapest ways to protect a business that has good odds of surviving its first year but needs its paperwork in order to make it there, and pairing that document with a fast, functional website closes the other gap covered in our small business website statistics.
Frequently Asked Questions
How many new businesses start in the US each year? The US Census Bureau recorded 5.5 million new business applications in 2023, an all-time high for its Business Formation Statistics series, which has tracked applications since 2004.
How many new businesses actually become employers? About 1.6 million of the 5.5 million 2023 applications were classified as high-propensity, meaning the Census Bureau’s model flags them as likely to become a business with payroll, up from roughly 830,000 in 2019.
What percentage of new businesses survive their first year? Around 80% of new US establishments are still operating one year after opening, according to Bureau of Labor Statistics establishment survival data, though survival drops toward 50% by year five.
How does US business formation compare to other countries? UK Companies House recorded about 800,000 new company incorporations in a recent year, roughly a seventh of the US application total, reflecting the UK’s smaller economy and population.
Sources and References
- US Census Bureau. Business Formation Statistics. Annual and monthly application counts, series tracked since 2004. 2023 annual data is the most recent finalized full-year release.
- US Census Bureau. Business Formation Statistics methodology and High-Propensity Business Application definitions.
- US Bureau of Labor Statistics. Business Employment Dynamics, survival of private sector establishments by year.
- Small Business Administration, Office of Advocacy. (2023). Small Business Profile: United States. 33.2 million small businesses estimate.
- UK Companies House. Incorporated companies statistics, annual release.
Note: All figures verified as of July 2026. Business Formation Statistics are released monthly with annual totals finalized the following year, so 2024 through 2026 annual totals were not yet final at the time of writing and are refreshed here at least twice a year.
