Business Applications Saw a Significant Dip Between 2021 and 2022, but They’re Heating Up Again in 2023
More than three years after the onset of the coronavirus pandemic, many business owners still face challenges related to the “new normal” and consumers’ continued behavioral shifts.
It seems the changes have confounded some would-be entrepreneurial efforts: The number of employer identification number (EIN) filings, a first step toward starting a business, dipped between 2021 and 2022 — the only time in the past 10 years. But in the first nine months of 2023, more than 4 million business applications were filed — the second-highest number of filings in that same period in the past 10 years.
We break down business application data at several levels: nationally, by metro, by industry, by state and more.
Key findings
- Applications to start U.S. businesses dropped between 2021 and 2022 — the only time in the past 10 years. Business applications — the number of people who filed for a tax ID number for their business — dipped by 6.6% between 2021 and 2022 after double-digit increases between 2019 and 2020 (24.6%) and 2020 and 2021 (23.3%). Still, the number of business applications remains elevated compared to pre-pandemic.
- Dover, Del., Mobile, Ala., and Colorado Springs, Colo., saw double-digit growth in business applications between 2021 and 2022. In these metros, business applications jumped 12.2%, 11.5% and 10.9%, respectively. Conversely, 24 metros (among the 100 with the most business applications in 2021) saw double-digit dips between 2021 and 2022, led by Shreveport, La. (25.2%), New Orleans (21.8%) and Cleveland (20.9%).
- Business applications grew in only four industries between 2021 and 2022. Mining, quarrying, and oil and gas extraction (14.4%) and utilities (10.7%) were the only ones with increases of at least 1.0% in this period. Eight industries saw double-digit decreases, led by agriculture, forestry, fishing and hunting (15.5%) and retail trade (13.4%).
- In the first nine months of 2023, 4.07 million business applications were filed — the second-highest in the past 10 years. 2023 was only pacing behind 2021 (4.12 million) through September. Wyoming (40.1%), New Mexico (23.8%) and Delaware (20.4%) saw the biggest business application increases between the first nine months of 2022 and 2023. Only three states saw decreases in this period: Mississippi (5.7%), Vermont (1.5%) and Louisiana (0.6%).
Business applications dropped between 2021 and 2022 — the only time in the past 10 years
Between 2021 and 2022, EIN filings dropped 6.6% — the only drop in the past 10 years. In 2022, 5.05 million people filed for business tax ID numbers, down from 2021’s 5.40 million. It seems feasible the dip is one part of the erratic economic response to the pandemic, along with the frenzied housing market, inflation spike and fluctuating job market.
However, it’s also worth noting that business applications increased by 24.6% — the biggest jump in the last 10 years — between 2019 and 2020 — and 23.3% from 2020 to 2021. The pandemic didn’t get in the way of entrepreneurial efforts for some. Further, business applications remain significantly elevated compared to pre-pandemic figures.
Business applications by year
| Year | Business applications | % change YoY | % change since 2013 |
|---|---|---|---|
| 2013 | 2,611,637 | N/A | N/A |
| 2014 | 2,667,290 | 2.1% | 2.1% |
| 2015 | 2,823,431 | 5.9% | 8.1% |
| 2016 | 2,976,235 | 5.4% | 14.0% |
| 2017 | 3,197,639 | 7.4% | 22.4% |
| 2018 | 3,500,659 | 9.5% | 34.0% |
| 2019 | 3,518,154 | 0.5% | 34.7% |
| 2020 | 4,382,758 | 24.6% | 67.8% |
| 2021 | 5,404,285 | 23.3% | 106.9% |
| 2022 | 5,048,457 | -6.6% | 93.3% |
Source: LendingTree analysis of U.S. Census Bureau Business Formation Statistics data.
Between 2021 and 2022, business applications increased only in October
Although the overall trend in business applications between 2021 and 2022 was downward, applications increased year over year, just slightly, in October — by 0.3%. Conversely, May, April, January and June saw double-digit dips in business applications year over year.
Business applications by month, 2021 vs. 2022
| Month | 2021 business applications | 2022 business applications | % change |
|---|---|---|---|
| October | 430,252 | 431,567 | 0.3% |
| December | 423,905 | 417,857 | -1.4% |
| September | 433,037 | 424,149 | -2.1% |
| February | 427,441 | 418,165 | -2.2% |
| August | 430,758 | 419,583 | -2.6% |
| November | 433,499 | 418,116 | -3.5% |
| July | 447,318 | 419,504 | -6.2% |
| March | 453,684 | 412,925 | -9.0% |
| June | 451,903 | 406,294 | -10.1% |
| January | 481,995 | 431,003 | -10.6% |
| April | 490,008 | 425,731 | -13.1% |
| May | 500,485 | 423,563 | -15.4% |
| Total | 5,404,285 | 5,048,457 | -6.6% |
Source: LendingTree analysis of U.S. Census Bureau Business Formation Statistics data.
One possible cause of the October uptick: the proliferation of artificial intelligence (AI), which took a major turn toward the end of last year. ChatGPT was launched on Nov. 30, 2022. Although its creator company, OpenAI, has been around since 2015, the chatbot represented a substantial shift in the AI landscape. Startups raised upward of $3.5 billion in investor funds in October 2022, much of which was directed toward AI hardware companies.
3 metros saw double-digit growth in business applications between 2021 and 2022
Specific metros were able to buck the downward trend: Dover, Del.; Mobile, Ala., and Colorado Springs, Colo., saw double-digit growth in business applications between 2021 and 2022, by 12.2%, 11.5% and 10.9%, respectively.
Delaware (including Dover) saw a proliferation of franchised businesses in its shopping centers, which may be owed in part to the state’s movement toward developing “live, work and play” mixed-use centers that put residential, business and retail zones close together, according to Delaware Online. In Mobile, about 20 new businesses were expected to have opened in the city’s downtown last year. At the same time, in Colorado Springs, popular fast food establishments like Whataburger, Chick-fil-A and Krispy Kreme were expected to arrive or expand in 2022, along with a branch of Denver-based bookstore Tattered Cover (though this already closed in 2023).
Business applications by metro, 2021 vs. 2022
| Rank | Metro | 2021 business applications | 2022 business applications | % change |
|---|---|---|---|---|
| 1 | Dover, DE | 11,552 | 12,961 | 12.2% |
| 2 | Mobile, AL | 8,782 | 9,792 | 11.5% |
| 3 | Colorado Springs, CO | 13,616 | 15,099 | 10.9% |
| 4 | Knoxville, TN | 8,431 | 9,115 | 8.1% |
| 5 | Omaha, NE | 10,951 | 11,803 | 7.8% |
| 6 | Albuquerque, NM | 12,193 | 13,052 | 7.0% |
| 7 | Tucson, AZ | 11,768 | 12,559 | 6.7% |
| 8 | Sacramento, CA | 29,975 | 31,625 | 5.5% |
| 9 | Ogden, UT | 10,237 | 10,689 | 4.4% |
| 10 | Cape Coral, FL | 17,777 | 18,527 | 4.2% |
| 11 | Provo, UT | 15,926 | 16,562 | 4.0% |
| 12 | North Port, FL | 17,322 | 17,944 | 3.6% |
| 13 | Denver, CO | 62,469 | 64,488 | 3.2% |
| 14 | Reno, NV | 8,290 | 8,491 | 2.4% |
| 15 | McAllen, TX | 8,355 | 8,530 | 2.1% |
| 16 | Pensacola, FL | 8,696 | 8,853 | 1.8% |
| 17 | Port St. Lucie, FL | 11,688 | 11,885 | 1.7% |
| 18 | Albany, NY | 11,677 | 11,842 | 1.4% |
| 19 | Salt Lake City, UT | 23,896 | 24,192 | 1.2% |
| 20 | Tampa, FL | 80,217 | 80,757 | 0.7% |
| 21 | Salisbury, MD | 8,253 | 8,286 | 0.4% |
| 22 | Phoenix, AZ | 88,709 | 88,955 | 0.3% |
| 23 | El Paso, TX | 8,354 | 8,349 | -0.1% |
| 23 | Nashville, TN | 33,177 | 33,155 | -0.1% |
| 23 | Boise, ID | 13,199 | 13,189 | -0.1% |
| 26 | Naples, FL | 9,540 | 9,523 | -0.2% |
| 27 | Des Moines, IA | 8,499 | 8,472 | -0.3% |
| 28 | Kansas City, MO | 32,070 | 31,824 | -0.8% |
| 29 | Winston-Salem, NC | 8,466 | 8,390 | -0.9% |
| 29 | Deltona, FL | 12,785 | 12,664 | -0.9% |
| 31 | Austin, TX | 47,033 | 46,564 | -1.0% |
| 32 | Palm Bay, FL | 10,668 | 10,527 | -1.3% |
| 33 | Grand Rapids, MI | 12,583 | 12,371 | -1.7% |
| 34 | Rochester, NY | 10,979 | 10,768 | -1.9% |
| 35 | Honolulu, HI | 11,979 | 11,742 | -2.0% |
| 36 | San Antonio, TX | 34,089 | 33,346 | -2.2% |
| 37 | Lakeland, FL | 16,080 | 15,620 | -2.9% |
| 37 | Louisville, KY | 18,049 | 17,523 | -2.9% |
| 39 | San Diego, CA | 41,617 | 40,335 | -3.1% |
| 40 | Greenville, SC | 15,450 | 14,955 | -3.2% |
| 41 | Charleston, SC | 18,940 | 18,302 | -3.4% |
| 41 | Raleigh, NC | 27,694 | 26,760 | -3.4% |
| 43 | Portland, OR | 32,574 | 31,406 | -3.6% |
| 44 | Orlando, FL | 82,384 | 79,343 | -3.7% |
| 45 | Madison, WI | 7,930 | 7,632 | -3.8% |
| 46 | Bakersfield, CA | 7,925 | 7,589 | -4.2% |
| 47 | Providence, RI | 16,212 | 15,504 | -4.4% |
| 48 | New York, NY | 378,167 | 360,830 | -4.6% |
| 48 | Oxnard, CA | 7,995 | 7,625 | -4.6% |
| 50 | Tulsa, OK | 15,269 | 14,557 | -4.7% |
| 51 | Buffalo, NY | 11,491 | 10,911 | -5.0% |
| 52 | Oklahoma City, OK | 25,115 | 23,822 | -5.1% |
| 53 | Riverside, CA | 57,236 | 54,022 | -5.6% |
| 54 | Columbus, OH | 35,001 | 32,948 | -5.9% |
| 54 | Pittsburgh, PA | 24,050 | 22,629 | -5.9% |
| 56 | Stockton, CA | 8,502 | 7,992 | -6.0% |
| 57 | Fresno, CA | 10,007 | 9,401 | -6.1% |
| 57 | Milwaukee, WI | 25,587 | 24,036 | -6.1% |
| 57 | Seattle, WA | 53,385 | 50,132 | -6.1% |
| 60 | San Jose, CA | 20,090 | 18,820 | -6.3% |
| 61 | Allentown, PA | 9,901 | 9,248 | -6.6% |
| 62 | Boston, MA | 57,729 | 53,872 | -6.7% |
| 63 | Indianapolis, IN | 39,833 | 36,970 | -7.2% |
| 64 | Dallas, TX | 162,082 | 150,060 | -7.4% |
| 65 | Miami, FL | 271,758 | 251,242 | -7.5% |
| 66 | Cincinnati, OH | 28,432 | 26,271 | -7.6% |
| 67 | Dayton, OH | 10,209 | 9,410 | -7.8% |
| 68 | Jacksonville, FL | 40,521 | 37,292 | -8.0% |
| 68 | Minneapolis, MN | 49,203 | 45,264 | -8.0% |
| 68 | Charlotte, NC | 57,525 | 52,901 | -8.0% |
| 71 | Durham, NC | 9,625 | 8,808 | -8.5% |
| 72 | Los Angeles, CA | 225,526 | 206,047 | -8.6% |
| 73 | San Francisco, CA | 62,995 | 57,312 | -9.0% |
| 74 | Washington, DC | 120,759 | 109,731 | -9.1% |
| 75 | Virginia Beach, VA | 32,416 | 29,434 | -9.2% |
| 76 | Richmond, VA | 25,300 | 22,792 | -9.9% |
| 77 | Houston, TX | 151,358 | 136,264 | -10.0% |
| 78 | Augusta, GA | 11,906 | 10,693 | -10.2% |
| 79 | St. Louis, MO | 43,007 | 38,382 | -10.8% |
| 80 | Las Vegas, NV | 55,475 | 49,369 | -11.0% |
| 81 | Greensboro, NC | 12,951 | 11,515 | -11.1% |
| 82 | Birmingham, AL | 19,991 | 17,757 | -11.2% |
| 83 | Savannah, GA | 10,237 | 8,994 | -12.1% |
| 84 | Columbia, SC | 18,851 | 16,523 | -12.3% |
| 85 | Detroit, MI | 91,590 | 80,037 | -12.6% |
| 86 | Worcester, MA | 8,287 | 7,225 | -12.8% |
| 87 | Lafayette, LA | 9,455 | 8,141 | -13.9% |
| 88 | Little Rock, AR | 14,206 | 12,193 | -14.2% |
| 89 | Jackson, MS | 15,697 | 13,307 | -15.2% |
| 90 | Akron, OH | 9,978 | 8,416 | -15.7% |
| 91 | Baltimore, MD | 52,041 | 43,770 | -15.9% |
| 91 | Philadelphia, PA | 128,265 | 107,863 | -15.9% |
| 93 | Memphis, TN | 33,450 | 27,967 | -16.4% |
| 94 | Chicago, IL | 176,244 | 146,369 | -17.0% |
| 95 | Tallahassee, FL | 9,089 | 7,529 | -17.2% |
| 96 | Atlanta, GA | 238,201 | 195,047 | -18.1% |
| 97 | Baton Rouge, LA | 20,803 | 16,477 | -20.8% |
| 98 | Cleveland, OH | 38,081 | 30,117 | -20.9% |
| 99 | New Orleans, LA | 32,647 | 25,518 | -21.8% |
| 100 | Shreveport, LA | 10,493 | 7,850 | -25.2% |
Source: LendingTree analysis of U.S. Census Bureau Business Formation Statistics data. Note: This list analyzed the 100 metros with the most business applications in 2021.
Still, almost a quarter of the 100 metros analyzed — 24 — saw double-digit drops in business applications between 2021 and 2022.
Louisiana was one of the most put-upon states in this regard: Two of its biggest metros, Shreveport and New Orleans, saw dips of 25.2% and 21.8%, respectively. Gary Wagner, an economist at the University of Louisiana at Lafayette, told NOLA.com of the state’s economy based on new federal data in June 2022: “It’s probably hard to imagine a report that’s worse right now.”
Cleveland came in third with a dip of 20.9%. Though — as reported in March 2023 by Signal Cleveland — the city is continuing to bounce back after the pandemic, with its unemployment rate often dipping lower than Ohio’s overall unemployment rate since the fall of 2022.
Business applications grew in only 4 industries between 2021 and 2022
While most industries experienced the same downward trend in business applications between 2021 and 2022, four grew:
- Mining, quarrying, and oil and gas extraction
- Utilities
- Real estate and rental and leasing
- Professional, scientific and technical services
The mining, quarrying, and oil and gas extraction industry saw the most growth by far with a 14.4% change year over year. Utilities came in second at 10.7%, while the final two grew by less than 1.0%.
According to the Institute for Energy Research (IER), global oil consumption increased by 2.9 million barrels a day between 2021 and 2022, a trend already underway (and even more pronounced) between 2020 and 2021. Much of the demand for fossil fuels, the IER reports, is related to aviation, which tracks with the surge in post-pandemic travel.
Growth in the utilities sector, on the other hand, may be related to the increased prevalence of a work-from-home lifestyle, requiring workers to use more energy, water, bandwidth and other resources than they would have from an office.
Business applications by industry, 2021 vs. 2022
| Industry | 2021 business applications | 2022 business applications | % change |
|---|---|---|---|
| Mining, quarrying, and oil and gas extraction | 5,346 | 6,116 | 14.4% |
| Utilities | 5,099 | 5,646 | 10.7% |
| Real estate and rental and leasing | 288,174 | 289,694 | 0.5% |
| Professional, scientific and technical services | 615,456 | 615,874 | 0.1% |
| Health care and social assistance | 299,798 | 296,246 | -1.2% |
| Construction | 498,470 | 490,916 | -1.5% |
| Arts, entertainment and recreation | 153,175 | 150,300 | -1.9% |
| Administrative and support and waste management and remediation services | 373,756 | 359,224 | -3.9% |
| Educational services | 74,417 | 69,676 | -6.4% |
| Management of companies and enterprises | 52,750 | 48,703 | -7.7% |
| Accommodation and food services | 302,912 | 274,453 | -9.4% |
| Manufacturing | 88,434 | 79,030 | -10.6% |
| Transportation and warehousing | 484,625 | 431,626 | -10.9% |
| Other services (except public administration) | 520,545 | 462,635 | -11.1% |
| Information | 107,301 | 95,177 | -11.3% |
| Finance and insurance | 251,045 | 220,893 | -12.0% |
| Wholesale trade | 125,646 | 109,699 | -12.7% |
| Retail trade | 983,418 | 851,386 | -13.4% |
| Agriculture, forestry, fishing and hunting | 57,560 | 48,651 | -15.5% |
Source: LendingTree analysis of U.S. Census Bureau Business Formation Statistics data.
Most industries, however, experienced the overall downward trend of the period — though some suffered more than others. Eight of the 19 industries we studied saw double-digit dips, with agriculture, forestry, fishing and hunting seeing the most precipitous drop-off at 15.5%. Retail and wholesale trade, though cataloged separately in the study, could conceivably be construed as an overall runner-up category, with drops of 13.4% and 12.7%, respectively.
According to the American Farm Bureau Federation, agricultural expenses rose in 2022. Fertilizer costs, for example, increased by 60% between 2021 and 2022 — a development that could explain the industry’s relatively steep drop. The slowing of the retail and wholesale trade industries lines up well with the supply chain issues that plagued manufacturers and sellers of all sorts in 2022.
Business applications pacing well so far in 2023 — here’s a national and state look
Although the dip between 2021 and 2022 is significant, 2023 (so far) is looking brighter across the board. Between January and September, 4.07 million business applications were filed, the second-highest number during that same set of months over the past 10 years. (The top year was 2021, with 4.12 million filings.)
Business applications, first 9 months of year
| Year | Business applications, first 9 months |
|---|---|
| 2021 | 4,116,629 |
| 2023 | 4,065,548 |
| 2022 | 3,780,917 |
| 2020 | 3,227,267 |
| 2018 | 2,625,188 |
| 2019 | 2,612,470 |
| 2017 | 2,373,908 |
| 2016 | 2,217,417 |
| 2015 | 2,116,979 |
| 2014 | 2,012,607 |
Source: LendingTree analysis of U.S. Census Bureau Business Formation Statistics data.
The month with the most business filings in the first nine months of 2023 was September, with 472,961 EIN applications. Overall, filings increased as the year drew on, with January having the lowest number at 423,963. Still, more than 420,000 applications were filed each month.
Business applications, 2023
| Month | Business applications |
|---|---|
| January | 423,963 |
| February | 431,984 |
| March | 452,924 |
| April | 436,500 |
| May | 441,147 |
| June | 467,564 |
| July | 471,629 |
| August | 466,876 |
| September | 472,961 |
| Total through 9 months | 4,065,548 |
Source: LendingTree analysis of U.S. Census Bureau Business Formation Statistics data.
Again, geography plays a key role, and the figures vary significantly by state.
While exact causes are hard to discern, Wyoming has seen a population increase even as deaths outnumber births — and the increase in digital-first remote businesses means even one of the least densely populated states in the country can headquarter startups. Plus, the state’s the second-largest net energy supplier in the U.S. after Texas, according to the U.S. Energy Information Administration (EIA) — and the fossil fuel industry saw the most growth during the recent dip.
New Mexico was second with an increase of 23.8% to 24,932 business applications in the studied 2023 period — perhaps also spurred by the increase in remote business possibilities. Delaware was third with an increase of 20.4%, totaling 40,852 filings in the first nine months of the year.
Business applications, first 9 months of 2022 vs. 2023
| Rank | State | Business applications, first 9 months of 2022 | Business applications, first 9 months of 2023 | % change |
|---|---|---|---|---|
| 1 | Wyoming | 30,576 | 42,847 | 40.1% |
| 2 | New Mexico | 20,135 | 24,932 | 23.8% |
| 3 | Delaware | 33,934 | 40,852 | 20.4% |
| 4 | California | 359,790 | 422,699 | 17.5% |
| 5 | Kentucky | 34,986 | 40,836 | 16.7% |
| 6 | Colorado | 85,854 | 98,453 | 14.7% |
| 7 | West Virginia | 10,353 | 11,520 | 11.3% |
| 8 | Montana | 15,578 | 17,285 | 11.0% |
| 9 | Indiana | 62,726 | 69,402 | 10.6% |
| 10 | Oregon | 37,499 | 41,388 | 10.4% |
| 11 | Florida | 453,498 | 500,224 | 10.3% |
| 12 | New Hampshire | 10,447 | 11,514 | 10.2% |
| 13 | Arizona | 86,109 | 94,469 | 9.7% |
| 14 | Minnesota | 46,340 | 50,784 | 9.6% |
| 14 | North Dakota | 6,124 | 6,709 | 9.6% |
| 16 | Washington | 67,199 | 73,266 | 9.0% |
| 17 | Iowa | 22,734 | 24,711 | 8.7% |
| 18 | Michigan | 102,856 | 111,689 | 8.6% |
| 19 | Utah | 48,852 | 52,809 | 8.1% |
| 20 | Pennsylvania | 106,307 | 114,745 | 7.9% |
| 20 | Missouri | 60,971 | 65,765 | 7.9% |
| 22 | South Dakota | 7,901 | 8,491 | 7.5% |
| 23 | Rhode Island | 8,194 | 8,755 | 6.8% |
| 23 | Massachusetts | 53,647 | 57,281 | 6.8% |
| 25 | Nevada | 46,765 | 49,845 | 6.6% |
| 26 | Virginia | 93,096 | 99,106 | 6.5% |
| 27 | Alaska | 6,334 | 6,724 | 6.2% |
| 28 | Ohio | 105,391 | 111,866 | 6.1% |
| 29 | Kansas | 23,368 | 24,700 | 5.7% |
| 29 | Maine | 9,827 | 10,387 | 5.7% |
| 31 | Connecticut | 33,835 | 35,673 | 5.4% |
| 32 | Nebraska | 15,435 | 16,164 | 4.7% |
| 33 | Texas | 355,530 | 371,866 | 4.6% |
| 34 | New Jersey | 116,200 | 121,240 | 4.3% |
| 35 | Idaho | 22,606 | 23,535 | 4.1% |
| 36 | Georgia | 205,073 | 213,027 | 3.9% |
| 37 | Tennessee | 69,397 | 72,026 | 3.8% |
| 38 | District of Columbia | 10,851 | 11,230 | 3.5% |
| 38 | New York | 225,627 | 233,500 | 3.5% |
| 40 | North Carolina | 123,937 | 127,421 | 2.8% |
| 41 | Arkansas | 28,534 | 29,307 | 2.7% |
| 41 | Hawaii | 13,925 | 14,295 | 2.7% |
| 43 | Oklahoma | 41,934 | 43,002 | 2.5% |
| 44 | Maryland | 75,162 | 76,404 | 1.7% |
| 45 | Wisconsin | 48,548 | 49,222 | 1.4% |
| 46 | South Carolina | 68,501 | 69,108 | 0.9% |
| 47 | Alabama | 54,073 | 54,349 | 0.5% |
| 48 | Illinois | 128,222 | 128,587 | 0.3% |
| 49 | Louisiana | 61,585 | 61,204 | -0.6% |
| 50 | Vermont | 5,715 | 5,627 | -1.5% |
| 51 | Mississippi | 43,134 | 40,687 | -5.7% |
Source: LendingTree analysis of U.S. Census Bureau Business Formation Statistics data.
Meanwhile, Mississippi saw the biggest dip in business applications year over year between 2022 and 2023, at 5.7%, representing 2,447 fewer filings. According to U.S. Census Bureau data, Mississippi and Louisiana (which suffered the third-highest drop in business applications in our study) had the highest poverty rates in the country in 2022.
6 steps to start a business
“The pandemic changed so much for those wanting to start a business,” says Matt Schulz, LendingTree chief credit analyst.
Although many small business owners suffered during COVID-19’s darkest days, some entrepreneurs were catapulted into action after losing their jobs — or finally having the time, with everything shut down, to get serious about business planning.
Either way, starting a business “has never been easier to do than today,” Schulz says. Here are some of the steps along the way to make your entrepreneurial dreams a reality.
- Do research, but don’t wait too long to make the leap. A solid business plan, including market research proving your idea has legs, is always the first step toward starting a successful enterprise. But even with the best planning possible, you’ll still need to take a leap of faith at some point. “There’s never been a perfect time to start a business, and there never will be,” Schulz says. “You’ll also never feel 100% prepared and ready to go.” Do the best you can — and then move forward.
- Register your business and file for an EIN. Among the first steps toward making your business official is registering your business with the appropriate entities — usually your state and county, and sometimes with federal agencies. You’ll need to choose a business structure (LLC, S-Corp, sole proprietorship, etc.) and file for an employer identification number (EIN), which can be done online via the IRS.
- Obtain any necessary licensing or permits. Depending on the type of venture you’re starting and your local governance, you may need to obtain licenses or permits to legally run it. Some licenses — like those required for doctors and lawyers to practice — require more effort to qualify for and obtain than others.
- Open a business bank account. Although it may be tempting to keep all your money in one place, separating your business and personal finances is an important step that can help make your bookkeeping easier — as well as clarify your company’s cash flow and profitability. Further, if you apply for a business loan, line of credit or grant, having the cash in a separate account can help ensure it goes toward the right expenses.
- Apply for trademarks, copyrights or patents as needed. Your intellectual property can be one of your most valuable assets as a business owner. Taking steps to protect it should be one of the first things you do after getting the organization up and running.
- Buy business insurance. Like any other insurance product, business insurance can protect your livelihood in an expensive emergency like an injury, a lawsuit or property damage.
Methodology
LendingTree researchers analyzed U.S. Census Bureau Business Formation Statistics data to find the 100 metros with the most business applications in 2021. Analysts then compared the number of people who filed for EINs in each metro in 2021 and 2022 — the latest year for which full data was available.
We also compared business applications in the first nine months of 2022 to that same period in 2023.
Researchers also analyzed business application data at the national, state and industry levels.