California's economy remains the largest in the nation, with a gross state product exceeding $4 trillion. The Golden State's 4.3 million small businesses drive nearly 90% of state GDP and employ 7.6 million workers. Here's what the latest 2026 data reveals about entrepreneurship in California.
How Many Small Businesses Are in California?
Understanding the scale of California's small business ecosystem starts with the numbers. These figures show why the state dominates as America's entrepreneurial hub.
- The number of small businesses in California in 2026 is 4.3 million, representing 99.8% of all businesses in the state.
- Total businesses in California across all sizes reaches approximately 4.34 million establishments.
- Small businesses employ 7.6 million Californians, accounting for 47.4% of the private-sector workforce.
- Between March 2023 and March 2024, California recorded a net increase of 62,171 business establishments.
- Small businesses created a net increase of 86,885 jobs, representing 99.7% of total job growth during this period.
- California ranks as the largest small business state in the U.S., generating approximately 90% of the state's GDP.
Top Small Businesses and Industries in California
The state's economic diversity spans technology, healthcare, and professional services. California's industry mix reflects both coastal innovation hubs and inland agricultural strength.
Largest Small Business Industries
- Professional, scientific, and technical services leads with 703,133 small businesses and 805,645 employees.
- Transportation and warehousing ranks second with 545,538 small businesses.
- Real estate, rental, and leasing follows with 405,255 small businesses statewide.
- Health care and social assistance includes 385,126 small businesses employing over 1 million workers.
- Administrative support and waste management encompasses 331,324 small businesses.
- Construction maintains 321,828 small businesses with 703,903 employees.
- Retail trade comprises 305,490 small businesses employing 599,194 workers.
Largest Employers in California 2026
Major corporations headquartered in California provide context for the state's economic landscape.
- Allied Universal leads California employers with over 800,000 employees nationwide.
- Kaiser Permanente ranks among the largest healthcare employers in the state.
- Wells Fargo, Apple, Google/Alphabet, and Oracle represent the financial and tech sectors.
- The Walt Disney Company and Chevron anchor entertainment and energy industries respectively.
- NVIDIA has emerged as a major employer due to AI industry growth.
Small Business Employment Statistics in California
Employment data reveals how small companies power California's workforce. These statistics answer common questions about hiring patterns and company size.
How Many People Are Employed by Small Businesses?
- Small businesses employ 7.6 million Californians in 2026, up from 7.2 million in previous years.
- This workforce represents 47.4% of California's private-sector employment.
- The median small business in California employs 9 to 10 workers, varying significantly by industry.
Employment by Company Size
- Small businesses with 1 to 19 employees number 754,987 firms, employing approximately 3.8 million workers.
- Small businesses with 20 to 499 employees number 82,847 firms, employing an estimated 4.7 million workers.
- Businesses with fewer than 20 employees comprise approximately 88% of all businesses in California.
- These micro-enterprises employ 18.2% of all workers in the state.
California Small Business Owners: Demographics and Income
Who owns California's small businesses? Ownership demographics show increasing diversity, while income data helps entrepreneurs set realistic expectations.
How Much Does a Business Owner Make in California?
- The average small business owner in California earns $126,297 annually as of January 2026.
- Self-employed owners earn a median income of $49,489 per year.
- Small businesses with 1 to 4 employees average $387,000 in annual revenue.
- Income varies dramatically by industry; technology and professional services typically outperform retail and hospitality.
Women-Owned and Minority-Owned Businesses
- Women entrepreneurs own 43.8% of California businesses, totaling 1,651,842 women-owned establishments.
- Of these, 88.9% operate without employees (solopreneurs) and 11.1% have employees.
- Hispanic business owners represent 26.1% of California business ownership with 1,062,720 establishments.
- Asian Americans own 23% of very small businesses (under 50 employees), compared with 10% of larger businesses.
- Latino Americans own 11% of very small businesses, compared with 2% of larger businesses.
- Women own 22% of very small businesses, compared with 7% of larger businesses.
Veteran-Owned Businesses
- Veterans own 3.5% of California businesses, comprising 131,220 total establishments.
- Veteran business ownership exceeds their workforce representation of 2.8%.
- A total of 1.2 million members of minority groups are self-employed across the state.
California Business Startup Statistics for 2026
Startup activity and survival rates matter for anyone considering launching a business. California's data shows both opportunity and challenge.
New Business Applications
- California averaged 43,265 new business applications monthly in 2024.
- This translates to approximately 59 new businesses launching per hour across the state.
- Applications decreased 6.9% compared to 2023, though California remains the second-largest startup hub behind Florida.
- Despite the pandemic, 2020 saw 442,324 applications for new business licenses, a 21.7% increase over 2019.
Small Business Survival Rates
- 81.5% of California businesses survive their first year, the lowest first-year failure rate of any U.S. state.
- 55.2% of small businesses make it past five years of operation.
- 33.6% of businesses continue operating beyond ten years.
- California's survival rates exceed national averages across all timeframes.
Local Business Statistics by California Region
Regional differences shape where entrepreneurs choose to launch. County-level data helps identify thriving business ecosystems.
- Los Angeles County leads with 296,746 small businesses, the largest concentration in the state.
- Orange County follows with 103,620 small businesses.
- San Diego County contains 90,078 small businesses.
- Santa Clara County (Silicon Valley) has 48,524 small businesses.
- Alameda County (East Bay) includes 41,348 small businesses.
- Sacramento County maintains 32,131 small businesses.
- Per capita, San Francisco leads with 41.8 small businesses per 1,000 residents.
- Marin County follows at 38.6 per 1,000, and Sonoma County at 29.7 per 1,000 residents.
Small Business Lending and Exports
Access to capital and international trade drive growth for established small businesses. California leads in both categories.
Business Financing
- In 2023, California banks issued $9.9 billion in new loans to businesses with revenues under $1 million.
- Total reported new lending reached $29.7 billion for loans up to $1 million.
- Loans under $100,000 totaled $15.7 billion, supporting micro-enterprises and startups.
Small Business Exports
- 57,949 California small firms exported goods in 2023, representing 94.5% of all California exporters.
- Small business exports totaled $70.1 billion, comprising 42.3% of California's total exports.
- California small exporters contributed significantly to the state's position as a global trade leader.
California Small Business Requirements and Regulations
Legal requirements impact costs and compliance for every California business. If you're ready to form your business, learn how to start a California LLC with our step-by-step guide.
California Minimum Wage 2026
- As of January 1, 2026, California's minimum wage is $16.90 per hour for all employers, regardless of company size.
- Fast food workers receive $20.00 per hour under industry-specific rules.
- San Francisco maintains a local minimum of $19.18 per hour.
- San Jose requires $18.45 per hour for local employers.
- San Mateo mandates $18.60 per hour.
- San Diego sets its minimum at $17.75 per hour.
- Los Angeles County requires employers to pay above the state minimum for unincorporated areas.
LLC Formation Requirements and Costs
Every new California LLC must designate a California registered agent available during business hours at a physical address within the state.
- Articles of Organization filing fee is $70 with the Secretary of State.
- An initial Statement of Information costs $20 and is due within 90 days of formation.
- The annual franchise tax minimum is $800, payable approximately four months after formation.
- Biennial Statement of Information fees are $20 every two years thereafter.
- Total first-year costs range from $190 to $230 minimum, depending on optional services.
- For a detailed California LLC cost breakdown, see our comprehensive 2026 pricing guide.
Tax Structure and Compliance
- Every new California LLC receives a 12-digit corporate number from the Secretary of State or Franchise Tax Board.
- LLCs are taxed at flat dollar amounts based on gross income tiers:
- Gross incomes between $250,000 and $499,999 pay $900 annually.
- Gross incomes between $500,000 and $999,999 pay $2,500 annually.
- Gross incomes between $1 million and $4,999,999 pay $6,000 annually.
- Gross incomes of $5 million or greater pay $11,790 annually.
- California imposes taxation on both the business entity and pass-through income for S corporations and LLCs.
- Businesses using a name other than their legal name must file for a DBA (Doing Business As) in accordance with the Trade Name Registration Act.
- DBA filing fees vary by county, averaging around $40, and must be registered within 40 days of opening.
- Every business with employees needs an Employer Identification Number (EIN) from the IRS.
- Workers' compensation insurance is mandatory for any California business with employees.
- Retail and wholesale businesses require a seller's permit to purchase inventory without paying sales tax.
You can search existing California businesses through the Secretary of State database to verify registration status and name availability. After formation, maintain compliance by filing your biennial Statement of Information; see our LLC annual report guide for deadlines and requirements.
Sources
- SBA Office of Advocacy – California 2025 State Profile
- California Department of Industrial Relations – Minimum Wage
- California DIR Minimum Wage Order MW-2026
- Public Policy Institute of California – California's Businesses
- U.S. Census Bureau – County Business Patterns
- California Employment Development Department – Size of Business Data
- ZipRecruiter – Small Business Owner Salary in California