The Bay State is the most populous of all six states in the New England region of the US and has the third-highest income per capita in the country at $53,221. A very competitive labor market exists in Massachusetts due to the presence of many, well-educated young people straight out of the numerous varsities and colleges in the state like the Massachusetts Institute of Technology (MIT).
The economy of Massachusetts is dependent on sectors such as finance, higher education, healthcare, biotechnology, tourism, manufacturing, information technology and defense. Some of the large, multinational corporations present in the state include; General Electric, Raytheon, Liberty Mutual, Street State Corporation and Boston Scientific. Massachusetts was ranked 25th best state in the nation for business by a 2014 CNBC report.
Due to the large pool of talent available, small businesses (SMBs) and startups have an easy time selecting the most suitable individuals to hire. Most entrepreneurs are attracted to the thriving (and high earning) technology industry in the state and as the jobs increase more employees flock to the thriving tech community in Massachusetts with the result that other small business owners can expect more patronage and more disposable income in their communities.
Here are some statistics on the state of small businesses in Massachusetts:
- There are 700,646 small businesses in the state. They account for 99.5% of all businesses in the state.
- The top 5 industries with the largest number of small businesses are:
- Professional, scientific, and technical services (121,612).
- Construction (75,141).
- Real estate and rental and leasing (65,405).
- Transportation and warehousing (57,565).
- Retail trade (55,438).
- There are 1.5 million people employed by small businesses representing 45.5% of all employees in the state.
- As of November 2020, the number of small businesses that had not closed had decreased by 37% compared with January 2020.
- The hospitality industry is highly affected by the Covid-19 pandemic. In 2020, there was a 54.6% decrease in the number of open small businesses in this sector. Revenue for these businesses also dropped by 64.3%.
- Self-employed individuals running incorporated businesses have an average median income of $65,000 which is $33,000 more than those with unincorporated businesses.
- State law requires that every Massachusetts LLC designates a Massachusetts registered agent that will be available during regular business hours at a physical address within the state.
- In 2019, small businesses created 35,232 net jobs. Businesses with less than 20 employees added 27,656 net jobs while those with 100-499 employees generated 3,371 net jobs.
- To form a corporation, you need to file your Articles of Organization with the Secretary of State. The filing fee is $275 for up to 275,000 shares. For every additional 100,000 shares, there is a fee of $100.
- In 2018, lending institutions gave out 158,974 loans under $100,000 to small businesses while reporting under the Community Reinvestment Act. The total value of the loans was $2.2 billion.
- To form an LLC, you are required to file your Certificate of Organization with the Secretary of State. The filing fee is $500 plus a $20 online processing fee.
- There are 9,256 small business exporters that account for 33.5% of Massachusetts’ $25.3 billion worth of revenue in total exports.
- The top three industries with the largest share of small business employees are:
- Health care and social assistance (230,648).
- Accommodation and food services (208,166).
- Professional, scientific, and technical services (158,416).
- The total corporate excise tax that an S corporation (which most SMBs belong to) pays varies in part on the corporation’s gross receipts. For example:
- If gross receipts are less than $6 million, the corporation owes a tax of $2.60 per $1,000 of either taxable Massachusetts tangible personal property or taxable net worth.
- If gross receipts are $6 million but less than $9 million, the corporation not only owes the latter amount based on property or net worth but also owes a tax of 1.93% on its gross receipts.
- If gross receipts are $9 million or more, the corporation not only owes the foregoing amount based on property or net worth but also owes a tax of 2.9% on its gross receipts.
- Out of the over 700,000 small business owners, only 62,049 are self-employed minorities.