The Bay State ranks second in the nation for per capita income at $56,284, creating a competitive labor market fueled by graduates from institutions like MIT and Harvard. Massachusetts ranked 20th in CNBC's America's Top States for Business 2025 – an 18-spot improvement that earned it the “Most Improved State” recognition. The economy thrives on finance, higher education, health care, biotechnology, and information technology, with major employers including General Electric, Raytheon, Liberty Mutual, State Street Corporation, and Boston Scientific.
Number of Small Businesses in Massachusetts 2025
The number of small businesses in Massachusetts reached 756,096 in 2025, according to the SBA Massachusetts Small Business Profile. This figure includes both employer firms and self-employed individuals operating without paid staff.
- Massachusetts has 756,096 small businesses as of 2025, representing 99.5% of all businesses in the state.
- Of these, 126,237 have employees (employer firms), while the remaining 629,859 are non-employer businesses.
- Small businesses with employees account for 16.7% of all small businesses in Massachusetts.
- The state ranks among the top 15 nationally for total small business count.
Massachusetts Small Business Employment Statistics
In 2025, 1.5 million people are employed by small businesses in Massachusetts, making them a critical driver of the state's workforce. Job creation trends from the Massachusetts Small Business Credit Availability Report show small firms with fewer than 20 employees leading growth.
- Small businesses employ 1,512,884 workers in Massachusetts, representing 44.7% of the state's private-sector workforce.
- In 2024, Massachusetts small businesses created 5,292 net jobs.
- Businesses with fewer than 20 employees added 4,824 net jobs (91.2% of total small business job creation).
- Firms with 20-499 employees generated 468 net jobs.
- Following pandemic recovery, 22,386 establishments opened and 28,099 closed between March 2023 and March 2024.
- The hospitality sector has rebounded to 98.6% of pre-pandemic employment levels.
Main Industries in Massachusetts for Small Business
Massachusetts' industry landscape reflects its strengths in professional services, construction, and the growing logistics sector. These sectors dominate both in business count and employment figures.
Industries with the Most Small Businesses
Five industries maintain the largest number of small businesses in Massachusetts (2025 data from SBA Office of Advocacy):
- Professional, scientific, and technical services: 127,003 businesses
- Transportation and warehousing: 86,586 businesses
- Construction: 80,114 businesses
- Real estate and rental and leasing: 71,203 businesses
- Other services (except public administration): 64,393 businesses
Industries with the Most Small Business Employees
Three industries employ the largest share of small business workers in Massachusetts:
- Health care and social assistance: 231,153 employees
- Accommodation and food services: 198,748 employees
- Professional, scientific, and technical services: 182,888 employees
Most Profitable Industry in MA
The most profitable industry in MA for small businesses centers on the state's biotech corridor and tech ecosystem:
- Biotechnology and life sciences: average annual revenue exceeding $500,000 per firm
- Information technology services: average annual revenue of $420,000 per firm
- Professional and technical services: average annual revenue of $380,000 per firm
New Business Formations in Massachusetts 2020-2025
New business formations in Massachusetts show annual statistics that reflect entrepreneurial resilience following the pandemic surge. Data from the U.S. Census Bureau Business Formation Statistics shows the state consistently ranks in the top third nationally for new business applications.
- 2020: 66,665 new business applications
- 2021: 76,375 new business applications
- 2022: 81,000 new business applications (estimated)
- 2023: 76,375 new business applications
- 2024: 78,000 new business applications (estimated)
- 2025: 82,000 new business applications year-to-date (projected)
Small Business Lending and Exports in Massachusetts
Access to capital and international trade remain vital for Massachusetts small businesses. FFIEC CRA data shows strong lending activity, while the state's export economy demonstrates significant small business participation.
- In 2023, lending institutions reported $2.2 billion in small business loans under $100,000 under the Community Reinvestment Act.
- Massachusetts has 8,265 small business exporters, representing 87.1% of all exporters in the state.
- Small business exports account for $7.6 billion (22.3%) of Massachusetts' $33.8 billion in total exports.
Starting a Small Business in Massachusetts 2026
State law requires that every Massachusetts LLC designate a registered agent available during regular business hours at a physical address within the state. Here's what you need to know about formation costs and ongoing tax obligations based on official state requirements.
LLC Formation Costs
To form an LLC in Massachusetts in 2026, you must file your Certificate of Organization with the Secretary of the Commonwealth:
- Filing fee: $500
- Online processing fee: $20
- Annual Report fee: $520
Corporation Formation Costs
To form a corporation, you need to file your Articles of Organization with the Secretary of the Commonwealth:
- Filing fee: $275 for up to 275,000 shares
- Each additional 100,000 shares incurs a fee of $100
Corporate Excise Tax for S Corporations
The Massachusetts corporate excise tax for S corporations in 2026 varies based on gross receipts:
- Gross receipts under $6 million: $2.60 per $1,000 of taxable Massachusetts tangible personal property or net worth
- Gross receipts $6-9 million: Above rate plus 2.0% on gross receipts
- Gross receipts $9 million or more: Above rate plus 3.0% on gross receipts
- Minimum tax: $456
Minority-Owned and Self-Employed Businesses in Massachusetts
Diversity in business ownership and the income gap between incorporated and unincorporated self-employed individuals highlight ongoing disparities in the Massachusetts small business landscape. Data from the Massachusetts Supplier Diversity Office reveals significant challenges for minority entrepreneurs.
- Of Massachusetts' 756,096 small businesses, 2,060 are certified minority-owned employer firms, representing 7.5% of all employer firms.
- Self-employed individuals running incorporated businesses earn a median income of $64,686.
- Those with unincorporated businesses earn a median income of $31,723 – a difference of nearly $33,000.
- Minority-owned businesses face significant disparities in access to capital and state contracts.
Looking for an overview? See Massachusetts LLC Services
Source
- U.S. Small Business Administration – Massachusetts 2025 Small Business Profile
- U.S. Bureau of Economic Analysis – Personal Income by State
- U.S. Census Bureau – Business Formation Statistics
- Massachusetts Secretary of the Commonwealth – Starting a Business
- Massachusetts Department of Revenue – Corporate Tax Rates
- CNBC – America's Top States for Business 2025
