A closer look at the latest American data on business openings, closures, job creation and corporate structure, and why Canadian founders and investors should pay attention.
The latest small business statistics from the United States show that small firms account for nearly every business in the country and a large share of its new jobs. Figures from the U.S. Small Business Administration count 36.2 million small businesses in 2025, or 99.9 per cent of all American businesses.
Fresh federal data also points to a cooling in new business applications at the end of 2025. For Canadian companies that sell into, buy from or compete with American firms, those numbers offer a useful read on the health of Canada’s largest trading partner.
The data also renews attention on a basic but consequential question for any founder: how a company is legally structured. That choice shapes liability, taxes and the ability to raise money, and it differs in important ways on each side of the border.
Inside the SBA’s 2025 Count of 36.2 Million Small Businesses
According to the SBA’s 2025 national profile, the 36.2 million small businesses in the U.S. employed 62.3 million people. That works out to 45.9 per cent of the American private-sector workforce.
Put another way, close to half of all private-sector workers in the world’s largest economy draw a paycheque from a small firm. That makes small business conditions a key indicator of consumer spending, hiring and overall economic momentum.
The profile also shows how fluid the small business sector is. Firms are constantly opening, closing and changing shape, and the net result matters more than any single headline number.
1.1 Million Openings Against 982,940 Closures
Between March 2023 and March 2024, U.S. small businesses opened 1.1 million establishments and closed 982,940. Over the same period, the sector added a net 1.2 million jobs.
The gap between openings and closures is narrower than the headline totals suggest. Nearly as many establishments shut down as opened, which underlines how much churn sits beneath steady job growth.
For readers tracking the economy, that churn is not necessarily a warning sign. New entrants often replace weaker operators, and job creation can rise even when many firms exit the market.
Firms Under 250 Workers Generated 52.8% of Net New Jobs
The U.S. Bureau of Labor Statistics adds a second lens. Its data shows that firms with fewer than 250 employees accounted for 52.8 per cent of total net job creation between the first quarter of 2021 and the second quarter of 2024.
That period covers the recovery from the pandemic and the hiring boom that followed. Smaller employers, rather than large corporations, did slightly more than half of the net hiring.
It is worth noting that the BLS definition of a small firm, under 250 employees, is a working threshold for this measure. Different agencies and countries draw the line between small and medium-sized businesses in different places, so comparisons should be made with care.
December 2025 Business Applications Fell 7.3%
The U.S. Census Bureau’s Business Formation Statistics show 497,046 business applications were filed in December 2025. That was a 7.3 per cent decline from November.
A single month-over-month drop does not establish a trend, and year-end months can be affected by seasonal factors. Still, business applications are watched closely as an early signal of entrepreneurial confidence, since they come before hiring and investment.
Canadian exporters and investors may want to watch whether the December dip carries into the new year. A sustained slowdown in American business formation could eventually show up in demand for Canadian goods and services.
Why U.S. Small Business Statistics Matter to Canadian Companies
The connection is practical. Many Canadian firms rely on American customers, suppliers and partners, and conditions south of the border can quickly affect order books in Canada.
Companies rethinking where they source and sell may find our look at how to design global supply chains in 2026 a useful companion to these figures.
Borrowing costs are another link. Small firms in both countries are sensitive to interest rates, and readers can see how recent monetary policy is landing at home in our analysis of the Bank of Canada rate hike to 2.5%.
Three takeaways stand out for Canadian business owners:
- Small firms set the pace: With nearly half of U.S. private-sector workers at small businesses, their health is a strong signal for overall American demand.
- Churn is normal: High numbers of closures alongside openings do not necessarily mean a weak economy, as long as net job growth holds.
- Formation data is an early warning: Changes in business applications can hint at shifts in confidence before they appear in hiring or spending figures.
Sole Proprietors to Public Corporations: How U.S. Firms Are Organized
Behind every one of those 36.2 million businesses is a legal structure. A company, at its core, is an entity formed by people or groups to carry out economic activity, usually with profit as the goal. In many cases the law treats it as separate from its owners, able to own property, sign contracts, hire staff, sue and be sued, and even outlive its founders.
The structure a business chooses determines who is on the hook for its debts and how its profits are taxed. The main U.S. options are summarized below.
| Structure | Who owns it | Owner liability | Tax treatment |
|---|---|---|---|
| Sole proprietorship | One person | Personally liable | Profits reported by the owner |
| Partnership | Two or more people | Generally personally liable | Pass-through to partners |
| Limited liability company (LLC) | One or more members | Limited | Flexible; taxed as partnership, corporation or disregarded entity |
| C corporation | Shareholders | Limited | Taxed at corporate level and again on dividends |
| S corporation | Limited number and type of shareholders | Limited | Pass-through, avoiding double taxation |
| Nonprofit | No owners receive profits | Varies | Often tax-exempt under section 501(c)(3) |
| Cooperative | Members who use its services | Varies | Varies |
| Benefit corporation | Shareholders | Limited | For-profit, with social and environmental duties |
A sole proprietorship is the simplest and cheapest to start, but the owner and the business are legally the same, so personal assets are exposed. Partnerships can be general, limited (LPs) or limited liability (LLPs), and partners usually set out roles and profit shares in an agreement.
LLCs blend features of partnerships and corporations. By default, a multi-member LLC is taxed as a partnership, while a single-member LLC is folded into its owner’s return unless it elects corporate taxation. Corporations offer limited liability and easy transfer of ownership, at the cost of possible double taxation. Benefit corporations must weigh the effect of their decisions on workers, customers, communities and the environment, and some seek extra certification from the nonprofit B Lab.
Public vs. Private: The Line That Shapes Earnings Reporting
For readers who follow company earnings, the public-private divide is the one that matters most. A private company is held by a small group, such as founders, families or private equity firms. Its shares do not trade on an exchange and it faces fewer reporting obligations.
A public company sells stock to the general public on an exchange. In the U.S., it must register with the Securities and Exchange Commission and disclose its financial results on a regular basis. That disclosure is what produces the quarterly earnings reports investors track.
Going public allows a company to raise large amounts of capital, but it brings more regulatory scrutiny and a broad base of shareholders to answer to. Companies typically make the jump when they need substantial capital to expand and are prepared for ongoing public reporting.
How Amazon, McDonald’s, PepsiCo and Starbucks Are Structured
Some of the most recognizable brands in Canada show how these structures work in practice:
- Amazon: A publicly traded multinational corporation selling products and services online, subject to strict reporting rules.
- McDonald’s: A corporation that licenses its brand to franchisees who run individual restaurants.
- PepsiCo: A large corporation producing beverages and snacks under multiple brands.
- Starbucks: A publicly traded corporation selling coffee and related products worldwide.
- A neighbourhood bakery: Often run as a sole proprietorship or LLC, with the owner managing daily operations.
Where Canadian Rules Differ From the U.S. Model
General context: The U.S. figures and structures above do not map neatly onto Canada. Canadian businesses commonly operate as sole proprietorships, partnerships or corporations, and can incorporate either federally or provincially. The LLC is an American creation and is not a standard Canadian business vehicle.
Tax administration also differs. Canadian businesses deal with the Canada Revenue Agency rather than the IRS, and public companies answer to provincial and territorial securities regulators rather than a single national body like the SEC. Canada also has cooperatives and not-for-profit corporations, though the rules governing them vary by jurisdiction.
Because the details carry legal and tax consequences, owners should confirm how any structure applies to their situation with a qualified accountant or lawyer before making a decision.
The Questions Founders Weigh Before Choosing a Structure
Whether a business is starting out in Calgary or scaling across borders, the same core questions apply:
- Personal risk: Sole proprietorships and partnerships expose owners to unlimited liability, while corporations limit it.
- Tax on profits: Pass-through structures avoid corporate tax but put profits on owners’ personal returns; corporations may face tax at two levels.
- Number of owners: A solo founder has different options than a group, since a partnership requires at least two people.
- Capital needs: Corporations can issue shares and attract outside investors more easily than partnerships.
The decision is not permanent. Many firms start small and convert later, moving to a corporation for liability protection or to bring in investors. Owners working with lean budgets can find practical growth ideas in our guide to high-traction tactics for Calgary businesses.
The broader message from the American data is clear: small firms are not a side story in the economy. They employ nearly half the private workforce, generate more than half of net new jobs, and their formation rate is one of the first places a shift in confidence shows up. Canadian business leaders have good reason to keep watching.
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