Business applications overall decreased across all regions and industry sectors in February despite an uptick in economic activity and declining COVID-19 infections. Data is culled from business applications for employer identification numbers (EINs) and payroll tax liabilities.
New business applications dropped 13.4 percent to 423,095 last month, with the steepest declines for startups in the construction industry, which were down more than 18 percent from January. Administration and support startups declined over 14 percent, along with warehouses, transportation and retail, which all dropped by more than 14 percent. Agriculture startups and utilities dropped the least, with 6 percent and 2.6 percent, respectively.
Applications from corporations dropped 10.4 percent to 48,749. Meanwhile, applications for businesses with planned wages decreased 12.9 percent to 51,071. The Commerce Department forecasted that roughly 31,153 new businesses with payroll tax liabilities would form within four quarters of submitting an application, down 13.2 percent over January.
The Census Bureau’s March 2021 Business Formation Statistics Report is scheduled to drop on April 14.
A PYMNTS survey on Main Street small business survival indicates that there is no one-size-fits-all explanation as to why some succeed and others fail. The most common survival approach taken by local small businesses is to use digital platforms to increase sales. Some 52 percent of respondents started selling or advertising on digital channels since the pandemic took hold in March 2020.
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Despite the pandemic — or maybe because of it — more new businesses were launched in 2020 than in over a decade. Historically, disasters tend to drive wealth, so the entrepreneurial mindset could help the economy rebound.
The PYMNTS report Pandenomics: Main Street’s Six-Month Checkpoint showed that almost 10 percent of small businesses are now closed due to the pandemic, compared to 33.9 percent that had to close solely as a result of the pandemic in March.
