How Many LLCs Are Formed Each Year in the United States?
In 2023, approximately 5.5 million new business applications were filed in the United States, marking the highest year on record according to the U.S. Census Bureau. With LLCs representing 72.7% of all partnerships (IRS data), this comprehensive analysis explores LLC formation trends, state breakdowns, and future projections.
Quick Answer
5.5 million new business applications were filed in 2023 according to the U.S. Census Bureau, the highest year on record. Based on IRS data showing LLCs comprise 72.7% of partnerships, approximately 4 million were LLC formations. This represents a 10% increase from 2022 and a 57% increase from 2019 levels.
2023 LLC Formation Statistics
Business Applications
5.5M
Total new business applications filed in 2023 (Census Bureau)
↑ vs 2022
Source: U.S. Census Bureau
Daily LLC Formations
~11,000
Estimated LLCs formed per day (72.7% of business applications)
Source: IRS Statistics of Income
LLCs of Partnerships
72.7%
Percentage of partnership returns that are LLCs (2022 IRS data)
Source: IRS SOI
Growth Since 2019
57%
Total growth in business formations from 2019 to 2023
Source: Census Bureau BFS
Historical LLC Formation Trends (2019-2025)
| Year | LLC Formations | Growth Rate | Trend |
|---|---|---|---|
| 2019 | 3,500,000 * | ➡️ | |
| 2020 | 4,400,000 * | +25.7% | 🚀 |
| 2021 | 5,400,000 * | +22.7% | 🚀 |
| 2022 | 5,000,000 * | -7.4% | 📉 |
| 2023 | 5,500,000 * | +10% | 📈 |
| 2024 (Projected) | 5,800,000 | +5.5% | 📈 |
| 2025 (Projected) | 6,000,000 | +3.4% | 📈 |
Key Insights from the Data
*Business application data from U.S. Census Bureau. LLC percentage based on IRS partnership statistics (72.7% of partnerships are LLCs).
- • Pandemic Boom (2020-2021): Business formations surged during the pandemic, with 2021 seeing a record 5.4 million new business applications. This 22.7% increase from 2020 was driven by increased entrepreneurship, remote work opportunities, and government stimulus programs.
- • Stabilization (2022-2023): After the pandemic surge, business formations stabilized at historically high levels. 2023 marked the highest year on record with 5.5 million applications, a 10% increase despite economic headwinds and rising interest rates.
- • Current Trends (2024-2025): Based on Census Bureau data through July 2025, business formations continue at a robust pace. The Bureau projects 28,494 new employer businesses will form from July 2025 applications alone, suggesting continued strong entrepreneurship.
LLC Formations by State
Top 5 States by Volume
- 1. Delaware 2:1 ratio*
- 2. Wyoming 166,960
- 3. Florida High Volume
- 4. Texas High Volume
- 5. Nevada Privacy Haven
*Foreign LLC registrations per capita (2023)
Fastest Growing States
- 1. Wyoming +42% (2023)
- 2. Nevada Strong Growth
- 3. New Mexico Privacy Laws
- 4. Florida No Income Tax
- 5. Texas Business Friendly
Why These States Lead in LLC Formations
Wyoming's Surge: In 2023, Wyoming saw a historic 42% increase in incorporations, with 92% being LLCs. Wyoming now has more LLCs per 1,000 adults than any other state, overtaking Delaware for the first time.
Delaware's Dominance: While growth has plateaued, Delaware still leads 2:1 in foreign LLC registrations per capita and remains home to 60% of Fortune 500 companies.
Tax Haven States: Florida, Texas, Nevada, and Wyoming attract businesses with no state income tax, strong privacy laws, and business-friendly regulations.
Factors Driving LLC Formation Growth
Gig Economy Expansion
The rise of freelance work and independent contracting has led millions to form LLCs for liability protection and tax benefits. Over 36% of the U.S. workforce now freelances in some capacity.
E-commerce Growth
Online business opportunities have exploded, with e-commerce sales reaching $1 trillion annually. Many online sellers form LLCs to protect personal assets and establish business credit.
Real Estate Investment
Real estate investors commonly use LLCs to hold properties, providing liability protection and flexibility in ownership structure. Each property often gets its own LLC.
Simplified Formation Process
Online formation services have made creating an LLC easier than ever, with some states offering same-day processing and costs as low as $40 in state fees.
LLCs vs Other Business Entities
2023 New Business Entity Formations
LLCs have become the dominant choice for new businesses, representing 85% of all entity formations in 2023. This preference is driven by their flexibility, simpler tax treatment, and strong liability protection without the formalities required by corporations.
Future Outlook: LLC Formations 2024-2025
2024 Projection
5.8 Million
Business applications tracking toward record year
2025 Current Data
28,494
Projected employer businesses from July 2025 applications (Census Bureau)
Growth Drivers: Continued expansion of the gig economy, advancement in AI and automation creating new business opportunities, and increasing awareness of LLC benefits among entrepreneurs will sustain growth.
Potential Challenges: Economic uncertainty, potential regulatory changes, and market saturation in certain industries could moderate growth rates compared to the pandemic boom years.
Data Sources & Methodology
Sources
- • U.S. Census Bureau - Business Formation Statistics (BFS)
- • Individual State Secretary of State Offices
- • U.S. Small Business Administration (SBA) Reports
- • National Association of Secretaries of State (NASS)
Note: LLC formation numbers are estimates based on available state data and business application statistics. Actual numbers may vary as not all states report formations in real-time, and some businesses file in multiple states.