Business Formation Statistics - About the Data

Purpose:

BFS measure business initiation activity and the cycle from initiation to realized business formation. BFS gives an early look at business formation activity within the U.S. at a detailed state level and regional level.

BFS provide timely and high-frequency data on:

Business applications as indicated by applications for an EIN
Actual and projected business formations originating from business applications based on the record of first payroll tax liability for an EIN
Delay in business formation as indicated by the average duration between business application and business formation

Technical documentation for these statistics and specific recommendations for interpreting these statistics are described in our Methodology.

Content:

BFS data cover Employer Identification Number (EIN) applications made in the United States, including those associated with starting a new employer business. EINs are IDs used by business entities for tax purposes. In addition, BFS also provide information on actual and projected employer business formations originating from the EIN applications. Data are available at the national, regional, state (including Puerto Rico and the Island Areas), and county level. Data are also available by 2-digit NAICS industry sector at the national level.

Monthly BFS data cover the period starting from July 2004 at a monthly frequency. Monthly BFS data are released approximately 11-12 days after the end of the observed month. Weekly BFS data start from week 1 of 2006 at a weekly frequency. Weekly BFS are released with Monthly BFS, approximately 11-12 days after the end of the observed month. Annual County BFS data start from 2005 at an annual frequency. Annual County BFS are released approximately 6 months after year's end. Annual Island Areas BFS data start from 2005 at an annual frequency. Annual Island Areas BFS are released approximately 3 months after year's end.

The Business Application Series, available on both a weekly and monthly basis, contains 4 filtered series of EIN applications, measuring selected groupings based on a variety of factors.

Business Applications (BA): The core business applications series that corresponds to a subset of all EIN applications. BA includes all applications for an EIN, except for applications for tax liens, estates, trusts, or certain financial filings, applications with no state-county geocodes, applications with certain NAICS codes in sector 11 (agriculture, forestry, fishing and hunting) or 92 (public administration) that have low transition rates, and applications in certain industries (e.g. private households, civic and social organizations).
High-Propensity Business Applications (HBA): A subset of BA that contains all applications with a high-propensity of turning into a business with a payroll, based on various factors
Business Applications with Planned Wages (WBA): A subset of HBA that contains all applications that indicate a planned date for paying wages
Business Applications from Corporations (CBA): A subset of HBA that contains all applications that come from a corporation or a personal service corporation

The Business Formation Series, available only on a monthly basis, measures new employer firm births, the point when an application is realized and a business begins to operate. The Business Formations Series is available in two subsets, measuring from application to realization of the business paying wages, within 4 and 8 quarters. Puerto Rico and the Island Areas are not included in these series.

Business Formations within 4 Quarters (BF4Q): The number of employer businesses that originate from Business Applications within four quarters from the month of application
Projected Business Formations within 4 Quarters (PBF4Q): The projected number of employer businesses that originate from Business Applications within four quarters from the month of application
Spliced Business Formations within 4 Quarters (SBF4Q): Combines BF4Q and PBF4Q to provide the entire time series for the actual and projected business formations within four quarters
Business Formations within 8 Quarters (BF8Q): The number of employer businesses that originate from Business Applications (BA) within eight quarters from the month of application
Projected Business Formations within 8 Quarters (PBF8Q): The projected number of employer businesses that originate from Business Applications (BA) within eight quarters from the month of application
Spliced Business Formations within 8 Quarters (SBF8Q): Combines BF8Q and PBF8Q to provide the entire time series for the actual and projected business formations within eight quarters
Average Duration (in Quarters) from Business Application to Formation within 4 Quarters (DUR4Q): A measure of delay between business application and formation, conditional on business formation within four quarters
Average Duration (in Quarters) from Business Application to Formation within 8 Quarters (DUR8Q): A measure of delay between business application and formation, conditional on business formation within eight quarters

Uses:

BFS can help businesses, policymakers, regional planners, and researchers assess the current state of early entrepreneurship at the national and state levels. BFS uncover the trends in business applications and formations at previously unavailable levels of frequency, coverage, and timeliness. The data can be used to study a variety of issues in entrepreneurship, including, but not limited to, the high-frequency dynamics of entrepreneurial activity, the effects of business cycles on entrepreneurship, the effects of regional economic development policies on new business formation, the impact of state tax policies and regulations on business initiation, and the formation of new industrial clusters and agglomerations. A key benefit from these data are their timeliness and high-frequency, which allow policymakers, analysts, and researchers to better monitor the state of entrepreneurial activity in the United States.