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Business Formation Statistics

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Definitions

  • BA: Business Applications - The core business applications series that corresponds to a basic filtering of EIN applications. Includes all applications for an EIN, except for applications for tax liens, estates, trusts, certain financial filings, applications outside of the 50 states and DC or 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).
  • BDS: Business Dynamic Statistics - A research dataset based on the Longitudinal Business Database (LBD) that describes United States business dynamics across a wide range of measures. Disclosure analysis is performed prior to release to the public to protect the confidentiality of LBD data.
  • BF4Q: Business Formations within 4 Quarters - This series provides the number of employer businesses that originate from Business Applications (BA) within four quarters from the month of application. By definition, the end-point of this series is determined by the most recent quarter for which the administrative data on payroll is available.
  • BF8Q: Business Formations within 8 Quarters - This series provides the number of employer businesses that originate from Business Applications (BA) within eight quarters from the month of application. By definition, the end-point of this series is determined by the most recent quarter for which the administrative data on payroll is available.
  • BFS: Business Formation Statistics - A research dataset based on the Longitudinal Business Database (LBD), the Business Register (BR), and data on EIN applications that describe United States business applications and formations using a variety of measures.
  • BR: Business Register - A comprehensive database of all U.S. business establishments developed and maintained by the U.S. Census Bureau, with data beginning in 1975 and continuing to the present.
  • Business (Firm): A business (firm) is an organization consisting of one or more domestic establishments that were specified under common ownership or control. The business (firm) and the establishment are the same for single-establishment firms. In BFS, the unit of analysis is a business (firm) associated with an EIN, which may have one or more establishments.
  • Business Application: An EIN application made predominantly for business purposes.
  • Business Formation: The formation of an employer (wage-paying) business from a business application.
  • CBA: Business Applications from a Corporation - High-Propensity Business Applications (HBA) from a corporation or personal service corporation, based on the legal form of organization stated in the IRS Form SS-4.
  • DUR4Q: Average Duration (in Quarters) from Business Application to Formation within 4 Quarters - A measure of delay between business application and formation, measured as the average duration (in quarters) between the month of business application and the quarter of business formation, conditional on business formation within four quarters.
  • DUR8Q: Average Duration (in Quarters) from Business Application to Formation within 8 Quarters - A measure of delay between business application and formation, measured as the average duration (in quarters) between the month of business application and the quarter of business formation, conditional on business formation within eight quarters.
  • EIN: Employer Identification Number - An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique 9-digit number assigned by the IRS to entities for tax purposes. EINs never expire, and once an EIN is assigned to an entity, it will not be reissued even if the entity disappears.
  • HBA: High-Propensity Business Applications - Business Applications (BA) that have a high-propensity of turning into businesses with payroll. The identification of high-propensity applications is based on the characteristics of applications revealed on the IRS Form SS-4 that are associated with a high rate of business formation. High-propensity applications include applications:(a) from a corporate entity, (b) that indicate they are hiring employees, (c) that provide a first wages-paid date (planned wages); or (d) that have a NAICS industry code in accommodation and food services (72) or in portions of construction (237, 238), manufacturing (312, 321, 322, 332), retail (44, 452), professional, scientific, and technical services (5411, 5413), educational services (6111), and health care (621, 623). The characteristics associated with high-propensity applications are periodically evaluated and revised based on updated formations data. For more details on this process and our most recent revision, please see our methodology
  • IRS Form SS-4: An IRS form used for filing EIN applications.
  • LBD: Longitudinal Business Database - A confidential research data product developed at the Census Bureau's Center for Economic Studies (CES). Based on the Business Register, it is comprised only of employer establishments and features longitudinal linking of establishments.
  • PBF4Q: Projected Business Formations within 4 Quarters - The projected number of employer businesses that originate from Business Applications (BA) within four quarters from the month of application.
  • PBF8Q: Projected Business Formations within 8 Quarters - The projected number of employer businesses that originate from Business Applications (BA) within eight quarters from the month of application.
  • Regions: The United States Census Bureau defines four statistical regions widely used for data collection and analysis:

    • Northeast - The Northeast state region includes Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, and Pennsylvania.
    • Midwest - The Midwest state region consists of Ohio, Michigan, Indiana, Wisconsin, Illinois, Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska, and Kansas.
    • South - The South state region consists of Delaware, Maryland, Virginia, West Virginia, Kentucky, North Carolina, South Carolina, Tennessee, Georgia, Florida, Alabama, Mississippi, Arkansas, Louisiana, Texas, and Oklahoma. The District of Columbia is also included in the South.
    • West - The West state region consists of Montana, Idaho, Wyoming, Colorado, New Mexico, Arizona, Utah, Nevada, California, Oregon, Washington, Alaska, and Hawaii.
  • SBF4Q: Spliced Business Formations within 4 Quarters - This series combines (splices) BF4Q and PBF4Q to provide the entire time series for the actual and projected business formations within four quarters.
  • SBF8Q: Spliced Business Formations within 8 Quarters - This series combines (splices) BF8Q and PBF8Q to provide the entire time series for the actual and projected business formations within eight quarters.
  • Seasonal Adjustment: Many of BFS data series exhibit seasonality at the monthly frequency. Seasonal adjustment is a statistical method for removing the seasonal component of a time series that exhibits a seasonal pattern. It is performed to isolate the movement of a time series independently of the seasonal components. BFS data are provided both not adjusted and seasonally adjusted using the U.S. Census Bureau's X-13 ARIMA-SEATS seasonal adjustment program. Users can apply their own seasonal adjustment methods on the not adjusted data.
  • State: The data are provided at the nationwide level by state, and by region. The codes used to identify states are Federal Information Processing Standards (FIPS) codes developed by the National Institute of Standards and Technology (NIST). Outlying territories (Puerto Rico, Guam, etc.) are not included in BFS.
  • WBA: Business Applications with Planned Wages - High-Propensity Business Applications (HBA) that indicate a first wages-paid date on the IRS Form SS-4. The indication of a wages-paid date is associated with a high likelihood of transitioning into a business with payroll.
  • X-13 ARIMA-SEATS: A seasonal adjustment software produced, distributed, and maintained by the Census Bureau. It has extensive time series modeling and model selection capabilities, provides a set of diagnostics tools, and can efficiently process many time series at once.

Source: U.S. Census Bureau | Business Formation Statistics | (301) 763-2000 |  Last Revised: June 16, 2022