December Business Formation Report

As 2024 wrapped up, business formations ended on a strong note, with December seeing a 3% jump from the previous month, totaling 389,215 new registrations—but year-over-year numbers still took a 5% hit. This past year was anything but predictable, with hurricanes, inflation, and election jitters shaking up the playing field. Tech and clean energy states held steady, while others scrambled to recover from infrastructure and policy setbacks. As Q4 wrapped up, Texas and California led the way, but regulatory changes and seasonal slowdowns impacted others. With a new presidential administration incoming, the next few months will test which states can sustain growth. Our analysis is based on federal and state Corporations Division data and our own research, comparing year-over-year changes for December 2023 and 2024.

The Highlights

December always presents unique challenges for business formations. The colder climate, holiday season, and intermittent government office closures can influence entrepreneurs’ actions. Some aim to take advantage of year-end tax benefits, gaining a fresh start in January. Others choose to wait, avoiding the hassle of filing tax returns with no revenue if their businesses aren’t up and running right away. Despite the challenges of October and November in 2024, certain states demonstrated resilience, finishing the year strong with clear boosts in formations. Traditional leaders like California, Texas, and Florida continued to maintain their dominant positions, reflecting their ongoing appeal to entrepreneurs. But the post-election period brought some new game-changers into play. Talks of potential new tariffs had some entrepreneurs taking a step back, while others wasted no time jumping on the chance to gain an early edge. With these shifts in motion, there are a few standout moves that deserve a closer look.

The end of the year brought both familiar leaders and emerging contenders. Texas, California, and Florida continue to dominate the field, proving once again why they’re top choices for entrepreneurs looking to make their mark. And Colorado continued to punch above its weight, putting up robust business formation numbers for its population size. Delaware and Wyoming also stood out, leveraging their business-friendly environments, such as favorable tax structures and streamlined regulatory processes, to attract new ventures. Oklahoma also made significant strides, marking a big improvement over previous months as it continues to foster a robust network of business accelerators and startup resources. Utah experienced a remarkable 42% surge in formations from November to December, signaling a strong rebound after a mid-year lull. Florida is still topping the list, with steady numbers likely fueled by ongoing reconstruction after a tough hurricane season, as fresh funding keeps the rebuilding momentum strong.

At the bottom of the pack, Louisiana took a major hit in new business formations. While it had a post-hurricane rebuilding boost like Florida, it doesn’t have the same tourism and holiday economy to keep momentum rolling into winter. Big investments, like Meta’s $10 billion AI data center and Buc-ee’s $82 million expansion, promise future growth, but the effects aren’t immediate. Plus, sweeping tax reforms in the state, signed in December, may have business owners hitting pause until they see how things shake out. Vermont also struggled, facing economic strain and a tax revenue dip that likely made would-be entrepreneurs think twice. A shrinking population (Vermont is one of only three states to lose residents in 2024) adds to the challenge. New Mexico saw another big drop, fueled by rising unemployment and uncertainty in the oil and gas sector. A court decision to uphold strict emissions regulations hit smaller operators hard, potentially discouraging new ventures. And while North Dakota still finds itself at the bottom of the rankings, business formations were up a full 26% from November, which is definitely worth a shout-out. The state has doubtless contributed to the country’s record oil production in Q4 and had the nation’s lowest jobless rates in December, at just 1.9%, all of which hint towards greater future growth.

As we head into 2025, the business formation field is still buzzing with uncertainty, making it anyone’s game. While December saw some promising trends, especially in high-population states, along with emerging challengers like Utah and Oklahoma, entrepreneurs still face ongoing challenges. Economic shifts, post-election policies, and seasonal factors continue to impact decision-making. Some states are bouncing back from setbacks, while others are navigating hurdles like tax reforms and regulatory changes. With a new year and a new presidency on the horizon, Donald Trump’s vocal promises to bring big changes only add to the uncertainty, leaving business owners to navigate the unknown. As we look ahead, the business formation environment will likely remain fluid, making the next few months a pivotal time for new ventures. Entrepreneurs will need to stay agile, balancing the opportunities and risks that lie ahead.