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Homebased Sole
Proprietors Generate
$102 Billion In Annual Revenue
America’s homebased sole proprietors generate $102 billion
in annual revenue, according to a study released by the Office of
Advocacy of the U.S. Small Business Administration. The study details
revenues, expenses, and income for both homebased and non-homebased
sole proprietors by industrial sector.
“Sole proprietorships are a vital part of our economy,”
said Thomas M. Sullivan, Chief Counsel for Advocacy. “Many
are homebased micro businesses; collectively they generate a significant
amount of economic activity. For the average sole proprietor, their
business provides benefits of entrepreneurship that go beyond just
income and revenue.”
Written by Joanne H. Pratt with funding from the Office of Advocacy,
The Impact of Location on Net Income: A Comparison of Homebased
and Non-Homebased Sole Proprietors examines federal income tax data
from year 2002 sole proprietorship returns (Schedule C).
The report presents a comparison of homebased and non-homebased
sole proprietorships. For example, it finds that the average homebased
sole proprietor earned $22,569 in net income while their non-homebased
counterparts earned $38,243. Due to lower expenses, particularly
in rent and labor costs, the average homebased sole proprietor consistently
gained a higher return on gross revenues at 36 percent, versus 21
percent for the non-homebased.
The report also finds that the percent of homebased sole proprietorships
was greatest in the Administrative, Support, and Waste Management;
Information; and Construction sectors. For the non-homebased, the
percentage was greatest in the Accommodation and Food Services;
All Other Services; and Finance and Insurance sectors.
The Office of Advocacy, the “small business watchdog”
of the government, examines the role and status of small business
in the economy and independently represents the views of small business
to federal agencies, Congress, and the President. It is the source
for small business statistics presented in user-friendly formats
and it funds research into small business issues.
For more information and a complete copy of the report, visit the
Office of Advocacy website at www.sba.gov/advo.
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