COMPARABILITY OF 1992 AND 1997 DATA

The following changes were made in survey methodology in 1997 which affect
comparability with past reports:

1. The universe for the 1997 SMOBE and SWOBE was expanded to include all corporations.
In 1992, only subchapter S corporations in addition to partnerships and sole proprietorships
were included for the SMOBE. A small sample of ‘‘C ’’corporations was included in
the SWOBE to provide estimates at the industry division level only.

2. Previously, the SMOBE and SWOBE programs defined a business as an entity that filed a
business income tax return. Businesses that had received one or more Employer Identification
Numbers (EINs) may have filed tax returns under more than one EIN. I past surveys, each EIN
was treated as a separate business. For 1997, all operations under the same ownership were
defined as one company or business, irrespective of the number of the company’s EINs. The
definition eliminated the likelihood of surveying the same business owner more than once.
This change had no effect on the employment and payroll data for these surveys, but slightly
reduced the count for the number of businesses and the total receipts.

3. In the past, ownership was based on the race/ethnicity/gender of the majority of the number
of owners, without regard to the percentage of interest owned in the firm.Businesses with 50
percent or more minority owners have in the past been included in the minority business counts.
In the 1997 SMOBE, 51 percent or more of the interest, claims or rights in the business must be
held by minorities to be included as a minority-owned business and similarly for women. In the
1997 SMOBE, businesses in which ownership was shared among minority and nonminority groups
with no single racial/ethnic group having majority interest were excluded from the minority
business counts and tabulated as 50-percent minority-/50-percent nonminority-owned in the Com-
pany Summary publication. Equally owned male/female firms were treated as a separate entity
and were presented in a separate section of the Women-Owned Businesses publication. In previous
surveys, businesses which were equally owned by a man and a woman were classified as either male-
or female-owned. Equally owned corporations and partnerships were counted as women-owned. Using
administrative data all sole proprietorships were assigned a gender based on the spouse with the
largest self-employment income. The addition of the equally owned category in 1997 substantially
reduced the estimates for women-owned businesses.

4. In the past, a small sample of the cases placed on the non-Hispanic white male frame was taken to
estimate the number of firms owned by persons of minority ancestry when no indication of minority
ownership was found from any of the sources used in stratification. The estimates from this sample
were presented in a separate section of the Asian-and Pacific Islander-, American Indian-and Alaska
Native-owned business publication and the Hispanic-owned business publication as an estimate of the
undercount and were excluded from the detailed tables. In the 1997 SMOBE and SWOBE, the estimates
from this part of the sample were included in the detailed tables of the publications.

5.In prior surveys, the SMOBE universe of sole proprietorships was based on businesses filing an annual
IRS Schedule C (Form 1040) ‘‘Profit or Loss From Business’’report. Employers were identified by first match-
ing these Schedule C records to IRS Form 941 ‘‘Employers Quarterly Federal Tax Return’’payroll reports. Not
all Schedule C business income tax records that represented firms with employees could be matched. To estimate
for sole proprietorship employers that were not matched to payroll tax returns, a portion of the sole proprietorship
proprietorship universe that reported cost of labor or wages as an expense item on the Schedule C was also
considered employers. In addition, some cases with no cost of labor or wages reported but with large receipts
had payroll imputed and were counted as employers. For 1997, the methodology was revised to identify
sole proprietorship employers as only those that filed the IRS Form 941 payroll tax form. These businesses
were included in the universe even if they could not be matched to a Schedule C. This resulted in a
decrease in the estimate of firms with paid employees relative to the 1992 methodology.

COMPARABILITY OF SURVEY DATA WITH OTHER ECONOMIC CENSUS DATA

The tables in each publication that show data for all U.S .firms are comparable to and include the minority-and
women-owned firm data. Caution should be exercised in comparing data presented in this report with published or
unpublished data from other reports of the 1997 Economic Census. Factors that affect comparability of data
among censuses are industrialscope, business unit covered, receipts size, and coverage of nonemployers.

Industrial scope. Data in this report are based on the 1987 SIC Manual 4 (see Industry Classifications section).
SeveralSIC industries were in scope of the SMOBE and SWOBE but out of scope of the basic economic census.
These industries included: 07, Agricultural Services; 08, Forestry; 09, Fishing, Hunting ,and Trapping. Major industry
group 86, Membership Organizations, was within the scope of the economic census but out of the scope of the SMOBE
and SWOBE. In the SMOBE and SWOBE, industry 6552 (land subdividers and developers, except cemeteries) is included
with the construction industry group, unlike the other economic censuses that include it with industry 65 (realestate).

Business unit. Most of the economic censuses are conducted on an establishment or physical location basis,
individually enumerating and tabulating each establishment owned by a firm.I the SMOBE and SWOBE, however,
the whole firm was the primary unit for enumeration.(See Appendix A for definition of ‘‘firm.’’)

Receipts size. Most of the economic censuses determine whether or not a firm may be counted as an active busi-
ness according to its receipts size. The specified minimums vary by industry. For a firm to be counted as an active
business in the SMOBE and SWOBE, it had only to file a business tax return with business receipts greater than
$1,000, except for the construction industry, which had no minimum business receipts cutoff. Firms with no paid
employees. Although nonemployer firms are included in these surveys, they are omitted from many of the economic
census reports.