The U.S. Census Bureau




  A nonemployer business is one that has no paid employees, has annual business receipts of $1,000 or more ($1 or more in the construction industries), and is subject to federal income taxes.  


  Includes gross receipts, sales, commissions, and income from trades and businesses, as reported on annual business income tax returns. Business income consists of all payments for services rendered by nonemployer businesses, such as payments received as independent agents and contractors.  

  The composition of nonemployer receipts may differ from that of the related data item that is published for employer establishments. For example, for wholesale agents and brokers without payroll, the receipts item contains commissions received or earnings. In contrast, for wholesale agents and brokers with payroll, the sales item published in the economic census represents the value of the goods involved in the transactions.  

Number of Establishments  

  Generally, an establishment is a single physical location at which business is conducted or services or industrial operations are performed. However for nonemployers, we count each distinct business income tax return filed by a nonemployer business as an establishment. Nonemployer businesses may operate from a home address or a separate physical location. Most geography codes are derived from the business owner's mailing address, which may not be the same as the physical location of the business.  

Legal Form of Organization (LFO)  

  The legal form of organization for nonemployer businesses is derived from administrative record sources. There are other legal forms of organization, but only the following three are included in this report:  

Individual proprietorship.  An unincorporated business owned by an individual. Also included in this category are self-employed persons. The business may be the only occupation of an individual or the secondary activity of an individual who works full-time for someone else.  
Partnership.  An unincorporated business owned by two or more persons having a shared financial interest in the business.  
Corporation.  A legally incorporated business under state laws.  

Reference Year  

  The reference year is the period for which the data are reported. For the 1997 reference year, the data are part of the economic census core series. Beginning with reference year 1998, the nonemployer statistics tabulations will be released as an annual data series.  

North American Industry Classification System (NAICS)  

  The North American Industry Classification System was developed by representatives from the United States, Canada, and Mexico, and replaces each country's separate classification systems with one uniform system for classifying industries. In the United States, NAICS replaces the Standard Industrial Classification (SIC), a system that federal, state, and local governments, the business community, and the general public have used since the 1930s.  

  This new industry classification system enables North American Free Trade Agreement (NAFTA) partners--the United States, Canada, and Mexico--to better compare economic and financial statistics and ensure that such statistics keep pace with the changing economy.  

NAICS Sectors  

  The NAICS sectors represent general categories of economic activities. The sector code equals the first two digits of the NAICS industry code. For a further explanation of the individual NAICS sector codes, please refer to Appendix B, NAICS Sector Titles and Descriptions.  


Source: U.S. Census Bureau, EPCD, Nonemployer Statistics.
Last revised: July 13 2011