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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. Most nonemployers are self-employed individuals operating very small unincorporated businesses, which may or may not be the owner’s principal source of income.
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 received for services rendered by nonemployer businesses, such as payments received as independent agents and contractors.
The composition of nonemployer receipts may differ from receipts data published for employer establishments. For example, for wholesale agents and brokers without payroll (nonemployers), the receipts item contains commissions received or earnings. In contrast, for wholesale agents and brokers with payroll (employers), the sales and receipts item published in the Economic Census represents the value of the goods involved in the transactions.
Number of Firms
Generally, a firm is a single physical location where 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 a firm. A nonemployer business may operate from its owner’s home address or from 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. The following three legal forms of organization are included in this report:
Individual proprietorship Also referred to as a “sole proprietorship,” an unincorporated business owned by an individual. Also included in this category are self-employed persons.
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.
The reference year is the year for which the data are reported. In Economic Census years, the data are part of the Economic Census Core Series. Beginning with reference year 1998, the Nonemployer Statistics tabulations have been 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 replaced each country's separate classification systems with one uniform system for classifying industries. For more information, go to http://www.census.gov/epcd/www/naics.html.
Source: U.S. Census Bureau, EPCD, Nonemployer Statistics.