This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.theguardian.com/business/2018/sep/23/how-many-small-businesses-us-census-bureau-wrong
The article has changed 3 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| The US Census Bureau says there are 30m small businesses. They're wrong | The US Census Bureau says there are 30m small businesses. They're wrong |
| (about 1 month later) | |
| For years, whenever someone asked me how many small businesses there are in the US I always have the same response. “About 30m,” I say. Why? Because that’s what the US Census Bureau says. Actually, the number is even more. It’s 32,570,855. But wait … is this really accurate? Are these really small business owners like me? | For years, whenever someone asked me how many small businesses there are in the US I always have the same response. “About 30m,” I say. Why? Because that’s what the US Census Bureau says. Actually, the number is even more. It’s 32,570,855. But wait … is this really accurate? Are these really small business owners like me? |
| Businesses are confident in Trump's economy – but challenges still loom | Gene Marks | Businesses are confident in Trump's economy – but challenges still loom | Gene Marks |
| No, not really. And here’s why: of all these businesses, it turns out that only a third of them actually have employees. Not only that, but according to a report from the Census Bureau’s Adam Grundy, the 76.2% of businesses that had no employees accounted for just 4% of sales of all small businesses. So who are these non-employers? They’re “self-employed individuals operating a very small unincorporated business which may or may not be the owner’s principal source of income,” Grundy writes in a blog for the bureau. | No, not really. And here’s why: of all these businesses, it turns out that only a third of them actually have employees. Not only that, but according to a report from the Census Bureau’s Adam Grundy, the 76.2% of businesses that had no employees accounted for just 4% of sales of all small businesses. So who are these non-employers? They’re “self-employed individuals operating a very small unincorporated business which may or may not be the owner’s principal source of income,” Grundy writes in a blog for the bureau. |
| In other words, these are not business owners. | In other words, these are not business owners. |
| Many of them are “side hustlers”. It’s the neighbor who sells $1,000 worth of crafts on Etsy or the friend who sometimes drives an Uber. It’s a college kid who babysits or a school teacher who occasionally rents out a room on Airbnb. They probably have a full-time job with health insurance. They are not entrepreneurs. They’re just earning a few extra bucks and reporting the income on a schedule C – the supplemental income tax form. | Many of them are “side hustlers”. It’s the neighbor who sells $1,000 worth of crafts on Etsy or the friend who sometimes drives an Uber. It’s a college kid who babysits or a school teacher who occasionally rents out a room on Airbnb. They probably have a full-time job with health insurance. They are not entrepreneurs. They’re just earning a few extra bucks and reporting the income on a schedule C – the supplemental income tax form. |
| There are others skewing the number. I call them the “shells”. For example, the real estate mogul who owns 10 rental properties each filing a separate tax return. Sure, that person could be a legit business owner, but of one business, not 10. I have a client where the four partners file tax returns for both a limited and general partnership for liability and tax purposes, but only own one business. All of these tax returns are skewing the Census Bureau’s calculations. | There are others skewing the number. I call them the “shells”. For example, the real estate mogul who owns 10 rental properties each filing a separate tax return. Sure, that person could be a legit business owner, but of one business, not 10. I have a client where the four partners file tax returns for both a limited and general partnership for liability and tax purposes, but only own one business. All of these tax returns are skewing the Census Bureau’s calculations. |
| There are, however, true “independents”. These are the people that run companies with no employees. This is their full-time job and they rely on that income for their livelihood. They’re generally service providers – a stockbroker, a cleaner, a delivery person. My barber, who is an independent contractor at someone else’s barber shop, is a business owner. An accountant, consultant or lawyer who may work from home but has clients is another example. Full-time real estate agents, dieticians, life coaches and yoga instructors also fit the bill. They don’t employ anyone, but I’ll give them a pass anyway and include them in my definition of small business owners. | There are, however, true “independents”. These are the people that run companies with no employees. This is their full-time job and they rely on that income for their livelihood. They’re generally service providers – a stockbroker, a cleaner, a delivery person. My barber, who is an independent contractor at someone else’s barber shop, is a business owner. An accountant, consultant or lawyer who may work from home but has clients is another example. Full-time real estate agents, dieticians, life coaches and yoga instructors also fit the bill. They don’t employ anyone, but I’ll give them a pass anyway and include them in my definition of small business owners. |
| How many of the 25m non-employers are hobbyists and shells versus actual independents? No one seems to know. What I do know is that none of them, in my opinion, are true business owners. To me, a true business owner usually satisfies two requirements: the business is a stand-alone entity that files its own tax return. More importantly, the business has employees. | How many of the 25m non-employers are hobbyists and shells versus actual independents? No one seems to know. What I do know is that none of them, in my opinion, are true business owners. To me, a true business owner usually satisfies two requirements: the business is a stand-alone entity that files its own tax return. More importantly, the business has employees. |
| True business owners sign paychecks. They have vacation policies. They struggle to find good people. They do performance reviews. They know what it’s like when a trusted employee doesn’t show up for work one day or just quits for no reason, leaving them high and dry. They find themselves spending more time on staff scheduling then selling. They have a break room. | True business owners sign paychecks. They have vacation policies. They struggle to find good people. They do performance reviews. They know what it’s like when a trusted employee doesn’t show up for work one day or just quits for no reason, leaving them high and dry. They find themselves spending more time on staff scheduling then selling. They have a break room. |
| Businesses claim it's hard to hire 'good people'. The solution is pretty simple | Gene Marks | Businesses claim it's hard to hire 'good people'. The solution is pretty simple | Gene Marks |
| Which is why certain industries, such as wholesales trade, accommodation and food services, have more employees than others. These are the true small business people. These are the ones who know that, like any newly married couple, you don’t truly know what it’s like to be a parent until you’ve had kids. And you don’t know what it’s like to run a business until you’ve got a payroll. | Which is why certain industries, such as wholesales trade, accommodation and food services, have more employees than others. These are the true small business people. These are the ones who know that, like any newly married couple, you don’t truly know what it’s like to be a parent until you’ve had kids. And you don’t know what it’s like to run a business until you’ve got a payroll. |
| So, if you’re targeting the “small business” community to sell your products or get elected to public office, just know that there aren’t 32m small businesses in the US. There are just 32m who report extra income on their tax returns. The real number of small business owners in this country is somewhere around 7.8m. They know who they are. | So, if you’re targeting the “small business” community to sell your products or get elected to public office, just know that there aren’t 32m small businesses in the US. There are just 32m who report extra income on their tax returns. The real number of small business owners in this country is somewhere around 7.8m. They know who they are. |
| US small business | US small business |
| Census | Census |
| comment | comment |
| Share on Facebook | Share on Facebook |
| Share on Twitter | Share on Twitter |
| Share via Email | Share via Email |
| Share on LinkedIn | Share on LinkedIn |
| Share on Pinterest | Share on Pinterest |
| Share on WhatsApp | Share on WhatsApp |
| Share on Messenger | Share on Messenger |
| Reuse this content | Reuse this content |